ACC 305 Lecture Notes - Lecture 33: Financial Statement, Income Statement, Retained Earnings

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17 Aug 2019

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Common-size analysis requires users to compute the percentage amounts of each item on the financial statement relative to a base amount. Items on the balance sheet are expressed as a percentage of total assets. Items on the income statement are expressed as a percentage of net revenues. Common-size analysis over several periods facilitates the identification of trends or changes in the relationships between items. Accounts store recorded monetary information from transactions, events, and arrangements. Chart of accounts comprehensive list of all accounts and their assigned account numbers. T-accounts format used to represent ledger accounts. Debit left side of a t-account. Credit right side of a t-account. Double-entry system for each transaction, event, or arrangement, the total dollar amount of debits must always equal the total dollar amount of credits. Permanent accounts the asset, liability, and shareholders" equity accounts whose balances at the end of the period are carried forward to the next period.

Related Questions

The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances: Account Title Debits Credits Cash 33,500 Accounts receivable 10,000 Equipment 15,000 Accumulated depreciation 4,500 Salaries payable 6,000 Common stock 41,000 Retained earnings 7,000 Total 58,500 58,500 The following is a summary of the transactions for the year: Sales of services, $102,000, of which $30,600 was on credit. Collected on accounts receivable, $22,000. Issued shares of common stock in exchange for $7,500 in cash. Paid salaries, $37,000 (of which $6,000 was for salaries payable). Paid miscellaneous expenses, $20,000. Purchased equipment for $10,000 in cash. Paid $2,425 in cash dividends to shareholders. Accrued salaries at year-end amounted to $740. Depreciation for the year on the equipment is $1,500. Required: 2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed. 3. Post the transactions, adjusting and closing entries into the appropriate t-accounts. 4. Prepare an unadjusted trial balance. 6. Prepare an adjusted trial balance. 7-a. Prepare an income statement for 2018. 7-b. Prepare a balance sheet as of December 31, 2018. 9. Prepare a post-closing trial balance.

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The general ledger of the Karlin Company, a consulting company,at January 1, 2013, contained the following account balances:Account Title Debits Credits Cash 30,000 Accounts receivable 15,000Equipment 20,000 Accumulated depreciation 6,000 Salaries payable9,000 Common stock 40,500 Retained earnings 9,500________________________________________________________________________________ Total 65,000 65,000________________________________________________________________________________________________________________________________________________________________________________________________________ The following is a summaryof the transactions for the year: a. Sales of services, $100,000,of which $30,000 was on credit. b. Collected on accountsreceivable, $27,300. c. Issued shares of common stock in exchangefor $10,000 in cash. d. Paid salaries, $50,000 (of which $9,000 wasfor salaries payable). e. Paid miscellaneous expenses, $24,000. f.Purchased equipment for $15,000 in cash. g. Paid $2,500 in cashdividends to shareholders. 1. Accrued salaries at year-end amountedto $1,000. 2. Depreciation for the year on the equipment is$2,000.

3. Prepare the closing entries.

4. Post the opening balances, transactions, adjusting andclosing entries into the appropriate t-accounts

5. Prepare an unadjusted trial balance.

6. Prepare an adjusted trial balance.

7. Prepare an income statement for 2013.

8. Prepare a balance sheet as of December 31, 2013.

9. Prepare a post-closing trial balance.

Kurtz Fencing Inc. uses a job order cost system. The followingdata summarize the operations related to production for March, thefirst month of operations:

	a. Materials purchased on account,$28,610.
	b. Materials requisitioned andfactory labor used:

Job	Materials	Factory Labor
301	$2,810	$2,640
302	3,710	3,920
303	2,340	1,910
304	8,210	7,110
305	5,360	5,270
306	3,780	3,390
For general factory use	1,060	4,040

	c. Factory overhead costs incurredon account, $5,710.
	d. Depreciation of machinery andequipment, $1,910.
	e. The factory overhead rate is $55per machine hour. Machine hours used:

Job	Machine Hours
301	24
302	36
303	29
304	73
305	41
306	24
Total	227

	f. Jobs completed: 301, 302, 303and 305.
	g. Jobs were shipped and customerswere billed as follows: Job 301, $8,520; Job 302, $10,770; Job 303,$15,650.

