On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:
Accounts Debit Credit Cash $ 25,100 Accounts Receivable 46,200 Allowance for Uncollectible Accounts $ 4,200 Inventory 20,000 Land 46,000 Equipment 15,000 Accumulated Depreciation 1,500 Accounts Payable 28,500 Notes Payable (6%, due April 1, 2019) 50,000 Common Stock 35,000 Retained Earnings 33,100 Totals $ 152,300 $ 152,300
During January 2018, the following transactions occur:
January 2. Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date.
January 6. Purchase additional inventory on account, $147,000.
January 15. Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800.
January 23. Receive $125,400 from customers on accounts receivable.
January 25. Pay $90,000 to inventory suppliers on accounts payable.
January 28. Write off accounts receivable as uncollectible, $4,800.
January 30. Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500.
January 31. Pay cash for monthly salaries, $52,000.
1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $3,000 and a two-year service life.
2. At the end of January, $11,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected.
3. Accrued interest expense on notes payable for January.
4. Accrued income taxes at the end of January are $13,000.
5. By the end of January, $3,000 of the gift cards sold on January 2 have been redeemed.
Need journal entries for the following 5.
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:
| Accounts | Debit | Credit | ||||
| Cash | $ | 25,100 | ||||
| Accounts Receivable | 46,200 | |||||
| Allowance for Uncollectible Accounts | $ | 4,200 | ||||
| Inventory | 20,000 | |||||
| Land | 46,000 | |||||
| Equipment | 15,000 | |||||
| Accumulated Depreciation | 1,500 | |||||
| Accounts Payable | 28,500 | |||||
| Notes Payable (6%, due April 1, 2019) | 50,000 | |||||
| Common Stock | 35,000 | |||||
| Retained Earnings | 33,100 | |||||
| Totals | $ | 152,300 | $ | 152,300 | ||
During January 2018, the following transactions occur:
January 2. Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date.
January 6. Purchase additional inventory on account, $147,000.
January 15. Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800.
January 23. Receive $125,400 from customers on accounts receivable.
January 25. Pay $90,000 to inventory suppliers on accounts payable.
January 28. Write off accounts receivable as uncollectible, $4,800.
January 30. Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500.
January 31. Pay cash for monthly salaries, $52,000.
1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $3,000 and a two-year service life.
2. At the end of January, $11,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected.
3. Accrued interest expense on notes payable for January.
4. Accrued income taxes at the end of January are $13,000.
5. By the end of January, $3,000 of the gift cards sold on January 2 have been redeemed.
Need journal entries for the following 5.
Related questions
On January 1, 2018, the general ledger of ACME Fireworksincludes the following account balances:
| Accounts | Debit | Credit | ||||
| Cash | $ | 25,100 | ||||
| AccountsReceivable | 46,200 | |||||
| Allowance forUncollectible Accounts | $ | 4,200 | ||||
| Inventory | 20,000 | |||||
| Land | 46,000 | |||||
| Equipment | 15,000 | |||||
| AccumulatedDepreciation | 1,500 | |||||
| AccountsPayable | 28,500 | |||||
| Notes Payable (6%,due April 1, 2019) | 50,000 | |||||
| Common Stock | 35,000 | |||||
| RetainedEarnings | 33,100 | |||||
| Totals | $ | 152,300 | $ | 152,300 | ||
During January 2018, the following transactions occur:
January 2. Sold gift cards totaling $8,000. The cards areredeemable for merchandise within one year of the purchasedate.
January 6. Purchase additional inventory on account,$147,000.
January 15. Firework sales for the first half of the month total$135,000. All of these sales are on account. The cost of the unitssold is $73,800.
January 23. Receive $125,400 from customers on accountsreceivable.
January 25. Pay $90,000 to inventory suppliers on accountspayable.
January 28. Write off accounts receivable as uncollectible,$4,800.
January 30. Firework sales for the second half of the month total$143,000. Sales include $11,000 for cash and $132,000 on account.The cost of the units sold is $79,500.
