ACCTG 211 Study Guide - Quiz Guide: Professional Liability Insurance, Promissory Note, Income Statement

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28 Sep 2018

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Take-home quiz #1 (10 points: on january 2, 2015, dewey cheetham started an engineering firm called cheetham & Record the following january transactions in general journal form: January 2: mr. cheetham invested ,000 of cash, ,000 of office equipment and ,000 of office supplies in the business in exchange for 100 shares of capital stock. 3: purchased a one-year (january 2014 through december 2014) professional liability insurance policy for ,200. 5: purchased an additional of office supplies for cash. 8: billed client abc ,000 for engineering services and collected this amount. 15: paid the secretary his semi-monthly salary of ,000. 16: purchased ,000 of office supplies on account. 20: purchased a used car for business purposes for ,000. He paid ,000 down and signed a promissory note for the balance. 21: purchased and paid for an office computer, ,500. 28: paid the telephone bill received on january 20. 29: paid for maintenance costs for the used car.

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Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations.

a.Lita Lopez invested $70,000 cash and office equipment valued at $10,000 in the company.

b.The company purchased an office suite for $40,000 cash.

c.The company purchased office equipment for $15,000 cash.

d.The company purchased $1,200 of office supplies and $1,700 of office equipment on credit.

e.The company paid a local newspaper $500 cash for printing an announcement of the officeâs opening.

f.The company completed a financial plan for a client and billed that client $2,800 for the service.

g.The company designed a financial plan for another client and immediately collected a $4,000 cash fee.

h.Lita Lopez withdrew $3,275 cash from the company for personal use.

i.The company received $1,800 cash as partial payment from the client described in transaction f.

j.The company made a partial payment of $700 cash on the equipment purchased in transaction d.

k.The company paid $1,800 cash for the office secretaryâs wages for this period.

.Create the following table . Assets=Liabilities+EquityCash+Accounts Receivable+Office Supplies+Office Equipment+Office Suite=Accounts Payable+L. Lopez, CapitalâL. Lopez, Withdrawals+RevenuesâExpenses

Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.

Check (1) Ending balances: Cash, $14,525; Expenses, $2,300; Accounts Payable, $2,200 2.Determine the companyâs net income.

crimsonshark725

For the past several years, Aaron Jones has operated aconsulting business from his home on a part-time basis. As ofDecember 1, 20X1, Aaron decided to move to rented quarters andincorporate his business as Progress Consulting Inc. ProgressConsulting entered into the following transactions during December:1st Aaron Jones invested the following assets in the business:cash, $50,000; supplies, $10,000; and office equipment, $30,000.Mr. Jones received stock in an amount equal to his investment inthe corporation. 2nd Paid $9,000 for rent for December 20X1 throughFebruary 28, 20X2. 3rd Paid $12,000 for a one year premium onproperty and casualty insurance. The policy covers the periodDecember 1, 20X1 to November 30, 20X2. 4th Received $16,000 cashfrom a client as an advance payment for services to be performed inthe future. 5th Purchased additional office equipment on accountfrom Payne Company for $10,000. 10th Paid $7,500 for a newspaperadvertisement that ran in todayâs paper. 11th Paid Payne Company$3,000 for part of the debt incurred on December 5. 12th Billedclients for services performed on account, $5,800. 17th Receivedcash payment from client for services performed on this date,$14,000. 18th Paid $6,000 for supplies. 20th Billed clients forservices performed on account, $15,000. 24th Received cash paymentfrom client for services performed on this date, $2,000. 25thReceived cash from clients as payment on account, $3,000. 30th Paid$750 for utilities for December. 31st Paid cash dividend of$5,000

Journalize each of the above transactions.

Post theses Journal entries tothe ledger.Prepare anunadjusted trial balance as of December 31,20X1.Journalize and post the adjustingentries using the following information:

a. Insurance expired during December is $1,000 Supplies on hand on December 31 are valued at$4,500. Depreciation ofoffice equipment for December is $1,000. Rent expired during December is $3,000.Determined that the company hadperformed $4,000 of the services for which it was paid in advanceon December 4th. f. Employeewages were left unpaid in the amount of $1,700 for the month ofDecember. The employees will be paid the first week inJanuary. Services wereperformed for a client on December 31 in the amount of $2,100. Theclient did not pay, nor has the client been billed. (hint: thistransaction has not yet been journalized.) Prepare an adjusted trial balance.Using the adjusted trial balance,prepare an income statement, a statement of retained

earnings, and a balance sheet. Journalize and post the closing entries.Prepare a post-closing trialbalance.

peacheel524

FNEC 1600

Comprehensive Problem â Due Date: December 1, 2017

Fall 2017

Your score on the following problem will carry a weight of 13% in determining your overall course grade. A hard copy of your solution must be submitted by December 1^st. Any submission after the beginning of class on that date is subject to a 10 point per day late point reduction.

Description:

You have been charged with preparing year-end adjusting entries along with a multiple-step income statement and a classified balance sheet for Fat Tire, Inc., a wholesaler of bicycles and bicycle parts. The financial statements will cover the year ended December 31, 2016. A December 31 bank reconciliation, an unadjusted trial balance, and other information to help with the adjusting entries follow.

