To complete this practice set, you will:
Account for current liabilities.
Journalize corporate transactions.
Prepare financial statements for corporation.
Journalize debt transactions.
Prepare statement of cash flows.
Three journal entries are requiredeach payroll period: 1) record the payroll, 2) record payments ofthe total net pay, and 3) record the employerâs payroll taxes.
December Transactions
December 1
Sale of 5,000 shares of common stock for $35 per share. Articlesof incorporation authorized 40,000 shares of $20 par common stock.A check is received for the proceeds of this sale. Remember totrack the number of shares of outstanding stock.
December 1
Acquire land with a fair market value of $25,000 in exchange for1,100 shares of its $20 par common stock.
December 1
Issue $100,000, 7% (contract rate), 10-year bond that paysinterest annually at an effective interest rate of 8% (marketrate). A check is received for the proceeds of this issuance.
Round this calculation to the nearest penny.
December1
Make a deposit using the deposit ticket below. Include all ofthe checks received to date. Remember to record this deposit inthe checkbook.
MY Bank
Eau Claire, WI
Amount
Chippewa Valley Photo, Inc.
Cash
December 1
Checks
Deposit Ticket
Total
December 1
Issue Check #1 for $180,000 to Rapid Buildersfor a building. The building will be depreciated over 40 yearsusing straight-line depreciation. Salvage value is $20,000.
December 1
Issue Check #2 for $12,000 to Hom Furniture foroffice equipment. Office equipment will be depreciated usingdouble-declining balance. The expected life of the equipment is 5years.
December 1
Issue Check #3 for $450 to MyFavorite CPAs fordrafting the articles of incorporation. Charge this expense toOrganization Expense account.
December 1
Issue Check #4 for $20 to Wisconsin Departmentof Revenue for a sellerâs permit. Charge this expense toMiscellaneous Administrative Expense account.
December 1
Purchase store equipment for $30,000 from Foreign Photo Supply,invoice #444, terms net 10. Store equipment will be depreciatedusing double-declining balance. The expected life of the equipmentis 5 years.
December 1
Issue Check #5 for $150.00 to Samantha Jones,the petty cash fund custodian, to establish a petty cash fund.
December 1
Issue Check #6 for $1,440 to Best Insurance topay for a 12-month business insurance policy effective December1.
December 1
Purchase office supplies for $2,300 and store supplies for$1,000 from Photo Equipment Unlimited, invoice #6000, terms net10.
December 1
Purchase inventory from Photo Equipment Unlimited, invoice#6101. The cost of each item sold must be calculated by usingFIFO inventory valuation method.
Item #
Description
Quantity
Unit $
Total
N650
NIKON DIGITAL CAMERA
6
420.00
2,520.00
O2500
OLYMPUS DIGITAL CAMERA
2
700.00
1,400.00
D2290
KODAK DIGITAL CAMERA
3
450.00
1,350.00
TOTAL
$ 5,270.00
December 2
Purchase inventory from Foreign Photo Supply, invoice#23655.
Item #
Description
Quantity
Unit $
Total
H2411
HP SCAN-JET 5300
6
150.00
900.00
H3411
HP SCAN-JET 6390 COLOR
3
540.00
1,620.00
TOTAL
$ 2,520.00
December 2
Purchase inventory from Printers Unlimited, invoice #20455.
Item #
Description
Quantity
Unit $
Total
HP1315
PHOTO QUALITY PRINTER
6
435.00
2,610.00
Hp1215
HP PHOTOSMART COLOR PRINTER
6
350.00
2,100.00
TOTAL
$ 4,710.00
December 3
Sell merchandise to Mason Photo, invoice #1000, Terms n/30.
Item #
Description
Quantity
Unit $
Total
COST
HP1315
PHOTO QUALITY PRINTER
2
625.00
1,250.00
D22900
KODAK DIGITAL CAMERA
3
750.00
2,250.00
SUBTOTAL
3,500.00
SALES TAX
192.50
TOTAL
$ 3,692.50
December 5
Sell merchandise to General City Hospital, invoice #1001, Terms2/10, n/30.