5. Prepare a classified balance sheet as ofJanuary 31, 2018.
6. Record closing entries.
Financial Accounting, 14th Edition
Final_Multiple choice
1. The primary objectives of control over inventory are
a.safeguarding the inventory from damage and maintainingconstant observation of the inventory
b.reporting inventory in the financial statements
c.maintaining constant observation of the inventory andreporting inventory in the financial statements
d.safeguarding inventory from damage and reporting inventory inthe financial statements
2. When merchandise sold is assumed to be in the order in whichthe purchases were made, the company is using
a.first-in, last-out
b.first-in, first-out
c.last-in, first-out
d.average cost
3. Use the information below to answer the followingquestion.
The Boxwood Company sells blankets for $60 each. The following wastaken from the inventory records during May. The company had nobeginning inventory on May 1.
| Date | Blankets | Units | Cost |
| May 3 | Purchase | 5 | $20 |
| 10 | Sale | 3 | |
| 17 | Purchase | 10 | $24 |
| 20 | Sale | 6 | |
| 23 | Sale | 3 | |
| 30 | Purchase | 10 | $30 |
Assuming that the company uses the perpetual inventory system,determine the gross profit for the sale of May 23 using the FIFOinventory cost method.
a.$72
b.$108
c.$180
d.$120
4.If merchandise inventory is being valued at cost and thepurchase price is steadily falling, which method of costing willyield the largest net income?
a.FIFO
b.LIFO
c.average cost
d.weighted average
5.Stevens Company started the year with an inventory cost of$145,000. During the month of January, Stevens purchased inventorythat cost $53,000. January sales totaled $140,000. Estimated grossprofit is 35%. The estimated ending inventory as of January 31is
a.$58,000
b.$107,000
c.$69,300
d.$91,000
6. Which one of the following below is not anelement of internal control?
a.risk assessment
b.cost-benefit considerations
c.monitoring
d.information and communication
7. A check drawn by a company for $340 in payment of a liabilitywas recorded in the journal as $430. What entry is required in thecompany's accounts?
a.debit Cash; credit Accounts Receivable
b.debit Accounts Receivable; credit Cash
c.debit Accounts Payable; credit Cash
d.debit Cash; credit Accounts Payable
8. A bank reconciliation should be prepared
a.to explain any difference between the company's balance perbooks with the balance per bank
b.by the company's bank
c.whenever the bank refuses to lend the company money
d.by the person who is authorized to sign checks
9.
Pilger Corporation has cash on hand at year-end of $201,000 anda negative cash flow from operations of $144,000. What is the ratioof cash to monthly cash expenses?
a.1.4 months
b.7.2 months
c.12.0 months
d.16.8 months
10. When does an account become uncollectible?
a.when accounts receivable is converted into notesreceivable
b.when a discount is availed on notes receivable
c.at the end of the fiscal year
d.there is no general rule for when an account becomesuncollectible
11.On the balance sheet, the amount shown for the Allowance forDoubtful Accounts is equal to the
a.total estimated uncollectible accounts as of the end of theyear
b.sum of all accounts that are past due
c.total of the accounts receivables written-off during theyear
d.uncollectible accounts expense for the year
12. Allowance for Doubtful Accounts has a debit balance of $600at the end of the year (before adjustment), and an analysis ofaccounts in the customers ledger indicates uncollectiblereceivables of $13,000. Which of the following entries records theproper adjusting entry for bad debt expense?
a.debit Allowance for Doubtful Accounts, $600; credit Bad DebtExpense, $600
b.debit Bad Debt Expense, $600; credit Allowance for DoubtfulAccounts, $600
c.debit Bad Debt Expense, $13,600; credit Allowance for DoubtfulAccounts, $13,600
d.debit Bad Debt Expense, $12,400; credit Allowance for DoubtfulAccounts, $12,400
13. When comparing the direct write-off method and the allowancemethod of accounting for uncollectible receivables, a majordifference is that the direct write-off method
a.is used primarily by small companies with few receivables
b.is used primarily by large companies with many receivables
c.uses an allowance account
d.uses a percentage of sales method to estimate uncollectibleaccounts
14. Accumulated Depreciation
a. is used to show the amount of cost expiration ofintangibles
b.is used to show the amount of cost expiration of naturalresources
c.is the same as Depreciation Expense
d.is a contra asset account
15. Equipment with a cost of $220,000 has an estimated residualvalue of $30,000 and an estimated life of 10 years or 19,000 hours.It is to be depreciated by the straight-line method. What is theamount of depreciation for the first full year, during which theequipment was used 2,100 hours?