Fat Tire, Inc.
Bank Reconciliation
31-Dec-16
Balance per Bank Statement				$297,000
Deposits in Transit		$4,500
Bank Error (See note 1 below)		1,200
Outstanding Checks		(2,000)		3,700
Adjusted Balance				$300,700

Balance per Fat Tire's Books				$300,000
Interest Earned per bank statement		$450
Book Error (See note 2 below)		1,170
NSF Check (See note 3 below)		(500)
December bank service charges		(420)		700
Adjusted Balance				$300,700

*note 1:* The bank incorrectly charged Fat Tire's account for a fee
that belonged to another client of the bank.
*note 2:* A check for $130 to pay a cash miscellaneous operating
expense was incorrectly recorded as $1,300 on Fat Tire's books.
*note 3:* The bank returned a bad check deposited by Fat Tire
that represented a receipt of payment from one of Fat Tire's
customers.
Fat Tire, Inc.
Unadjusted Trial Balance
December 31, 2016
	Debit		Credit
Accounts Payable			50,000
Accounts Receivable	425,700
Accumulated Depreciation (Equip)			4,305
Accumulated Depreciation (F & F)			23,600
Advertising Expense	18,000
Allowance for Doubtful Accounts			$1,500
Cash	$300,000
Common Stock			180,000
Cost of Goods Sold	2,613,000
Depreciation Expense	6,455
Equipment	10,000
Furniture & Fixtures	50,000
Income Tax Expense	228,323
Insurance Expense	7,500
Interest Revenue			5,200
Inventory	325,000
Miscellaneous Operating Expense	2,500
Note Payable			35,000
Payroll Tax Expense	23,680
Prepaid Insurance	10,500
Rent Expense	168,000
Rent Revenue			4,000
Retained Earnings			242,553
Salary Expense	264,500
Sales Discounts	42,000
Sales Returns	30,000
Sales Revenue			4,020,000
Supplies	2,000
Supplies Expense	17,000
Unearned Rent			2,000
Utilities Expense	24,000
Totals	4,568,158		4,568,158

Information related to adjusting entries:

No entries have been made for the December 31 bank reconciliation. Use the bank reconciliation provided to prepare the necessary entries.

Fat Tire pays employees and all payroll related liabilities semi-monthly. Each payment of payroll related liabilities is for the previous pay period. Thus, Fat Tire needs to accrue salaries and payroll related expenses for the December 16^th-31^st pay period. The following information was obtained for the last pay period of the year.

Gross Pay = $12,000
Federal Income Tax withholding rate = 20%
FICA rate for employees and employers = 8%
State unemployment taxes for the pay period = $250
Federal unemployment taxes for the pay period = $75

Fat Tire maintains a liability account for federal income tax withheld from employees and a separate liability account for its own corporate income taxes.

Based on a count taken on December 31^st, the amount of supplies that remain on hand is $500.

Unbilled sales as of December 31 totaled $5,000. The cost of those bikes sold was $2,000.

The Allowance for Doubtful accounts is adjusted at the end of each year using the percentage of sales method. Fat Tires estimates that 1% of adjusted net sales will go uncollected.

The Prepaid Insurance balance represents an $18,000 one-year policy that began on July 1. The company adjusts any prepaid items on a monthly basis.

Fat Tire decided to sublease some of its rental space. On October 1, the company received $6,000 in advance from a neighboring business for 3 monthâs rent. The lease period began on October 1. Fat Tire adjusts rent related accounts on a monthly basis.

Furniture and Fixtures were acquired on January 2, 2012 at a cost of $50,000. Management selected a 10 year life and a $2,000 residual value. Fat Tire depreciates Furniture and Fixtures on a monthly basis using the straight-line method of depreciation.

The Equipment was purchased on January 2, 2015 at a cost of $10,000. Management selected a productive life of 6,000 hours and a $1,000 residual value. Fat Tire depreciates Equipment on a monthly basis using the units-of-production method. The equipment was used 200 hours in December.

The Note Payable was issued on December 1, 2016. The terms of the note state that the principal and interest is to be paid two years from the issuance date. The interest rate stated on the note is 6 percent.

Accrued advertising expenses incurred but not yet paid totaled $1,000 on December 31.

Fat Tire makes quarterly payments for its income taxes. No entry has been made for the fourth quarter income taxes of 2016 which will be paid in 2017. To make this entry, you will have to determine the Income Before Tax for the year. One-fourth of that amount represents income earned in the fourth quarter. Fat Tireâs corporate tax rate is 40%.

Required:

Prepared the adjusting journal entries required on December 31, 2016.

Prepared a multiple-step income statement for the year ended December 31, 2016. Make sure your operating expenses are listed in descending order. Use the Income statement example that I provided as supplemental notes to chapter 6 as a guide.

Prepare a classified balance sheet as of December 31, 2016. List your current assets in order of liquidity.

Note: If it helps, prepare a supplemental schedule like we completed in problem 4.6A. It may help organize your data prior to preparing the financial statements.

Appropriate Use of Office Hours:

Office hours are held so that students can ask questions about assignments and/or concepts. For assignments that are to be submitted for a grade, it is unreasonable for you to ask âis my assignment correctâ or âcan you find my mistakesâ. That is why the assignments are graded. A reasonable request is to ask âhow toâ questions if you are stuck on a step or âcan you help me understand this data or this requirementâ. We (Iâm speaking for the TAs as well) want to help, but we are not there to complete your assignments for you.

Print Formats: Be sure to use the print preview feature in Excel and adjust your spreadsheets so that they can be easily read. Points will be deducted if I have to work just to read your printouts. Use normal size fonts and make sure that when reading left to right, you do not have sheets starting on one page and finishing on another. In other words, pretend Iâm your client.

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ACCTG 211 Study Guide - Quiz Guide: Professional Liability Insurance, Promissory Note, Income Statement

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