Required:

Journalize the entries torecord the summarized operations. Record each item (items a-f) asan individual entry on March 31. Record item g as 2 entries. Referto the Chart of Accounts for exact wording of accounttitles.

Post the appropriate entries toT accounts for Work in Process and Finished Goods, using theidentifying letters as transaction codes. Insert memo accountbalances as of the end of the month. For grading purposes entertransactions in alphabetical order. Determine the correct endingbalance. The ending balance label is provided on the left side ofthe T account even when the ending balance is a credit. The unusedcell on the balance line should be left blank.

Prepare a schedule ofunfinished jobs to support the balance in the work in processaccount.*

Prepare a schedule of completedjobs on hand to support the balance in the finished goodsaccount.*

*Refer to the list of AmountDescriptions for the exact wording of the answer choices for textentries.

Chart of Accounts

CHARTOF ACCOUNTS

KurtzFencing Inc.

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
132	Work in Process
133	Factory Overhead
134	Finished Goods
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
181	Land
191	Machinery and Equipment
192	Accumulated Depreciation-Machineryand Equipment

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Wages Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
531	Selling Expenses
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
540	Administrative Expenses
561	Depreciation Expense-Machinery andEquipment
590	Miscellaneous Expense
710	Interest Expense

Amount Descriptions

AmountDescriptions
Balance of Work in Process, January30
Finished Goods, January 30 (Job305)
Job No. 301
Job No. 302
Job No. 303
Job No. 304
Job No. 305
Job No. 306

Journal

Shaded cells have feedback.

1. Journalize the entries to record the summarized operations.Record each item (items a-f) as an individual entry on March 31.Record item g as 2 entries. Refer to the Chart of Accounts forexact wording of account titles.

All transactions on this page must be entered (except for postref(s)) before you will receive Check My Work feedback.

PAGE 10

JOURNAL

Score: 117/225

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

Materials are recorded in the Materials Inventory account untilrequisitioned.

All direct costs: materials and labor are recorded in the Workin Process account.

All indirect costs are considered as overhead and are recordedin the Factory Overhead account.

Overhead is applied to Work in Process using a predeterminedoverhead rate.

The cost of completed jobs should be moved to the Finished Goodsaccount.

The cost of sold jobs should be moved to the Cost of Goods Soldaccount.

T Accounts

Shaded cells have feedback.

2. Post the appropriate entries to T accounts for Work inProcess and Finished Goods, using the identifying letters astransaction codes. Insert memo account balances as of the end ofthe month. For grading purposes enter transactions in alphabeticalorder. Determine the correct ending balance. The ending balancelabel is provided on the left side of the T account even when theending balance is a credit. The unused cell on the balance lineshould be left blank.

Work in Process
b		f
e
Bal.

Finished Goods
f		g
Bal.

Points:

6 / 12

Feedback

Check My Work

Post entries to the Work in Process T account and to theFinished Goods T account.

Schedule of Unfinished Jobs

Shaded cells have feedback.

3. Prepare a schedule of unfinished jobs to support the balancein the work in process account. Refer to the list of AmountDescriptions for the exact wording of the answer choices for textentries.

Question not attempted.

Score: 0/51

Kurtz Fencing Inc.

Schedule of Unfinished Jobs

1	Job	Direct Materials	Direct Labor	Factory Overhead	Total
2
3
4

Points:

0 / 12

Feedback

Check My Work

Include the direct materials, direct labor, and factory overheadfor each unfinished job.

Schedule of Completed Jobs

Shaded cells have feedback.

4. Prepare a schedule of completed jobs on hand to support thebalance in the finished goods account. Refer to the list of AmountDescriptions for the exact wording of the answer choices for textentries.

Kurtz Fencing Inc.

Schedule of Completed Jobs

1	Job	Direct Materials	Direct Labor	Factory Overhead	Total
2

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ACC 305 Lecture Notes - Lecture 33: Financial Statement, Income Statement, Retained Earnings

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