Item #
Description
Quantity
Unit $
Total
COST
H2411
HP SCAN-JET 5300
2
250.00
500.00
O2500
OLYMPUS DIGITAL CAMERA
1
1,090.00
1,090.00
SUBTOTAL
1,590.00
SALES TAX
N/A
TOTAL
$ 1,590.00
December 6
Purchase inventory from Photo Equipment Unlimited, invoice#6300.
Item #
Description
Quantity
Unit $
Total
D2290
KODAK DIGITAL CAMERA
5
460.00
2,300.00
O2500
OLYMPUS DIGITAL CAMERA
5
700.00
3,500.00
TOTAL
$ 5,800.00
December 9
Sell merchandise to Sandy Murray, invoice #1002, Terms n/30.
Item #
Description
Quantity
Unit $
Total
COST
HP1215
HP PHOTOSMART COLOR PRINTER
4
475.00
1,900.00
N650
NIKON DIGITAL CAMERA
3
590.00
1,770.00
SUBTOTAL
3,670.00
SALES TAX
201.85
TOTAL
$ 3,871.85
December 10
Issue Check #7 to Foreign Photo Supply forinvoice #444, dated December 1.
December 10
Issue Check #8 to Photo Equipment Unlimited forthe amount due on invoices #6000 and #6101. Both invoices weredated December 1.
December 11
Return item purchased on invoice #23655 to Foreign PhotoSupply.
Item #
Description
Quantity
Unit $
Total
COST
H3411
HP SCAN-JET 6390 COLOR
-1
540.00
-540.00
TOTAL
$ -540.00
December 12
Issue Check #9 to Foreign Photo Supply for theamount due on invoice #23655 less returned item on December 11.
December 12
Issue Check #10 to Printers Unlimited for theamount due on invoice #20455, December 2.
December 13
Receive payment from Mason Photo in payment of invoice#1000.
December 14 Make a deposit using the depositticket below. Include the checks received from last deposit through today. Rememberto record this deposit in the checkbook.
MY Bank
Eau Claire, WI
Amount
Chippewa Valley Photo, Inc.
Cash
December 14
Checks
Deposit Ticket
Total
December 14
Complete Payroll Register for hours worked December 1-14.
Samantha Jones, Office Salary Expense for 88 hours. IssueCheck #11.
Jennifer Sells, Sales Salary Expense for 86 hours. IssueCheck #12.
NOTE: Overtime is paid at time and one-half for hours workedover 80.
Post earnings to Employeesâ Earnings Records.
Journalize payroll in the General Journal.
Record the checks in the Cash Payments Journal.
December 15
Receive payment from General City Hospital for invoice #1001,less the discount taken.
December 16
Sandy Murray Photo returns item purchased on invoice #1002.Issue credit to Sandy Murray Photo. The quantity and total salecost amounts are entered in the Cost of Merchandise Sold columns inthe Merchandise Inventory Subsidiary Ledger as negativenumbers.
Item #
Description
Quantity
Unit $
Total
COST
N650
NIKON DIGITAL CAMERA
-1
590.00
-590.00
SUBTOTAL
-590.00
SALES TAX
-32.45
TOTAL
$ -622.45
December 18
Sell merchandise to Robot Industries, invoice #1003. Termsn/30.
Item #
Description
Quantity
Unit $
Total
COST
O2500
OLYMPUS DIGITAL CAMERA
3
1,090.00
3,270.00
D2290
KODAK DIGITAL CAMERA
2
750.00
1,500.00
SUBTOTAL
4,770.00
SALES TAX
262.35
TOTAL
$ 5,032.35
December 20
Account for the cash sale of the following merchandise tovarious cash customers:
Item #
Description
Quantity
Unit $
Total
COST
HP1315
PHOTO QUALITY PRINTER
3
625.00
1,875.00
N650
NIKON DIGITAL CAMERA
1
590.00
590.00
O2500
OLYMPUS DIGITAL CAMERA
1
1,090.00
1,090.00
H2411
HP SCAN-JET 5300
3
250.00
750.00
SUBTOTAL
4,305.00
SALES TAX
236.78
TOTAL
$ 4,541.78
December 21
Purchase inventory from Photo Equipment Unlimited, invoice#6400.