a.$19,000
b.$21,000
c.$30,000
d.$22,000
16. The process of transferring the cost of metal ores and otherminerals removed from the earth to an expense account is called
a.depreciation
b.depletion
c.amortization
d.deferral
17. The Bacon Company acquired new machinery with a price of$15,200 by trading in similar old machinery and paying $12,700. Theold machinery originally cost $9,000 and had accumulateddepreciation of $5,000. In recording this transaction, BaconCompany should record
a.a loss of $1,500
b.the new machinery at $12,700
c.a gain of $1,500
d.the new machinery at $16,700
18. Assuming a 360-day year, when a $50,000, 90-day, 9%interest-bearing note payable matures, total payment will be
a.$54,500
b.$4,500
c.$1,125
d.$51,125
19. Which of the following is required to be withheld fromemployee's gross pay?
a.only federal income tax
b.both federal and state unemployment compensation taxes
c.only state unemployment compensation tax
d.only federal unemployment compensation tax
20. Hall Company sells merchandise with a one-year warranty. Inthe current year, sales consisted of 4,500 units. It is estimatedthat warranty repairs will average $10 per unit sold, and 30% ofthe repairs will be made in the current year and 70% in the nextyear. In the current year's income statement, Hall should showwarranty expense of
a.$45,000
b.$0
c.$13,500
d.$31,500
21. Which of the following below is not acharacteristic of a limited liability company?
a.limited legal liability
b.unlimited life
c.taxable
d.moderate ability to raise capital
22. Seth and Beth have original investments of $50,000 and$100,000 respectively in a partnership. The articles of partnershipinclude the following provisions regarding the division of netincome: interest on original investment at 10%; salary allowancesof $27,000 and $18,000, respectively; and the remainder to bedivided equally. How much of the net income of $42,000 is allocatedto Seth?
a.$20,000
b.$23,000
c.$32,000
d.$0
23. Which of the following is not a rightpossessed by common stockholders of a corporation?
a.the right to share in assets upon liquidation
b.the right to receive a minimum amount of dividends
c.the right to sell their stock to anyone they choose
d.the right to vote in the election of the board ofdirectors
24. The charter of a corporation provides for the issuance of100,000 shares of common stock. Assume that 45,000 shares wereoriginally issued and 5,000 were subsequently reacquired. What isthe amount of cash dividends to be paid if a $2 per share dividendis declared?
a.$80,000
b.$100,00
c.$90,000
d.$10,000
25.Which statement below is not a reason for acorporation to buy back its own stock?
a.to increase the shares outstanding
b.for supporting the market price of the stock
c.resale to employees
d.bonus to employees
Sanford Company
The Sanford Company had the following balance sheet as ofDecember 31, 20x2. The transactions for the first three months of20x3 are also presented along with other information about specificaccounts.
Sanford Company
Balance Sheet
December 31, 20x2
ASSETS | LIABILITIES | |||
Cash | $ 57,000 | Accounts Payable | $ 34,000 | |
Marketable Securities | 8,000 | Wages Payable | 11,200 | |
Accounts Receivable | 75,000 | Taxes Payable | 8,000 | |
Uncollectible Accounts | -2,000 | Short-Term Notes Payable | 12,000 | |
Inventory | 84,000 | Interest Payable | 800 | |
Supplies | 7,000 | Unearned Revenue | 13,000 | |
Prepaid Insurance | 6,000 | |||
Total Current Assets | $235,000 | Total Current Liabilities | $ 79,000 | |
Land | $114,000 | Long-Term Notes Payable | $ 20,000 | |
Equipment | 227,000 | Bonds Payable | 100,000 | |
Accumulated Depreciation | -87,000 | Mortgage Payable | 320,000 | |
Building | 560,000 | Total Long-Term Liabilities | $440,000 | |
Accumulated Depreciation | -130,000 | |||
Intangible Assets | 70,000 | STOCKHOLDER EQUITY | ||
Total Long-Term Assets | $754,000 | Capital Stock | $100,000 | |
Paid in Capital | 250,000 | |||
Retained Earnings | 120,000 | |||
Total Stockholders Equity | $470,000 | |||
Total Assets | $989,000 | Total Liabilities & Equity | $989,000 |
Additional Information
Accounts Receivable
The following table indicates the historical breakout ofaccounts receivable
Days | Current | 30 to 60 | 60 to 90 | Over 90 |
Percent of Balance | 50% | 30% | 15% | 5% |
Percent Collectible | 95% | 90% | 80% | 60% |
The company uses the gross method of recording all sales onaccounts.
Marketable Securities
The interest rate earned on marketable securities is 6.0%.
Inventory
In 20x2, the company had used the gross method to recordinventory purchases on account. As of January 1, 20x3, the companyis using the net method to record inventory purchases onaccount.
Prepaid Insurance
A three-year insurance policy in the amount of $7,200 waspurchased on July 1, 20x2.
Equipment
Equipment is depreciated at an average amount of $3,000 permonth.
Building
The current building was purchased on January 1, ten years agoand has an expected 40-year life at which time its salvage valuewill be $40,000.
Intangible Assets
Intangible assets were initially valued at $80,000 and are beingdepreciated over 40 years at $2,000 per year.
Short-Term Notes Payable
The one-year short-term notes payable are due on March 1, 20x3.The interest rate is 8.0% which is payable at maturity.
