ACCT30110 Lecture Notes - Lecture 13: Balance Sheet, Cash Flow, Income Statement
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Czar was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued 520,000 shares of common stock as of 12/31/2018. No new shares were issued during 2018.
1. On the âAdjusting Journal Entriesâ worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018. (Round all numbers to the nearest dollar). Label journal entries a through t.
P- On 2,1, 2018, Czar rented a portion of one store to Pellston Inc. The contract was for 15 months and Czar required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company.
Q- Czar started to lease some new retail space in 2018 and added shelving and fixtures to this leased space. Based on your review of invoices, the previous accountant capitalized the cost of fixtures but did not capitalize the shipping and installation costs of $2,815. These costs were expensed and recorded as a miscellaneous selling expense. Czar has decided to use double declining balance (DDB) depreciation for this item and to take a full year of depreciation in the year of acquisition. The leasehold improvements have a useful life of 15 years with a salvage value of $12,000.
R- Czar uses the FIFO Inventory Method in valuing inventory. The inventory balance of $340,000 was based on a physical count at 12/31/2018. Based on your analysis, you have noted that $10,000 of marketing games that belonged to Pellston Inc. was included in the account. You also note that $5,600 of goods shipped to Czar f.o.b. destination were in transit on December 31, 2018 and included in the physical count.
Czar Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December 31, 2018 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 264,000 | - | ||||
Accounts Receivable | 555,984 | - | ||||
Allowance for Doubtful Accounts | - | 13,600 | ||||
Interest Receivable | - | - | ||||
Merchandise Inventory | 340,000 | - | ||||
Prepaid Insurance | - | - | ||||
LIFO Reserve | - | 25,600 | ||||
Prepaid Advertising | - | - | ||||
Prepaid Rent | 13,600 | - | ||||
Office Supplies | 4,800 | - | ||||
Note Receivable | 20,000 | |||||
Available for Sale Securities | 300,000 | - | ||||
Office Building | 3,000,000 | - | ||||
Accumulated Depreciation - Office Building | - | 70,000 | ||||
Storage Building | 1,020,000 | - | ||||
Accumulated Depreciation - Storage Building | - | - | ||||
Land | 600,000 | - | ||||
Leasehold Improvements | 180,000 | - | ||||
Accumulated Depreciation - Leasehold Improvements | - | - | ||||
Office Equipment | 260,000 | - | ||||
Accumulated Depreciation - Office Equipment | - | 52,000 | ||||
Patent | 120,000 | - | ||||
Accounts Payable | - | 276,000 | ||||
Sales Tax Payable | - | - | ||||
Salaries Payable | - | 113,600 | ||||
Payroll Taxes Payable | - | 20,000 | ||||
Interest Payable | - | - | ||||
Income Tax Payable | - | - | ||||
Unearned Rent Revenue | - | - | ||||
Loan Payable - First Trust | - | 520,000 | ||||
Loan Payable - Coldwell Bank | - | 1,600,000 | ||||
Common Stock | - | 520,000 | ||||
Additional Paid in Capital | - | 1,599,000 | ||||
Retained Earnings | - | 736,000 | ||||
Accumulated Other Comprehensive Income | - | 20,000 | ||||
Dividends | 67,800 | - | ||||
Sales | - | 3,622,560 | ||||
Sales Returns and Allowances | 33,800 | - | ||||
Sales Discounts | 15,400 | - | ||||
Cost of Goods Sold | 1,583,600 | - | ||||
Sales Salaries Expense | 349,120 | - | ||||
Office Salaries Expense | 219,200 | - | ||||
Advertising Expense | 12,800 | - | ||||
Depreciation Expense - Office Building | - | |||||
Depreciation Expense - Leasehold Improvements | - | - | ||||
Depreciation Expense - Office Equipment | - | - | ||||
Leasing Expense - Stores | 105,600 | - | ||||
Miscellaneous Selling Expense | 18400 | - | ||||
Research & Development Expense | 12,000 | |||||
Rent Expense - Storage Facility | - | - | ||||
Insurance Expense | 12,000 | - | ||||
Office Supplies Expense | 28,000 | - | ||||
Miscellaneous Administrative Expense | 7,336 | - | ||||
Rent Revenue | - | 60,000 | ||||
Interest Revenue on Note Receivable | - | - | ||||
Dividend Revenue on AFS Securities | - | 20,000 | ||||
Interest Expense | - | - | ||||
Bad Debt Expense | 28,000 | - | ||||
Amortization Expense | - | - | ||||
Income Tax Expense | - | - | ||||
Payroll Taxes Expense | 96,920 | - | ||||
Rebate Expense | - | - | ||||
Unrealized holding loss | - | - | ||||
Depreciation Expense-Storage Building | - | - | ||||
Loss on Impairment | - | - | ||||
Rebate Liability | - | - | ||||
Restricted Cash for Future Expansion | - | - | ||||
9,268,360 | 9,268,360 |
1) Which of the following items would be reported net of taxesafter income from continuing operations?