Item #
Description
Quantity
Unit $
Total
N650
NIKON DIGITAL CAMERA
5
462.00
2,310.00
O2500
OLYMPUS DIGITAL CAMERA
7
770.00
5,390.00
D2290
KODAK DIGITAL CAMERA
2
460.00
920.00
TOTAL
$ 8,620.00
December 21
Purchase inventory from Foreign Photo Supply, invoice#24798.
Item #
Description
Quantity
Unit $
Total
H2411
HP SCAN-JET 5300
7
150.00
1,050.00
H3411
HP SCAN-JET 6390 COLOR
7
540.00
3,780.00
TOTAL
$ 4,830.00
December 21
Purchase inventory from Printers Unlimited, invoice #22544.
Item #
Description
Quantity
Unit $
Total
HP1315
PHOTO QUALITY PRINTER
8
435.00
3,480.00
HP1215
HP PHOTOSMART COLOR PRINTER
7
350.00
2,450.00
TOTAL
$ 5,930.00
December 22
Sell merchandise to Mason Photo, invoice #1004, Terms n/30.
Item #
Description
Quantity
Unit $
Total
COST
HP1315
PHOTO QUALITY PRINTER
3
625.00
1,875.00
HP1215
HP PHOTOSMART COLOR PRINTER
2
825.00
1,650.00
SUBTOTAL
3,525.00
SALES TAX
193.88
TOTAL
$ 3,718.88
December 22
Sell merchandise to General City Hospital, invoice #1005, Terms2/10, n/30.
Item #
Description
Quantity
Unit $
Total
COST
H2411
HP SCAN-JET 5300
5
275.00
1,375.00
O2500
OLYMPUS DIGITAL CAMERA
3
1,199.00
3,597.00
SUBTOTAL
4,972.00
SALES TAX
N/A
TOTAL
$ 4,972.00
December 23
Mason Photo returns item purchased on invoice #1000. Issuecredit memo to Mason Photo. This item must be put back into theinventory account.
Item #
Description
Quantity
Unit $
Total
COST
D2290
KODAK DIGITAL CAMERA
-1
750.00
-750.00
SUBTOTAL
-750.00
SALES TAX
-41.25
TOTAL
$ -791.25
December 23
Return defective camera to Photo Equipment Unlimited. Thequantity and total sale cost amounts are entered in the Purchasescolumns in the Merchandise Inventory Subsidiary Ledger as negativenumbers.
Item #
Description
Quantity
Unit $
Total
COST
D2290
KODAK DIGITAL CAMERA
-1
-450.00
-450.00
TOTAL
$ -450.00
December 23
Sell merchandise to Robot Industries, invoice #1006. Termsn/30.
Item #
Description
Quantity
Unit $
Total
COST
D2290
KODAK DIGITAL CAMERA
2
825.00
1,650.00
O2500
OLYMPUS DIGITAL CAMERA
2
1,199.00
2,398.00
SUBTOTAL
4,048.00
SALES TAX
222.64
TOTAL
$ 4,270.64
December 24
Receive payment from Mason Photo for invoice #1004, less thecredit for return of camera.
December 28
Purchase 100 shares of treasury common stock for $2,100. Issuecheck #13 to Up & Down Investment, Inc. forpayment.
December 28 Make a deposit using thedeposit ticket below. Include the checks received on
December 15, 20 and 24th. Remember to record thisdeposit in the checkbook.
MY Bank
Eau Claire, WI
Amount
Chippewa Valley Photo, Inc.
Cash
December 28
Checks
Deposit Ticket
Total
December 28
Complete Payroll Register for hours worked December 15-28.
Samantha Jones, Office Salary Expense for 82 hours. IssuedCheck #14.
Jennifer Sells, Sales Salary Expense for 88 hours. IssuedCheck #15.
NOTE: Overtime is paid at time and one-half for hours workedover 80.
Post earnings to Employeesâ Earnings Records.
Journalize payroll in the General Journal.
Record the checks in the Cash Payments Journal.
December 30
The Board of Directors declare a 1/2% Stock Dividend toshareholders on record on December 30. The market price of thestock is $22.00 per share.