Select one:
a. Gain or loss on the sale of property.
b. Loss due to a factory strike.
c. Interest expense.
d. Gain or loss on the sale of a major segment of theentity.
2)
Given the following list of accounts, calculate TotalAssets:
Accounts Receivable | $ 5,000 |
Capital Stock | 20,000 |
Cash | 14,300 |
Equipment | 15,400 |
Fees Earned | 44,400 |
Miscellaneous Expense | 18,200 |
Rent Expense | 4,150 |
Retained Earnings | 6,550 |
Wages Expense | 13,900 |
Select one:
a. $54,700
b. $26,550
c. $79,100
d. $34,700
3)
Which of the following is NOT associated with accrual basisaccounting?
Select one:
a. Income statement.
b. Matching principle.
c. Statement of cash flows.
d. Revenue recognition principle.
4)
Which of the following is an example of an intangible asset?
Select one:
a. Trademark
b. Timber
c. Equipment
d. Marketable securities
5)
Which of the following would be shown under the financingactivities section on the statement of cash flows?
Select one:
a. Cash received from customers.
b. The payment of cash to retire a long-term note.
c. Depreciation expense.
d. The proceeds from the sale of a building.
6)
A machine was purchased for $32,000 on April 1st. It has auseful life of 5 years and a residual value of $4,000. What is thedepreciation expense for the first fiscal year ending on December31st under the straight-line method?
Select one:
a. $1,400
b. $6,400
c. $4,200
d. $5,600
7)
The entry to record the signing of a contract to receiveinventory and make payment at a future date includes
Select one:
a. No debits or creditsâjust a memorandum.
b. A debit to cost of goods sold.
c. A credit to cash.
d. A debit to inventory.
8)
An inventory cost flow assumption is NOT needed for a productline
Select one:
a. If all of the inventory available for sale was purchased atthe same unit cost.
b. If all of the inventory looks the same.
c. If there is still some inventory on hand at the end of theyear.
d. If there is no beginning inventory carried over from theprevious accounting period.
9)
Fees received this period from customers for services to beperformed in the next accounting period, would be a(n)
Select one:
a. Expense disclosed on the statement of cash flows.
b. Revenue disclosed on the income statement.
c. Liability disclosed on the balance sheet.
d. Item not included on the financial statements until the nextaccounting period.
10)
Which of the following is TRUE of a corporation?
Select one:
a. They are incorporated with a national agency.
b. At least one owner has unlimited liability.
c. They are a separate taxable entity.
d. More than 70% of businesses are organized this way.
11)
The effects on the accounts of recording the cost of merchandisesold for cash using a perpetual inventory system include an
Select one:
a. Increase in Accounts Payable.
b. Increase in Merchandise Inventory.
c. Increase in Sales.
d. Increase in Cost of Goods Sold;
12)
Which of the following is NOT a limitation of externallyreported accounting information?
Select one:
a. The income statement contains atypical data due to the timingof the fiscal year end.
b. Accounting information relies on estimates.
c. Management has some discretion regarding the reportingclassification and choice of accounting measurement methods.
d. There is a hodge-podge of valuation techniques used on thefinancial statements.
13)
Given the following information regarding merchandise inventoryat the end of the fiscal year:
Ending inventory at cost $34,000
Ending inventory at market $33,400
Which of the following is correct?
Select one:
a. No journal entry should be made based upon the informationgiven.
b. Inventory should be reported on the balance sheet at$34,000.
c. Inventory should be reported on the balance sheet at$33,400.
d. A journal entry should be made to recognize a gain of$600.
14)
Which of the following describes the closing process when acompany has net earnings for the period?
Select one:
a. The Dividends account is debited for its balance.
b. The individual asset accounts are credited for theirbalances.
c. The individual expense accounts are debited for theirbalances.
d. The Income Summary account is debited for its balance.