December 31
Issue Check #16 to reimburse petty cash for thefollowing expenditures:
Remember, the Petty Cash account should not be used atthe time of fund replenishment. Use the followingaccounts:
Advertising Expense
$ 90.00
Miscellaneous Selling Expense
40.00
Miscellaneous Administrative Expense
12.50
Total
$ 142.50
December 31
Issue the certificates for the dividends declared on December30.
December 31 Prepare Bank Reconciliation. Record the adjustments in the GeneralLedger using Miscellaneous Administrative Expenses for any bankcharges credited by the bank and update the checkbook balance. Thebank statement and bank reconciliation form on the next page.
End of Month Instructions
In the Statements and Schedules booklet, complete the UnadjustedTrial Balance.
Prepare the adjusting entries. The adjusting entries should berecorded in the General Journal and posted to the respectiveaccounts in the General Ledger.
Merchandise Inventory: a physical inventorycount was taken which resulted in 1 more H2411-HP SCAN âJET 5300than in the perpetual inventory records. Record and post journalentry to add this item to the Merchandise Inventory account and tothe Subsidiary Ledger account.
Depreciation: calculate depreciation for thebuilding, office equipment and store equipment. Depreciationamounts should be calculated to the penny. See the December 1transactions for the depreciation method and expected life. Preparea Depreciation Schedule for the entire life of the office equipmentand store equipment. Use tables in the Depreciation Schedule in theLedgers and Schedules booklet. Record depreciation entry for themonth of December (one month only).
Uncollectable accounts: estimated uncollectableaccounts are ½ percent of the Accounts Receivable balance in theGeneral Ledger after all other monthly entries have beenposted. The allowance method is used to estimateuncollectable accounts.
Insurance: one month of the business insurancehas expired.
Store and Office Supplies: a physical count wastaken of the store supplies and $500 is remaining. A physical countwas taken of the office supplies and $575 is remaining.
Bond amortization: record the bond interestpayable and amortization of the discount for the month. Use theeffective interest method to amortize the premium. Round results tothe nearest penny. Prepare an amortization schedule for the entirelife of the bonds. A form is provided in the Ledgers and Schedulesbooklet.
Payroll: accrue the payroll expense from thelast pay period, December 28, to December 31. Each employee worked20 hours. The amount of the accrued payroll is immaterial;therefore, accrued taxes do not need to be calculated. Credit thesum of the two salaries expense accounts to Salaries Payable.
Income tax: the corporate Income tax for themonth of $285.
Customer Returns: You estimate that 5% of saleswill be returned next year. The estimated cost this merchandise is60% of sales.
After the Adjusting entries have been journalized and posted,prepare an Adjusted Trial Balance. The Adjusted Trial Balance isthe basis for all of your financial statements.
Prepare a Schedule of Accounts Receivable, Schedule of AccountsPayable and Schedule of Merchandise Inventory. Make sure the totalsof these schedules are equal to their general ledger accountbalance.
Prepare a Multiple-Step Income Statement, Statement of RetainedEarnings, Classified Balance Sheet, and Statement of Cash Flowsusing the indirect method. To model the formatting, each of thefinancial statements has a couple of the first line titles filledin with a dollar sign to serve as an indicator as to where to writethe dollar amount that corresponds to that line. Make sure to usedouble lines at the grand totals and to use appropriate dollarsigns at the correct places. Proper formatting is very important.The forms for the financial statements are in the Statements andSchedules booklet.
Record the entry to close the temporary accounts and post to theledger.
Prepare a Post-Closing Trial Balance in the form located in theStatements and Schedules booklet.
To complete this practice set, you will:
Account for current liabilities.
Journalize corporate transactions.
Prepare financial statements for corporation.
Journalize debt transactions.
Prepare statement of cash flows.
Three journal entries are requiredeach payroll period: 1) record the payroll, 2) record payments ofthe total net pay, and 3) record the employerâs payroll taxes.
December Transactions
December 1 | Sale of 5,000 shares of common stock for $35 per share. Articlesof incorporation authorized 40,000 shares of $20 par common stock.A check is received for the proceeds of this sale. Remember totrack the number of shares of outstanding stock. | ||||||||||||||||||||||||||||||||||||
December 1 | Acquire land with a fair market value of $25,000 in exchange for1,100 shares of its $20 par common stock. | ||||||||||||||||||||||||||||||||||||
December 1 | Issue $100,000, 7% (contract rate), 10-year bond that paysinterest annually at an effective interest rate of 8% (marketrate). A check is received for the proceeds of this issuance. Round this calculation to the nearest penny. | ||||||||||||||||||||||||||||||||||||
December1 | Make a deposit using the deposit ticket below. Include all ofthe checks received to date. Remember to record this deposit inthe checkbook.
| ||||||||||||||||||||||||||||||||||||
December 1 | Issue Check #1 for $180,000 to Rapid Buildersfor a building. The building will be depreciated over 40 yearsusing straight-line depreciation. Salvage value is $20,000. | ||||||||||||||||||||||||||||||||||||
December 1 | Issue Check #2 for $12,000 to Hom Furniture foroffice equipment. Office equipment will be depreciated usingdouble-declining balance. The expected life of the equipment is 5years. | ||||||||||||||||||||||||||||||||||||
December 1 | Issue Check #3 for $450 to MyFavorite CPAs fordrafting the articles of incorporation. Charge this expense toOrganization Expense account. | ||||||||||||||||||||||||||||||||||||
December 1 | Issue Check #4 for $20 to Wisconsin Departmentof Revenue for a sellerâs permit. Charge this expense toMiscellaneous Administrative Expense account. | ||||||||||||||||||||||||||||||||||||
December 1 | Purchase store equipment for $30,000 from Foreign Photo Supply,invoice #444, terms net 10. Store equipment will be depreciatedusing double-declining balance. The expected life of the equipmentis 5 years. | ||||||||||||||||||||||||||||||||||||
December 1 | Issue Check #5 for $150.00 to Samantha Jones,the petty cash fund custodian, to establish a petty cash fund. | ||||||||||||||||||||||||||||||||||||
December 1 | Issue Check #6 for $1,440 to Best Insurance topay for a 12-month business insurance policy effective December1. | ||||||||||||||||||||||||||||||||||||
December 1 | Purchase office supplies for $2,300 and store supplies for$1,000 from Photo Equipment Unlimited, invoice #6000, terms net10. | ||||||||||||||||||||||||||||||||||||
December 1 | Purchase inventory from Photo Equipment Unlimited, invoice#6101. The cost of each item sold must be calculated by usingFIFO inventory valuation method.
| ||||||||||||||||||||||||||||||||||||
December 2 | Purchase inventory from Foreign Photo Supply, invoice#23655.
| ||||||||||||||||||||||||||||||||||||
December 2 | Purchase inventory from Printers Unlimited, invoice #20455.
| ||||||||||||||||||||||||||||||||||||
December 3 | Sell merchandise to Mason Photo, invoice #1000, Terms n/30.
| ||||||||||||||||||||||||||||||||||||
December 5 | Sell merchandise to General City Hospital, invoice #1001, Terms2/10, n/30.
| ||||||||||||||||||||||||||||||||||||
December 6 | Purchase inventory from Photo Equipment Unlimited, invoice#6300.
| ||||||||||||||||||||||||||||||||||||
December 9 | Sell merchandise to Sandy Murray, invoice #1002, Terms n/30.
| ||||||||||||||||||||||||||||||||||||
December 10 | Issue Check #7 to Foreign Photo Supply forinvoice #444, dated December 1. | ||||||||||||||||||||||||||||||||||||
December 10 | Issue Check #8 to Photo Equipment Unlimited forthe amount due on invoices #6000 and #6101. Both invoices weredated December 1. | ||||||||||||||||||||||||||||||||||||
December 11 | Return item purchased on invoice #23655 to Foreign PhotoSupply.
| ||||||||||||||||||||||||||||||||||||
December 12 | Issue Check #9 to Foreign Photo Supply for theamount due on invoice #23655 less returned item on December 11. | ||||||||||||||||||||||||||||||||||||
December 12 | Issue Check #10 to Printers Unlimited for theamount due on invoice #20455, December 2. | ||||||||||||||||||||||||||||||||||||
December 13 | Receive payment from Mason Photo in payment of invoice#1000. |
December 14 Make a deposit using the depositticket below. Include the checks received from last deposit through today. Rememberto record this deposit in the checkbook.
MY Bank | ||
Eau Claire, WI | ||
Amount | ||
Chippewa Valley Photo, Inc. | Cash | |
December 14 | Checks | |
Deposit Ticket | ||
Total | ||
December 14 | Complete Payroll Register for hours worked December 1-14. Samantha Jones, Office Salary Expense for 88 hours. IssueCheck #11. Jennifer Sells, Sales Salary Expense for 86 hours. IssueCheck #12. NOTE: Overtime is paid at time and one-half for hours workedover 80. Post earnings to Employeesâ Earnings Records. Journalize payroll in the General Journal. Record the checks in the Cash Payments Journal. | ||||||||||||||||||||||||||||||||||||||||||||||||
December 15 | Receive payment from General City Hospital for invoice #1001,less the discount taken. | ||||||||||||||||||||||||||||||||||||||||||||||||
December 16 | Sandy Murray Photo returns item purchased on invoice #1002.Issue credit to Sandy Murray Photo. The quantity and total salecost amounts are entered in the Cost of Merchandise Sold columns inthe Merchandise Inventory Subsidiary Ledger as negativenumbers.
| ||||||||||||||||||||||||||||||||||||||||||||||||
December 18 | Sell merchandise to Robot Industries, invoice #1003. Termsn/30.
| ||||||||||||||||||||||||||||||||||||||||||||||||
December 20 | Account for the cash sale of the following merchandise tovarious cash customers:
| ||||||||||||||||||||||||||||||||||||||||||||||||
December 21 | Purchase inventory from Photo Equipment Unlimited, invoice#6400.
|
December 21 | Purchase inventory from Foreign Photo Supply, invoice#24798.
| ||||||||||||||||||||||||||||||||||||
December 21 | Purchase inventory from Printers Unlimited, invoice #22544.
| ||||||||||||||||||||||||||||||||||||
December 22 | Sell merchandise to Mason Photo, invoice #1004, Terms n/30.
| ||||||||||||||||||||||||||||||||||||
December 22 | Sell merchandise to General City Hospital, invoice #1005, Terms2/10, n/30.
| ||||||||||||||||||||||||||||||||||||
December 23 | Mason Photo returns item purchased on invoice #1000. Issuecredit memo to Mason Photo. This item must be put back into theinventory account.
|
December 23 | Return defective camera to Photo Equipment Unlimited. Thequantity and total sale cost amounts are entered in the Purchasescolumns in the Merchandise Inventory Subsidiary Ledger as negativenumbers.
| ||||||||||||||||||||||||||||||||||||||
December 23 | Sell merchandise to Robot Industries, invoice #1006. Termsn/30.
| ||||||||||||||||||||||||||||||||||||||
December 24 | Receive payment from Mason Photo for invoice #1004, less thecredit for return of camera. | ||||||||||||||||||||||||||||||||||||||
December 28 | Purchase 100 shares of treasury common stock for $2,100. Issuecheck #13 to Up & Down Investment, Inc. forpayment. | ||||||||||||||||||||||||||||||||||||||
December 28 Make a deposit using thedeposit ticket below. Include the checks received on
December 15, 20 and 24th. Remember to record thisdeposit in the checkbook.
MY Bank | ||
Eau Claire, WI | ||
Amount | ||
Chippewa Valley Photo, Inc. | Cash | |
December 28 | Checks | |
Deposit Ticket | ||
Total | ||
December 28 | Complete Payroll Register for hours worked December 15-28. Samantha Jones, Office Salary Expense for 82 hours. IssuedCheck #14. Jennifer Sells, Sales Salary Expense for 88 hours. IssuedCheck #15. NOTE: Overtime is paid at time and one-half for hours workedover 80. Post earnings to Employeesâ Earnings Records. Journalize payroll in the General Journal. Record the checks in the Cash Payments Journal. |
December 30 | The Board of Directors declare a 1/2% Stock Dividend toshareholders on record on December 30. The market price of thestock is $22.00 per share. | ||||||||
December 31 | Issue Check #16 to reimburse petty cash for thefollowing expenditures:
| ||||||||
December 31 | Issue the certificates for the dividends declared on December30. |
December 31 Prepare Bank Reconciliation. Record the adjustments in the GeneralLedger using Miscellaneous Administrative Expenses for any bankcharges credited by the bank and update the checkbook balance. Thebank statement and bank reconciliation form on the next page.
End of Month Instructions
In the Statements and Schedules booklet, complete the UnadjustedTrial Balance.
Prepare the adjusting entries. The adjusting entries should berecorded in the General Journal and posted to the respectiveaccounts in the General Ledger.
Merchandise Inventory: a physical inventorycount was taken which resulted in 1 more H2411-HP SCAN âJET 5300than in the perpetual inventory records. Record and post journalentry to add this item to the Merchandise Inventory account and tothe Subsidiary Ledger account.
Depreciation: calculate depreciation for thebuilding, office equipment and store equipment. Depreciationamounts should be calculated to the penny. See the December 1transactions for the depreciation method and expected life. Preparea Depreciation Schedule for the entire life of the office equipmentand store equipment. Use tables in the Depreciation Schedule in theLedgers and Schedules booklet. Record depreciation entry for themonth of December (one month only).
Uncollectable accounts: estimated uncollectableaccounts are ½ percent of the Accounts Receivable balance in theGeneral Ledger after all other monthly entries have beenposted. The allowance method is used to estimateuncollectable accounts.
Insurance: one month of the business insurancehas expired.
Store and Office Supplies: a physical count wastaken of the store supplies and $500 is remaining. A physical countwas taken of the office supplies and $575 is remaining.
Bond amortization: record the bond interestpayable and amortization of the discount for the month. Use theeffective interest method to amortize the premium. Round results tothe nearest penny. Prepare an amortization schedule for the entirelife of the bonds. A form is provided in the Ledgers and Schedulesbooklet.
Payroll: accrue the payroll expense from thelast pay period, December 28, to December 31. Each employee worked20 hours. The amount of the accrued payroll is immaterial;therefore, accrued taxes do not need to be calculated. Credit thesum of the two salaries expense accounts to Salaries Payable.
Income tax: the corporate Income tax for themonth of $285.
Customer Returns: You estimate that 5% of saleswill be returned next year. The estimated cost this merchandise is60% of sales.
After the Adjusting entries have been journalized and posted,prepare an Adjusted Trial Balance. The Adjusted Trial Balance isthe basis for all of your financial statements.
Prepare a Schedule of Accounts Receivable, Schedule of AccountsPayable and Schedule of Merchandise Inventory. Make sure the totalsof these schedules are equal to their general ledger accountbalance.
Prepare a Multiple-Step Income Statement, Statement of RetainedEarnings, Classified Balance Sheet, and Statement of Cash Flowsusing the indirect method. To model the formatting, each of thefinancial statements has a couple of the first line titles filledin with a dollar sign to serve as an indicator as to where to writethe dollar amount that corresponds to that line. Make sure to usedouble lines at the grand totals and to use appropriate dollarsigns at the correct places. Proper formatting is very important.The forms for the financial statements are in the Statements andSchedules booklet.
Record the entry to close the temporary accounts and post to theledger.
Prepare a Post-Closing Trial Balance in the form located in theStatements and Schedules booklet.
Related questions
Stores is authorized to issue10,000
shares of common stock. During aâ two-month period,Captain
completed theseâ stock-issuance transactions:
| Jan | 23 | Issued 2,600 shares of $2.50 par common stock for cash of $15.00 per share. | |||||||||||||||||||||||||||||
| Feb | 12 | Received inventory with a market value of $20,000 and equipment with market | |||||||||||||||||||||||||||||
| value of $45,000 for 3,300 shares of the $2.50 par common stock. Requirements
Requirement 1. Journalize the transactions. Begin by journalize the transaction onJanuaryJanuary 23. â(Record debitsâ first, then credits. Exclude explanations from any journalâ entries.)
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