Long-Term Notes Payable
The long-term notes payable are due in ten years. The interestrate on the notes is 7.5%.
Bonds Payable
The bonds payable mature in twenty years. The interest rate onthe bonds is 7.0%.
Mortgage Payable
The following amortization schedule can be used for the January,20x3 mortgage payment on the 10.0%, 30- year mortgage.
Month | Payment | Interest | Principal | Balance |
January | $3,500 | $2,667 | $833 | $320,000 $319,167 |
Capital Stock
The capital stock is common stock at $10 par value with 50,000shares authorized, and 10,000 shares issued and outstanding.
Journal Entries
Jan 1 Equipment with a historical cost of $10,000 and anaccumulated depreciation of $3,000 was sold for $6,000
Jan 2 Equipment with a historical cost of $20,000and an accumulated depreciation of $18,000 was disposed of with anadditional disposal cost of $1,300.
Jan 2 Sanford Company borrowed $24,000 on ashort-term discounted 90 day, 9.0% noninterest-bearing notepayable.
Jan 3 Sanford Company paid $18,000 in advance for the 6 monthrental of a warehouse.
Jan 3 Equipment with a historical cost of $50,000 and anaccumulated depreciation of $40,000 was traded for new similarequipment valued at $75,000. Sanford Company received $14,500 as atrade in for the old equipment, paid $7,500 and established a 7.5%long-term note payable for the balance due.
Jan 4 Equipment with a historical cost of $35,000 and anaccumulated depreciation of $20,000 was traded for new dissimilarequipment valued at $60,000. The salvage value of the old equipmentwas $5,000 and the trade in value was $7,000. Sanford paid $4,000for the equipment and established a 7.5% long-term note payable forthe balance due.
Jan 5 Sanford Company declared a dividend of $2.00 per sharepayable on February 10, 20x3 to all shareholders of record onJanuary 20, 20x3.
Jan 6 The amount in wages payable and taxes payable was paid infull.
Jan 8 Sanford Company paid a total of $18,000 on accountspayable and was able to take advantage of $1,500 in purchasediscounts for early payment. The original inventory purchase wasrecorded at the full amount (gross method).
Jan 15 Cash sales for two weeks equaled $22,000. The cost ofinventory sold equaled $12,000.
Jan 20 Supplies in the amount of $4,200 were purchased forcash.
Jan 21 A customer who owed $10,000 on an account receivable,agreed to sign a 60-day note receivable with an interest rate of8.0%. The interest earned on the note will be paid at the maturitydate of the note receivable.
Jan 29 The balance of $14,500 in accounts payable was paid.
Jan 30 The company purchased $45,000 of inventory on accountwith the terms 2/10, net 30. The company has decided to switch tothe net method for all inventory purchases on account beginning in20x3.
Jan 31 Cash sales for two weeks equaled $24,000. The cost ofinventory sold equaled $13,000.
Jan 31 Sales on account for the month of January totaled $55,000with the terms 2/10, net 30. The cost of inventory sold equaled$26,000.
Jan 31 The unearned revenue represented the rental of specialequipment that was used by another company on weekends. $4,000 ofthe revenue was earned in January.
Jan 31 Collected cash of $48,000 from the accounts receivable,plus there was a total sales discount of $1,000 for the payment ofreceivables within the ten day discount period.
Jan 31 Salary expenses in the amount of $14,000 and tax expensesin the amount of $8,000 were paid.
Jan 31 The utility bill of $2,500 was paid.
Jan 31 A bill in the amount of $3,600 for advertising expensesincurred during the month of January was received.
Jan 31 The monthly payment for January of the mortgage payablewas made.
Feb 1 The Sanford Company made a new issue of 5,000 shares ofcommon stock for cash. The market price of the stock was $40 pershare.
Feb 2 A petty cash fund in the amount of $500 wasestablished.
Feb 3 The Sanford Company bought back 1,000 shares of its owncommon stock for $40 per share.
Feb 8 The purchase of inventory on account on Jan 30th was paidin full.
Feb 10 Sanford Company sold the note receivable from Jan 21st tothe bank, which discounted the note at 12.0%.
Feb 15 Cash sales for two weeks equaled $20,000. The cost ofinventory sold equaled $11,000.
Feb 20 The company purchases $20,000 of inventory on accountwith the terms 2/10, net 30.
Feb 27 The company paid an advertising bill for $5,600 whichincluded the February advertising expense of $2,000 plus thebalance due from January.
Feb 28 Cash sales for two weeks equaled $25,000. The cost ofinventory sold equaled $14,000.
Feb 28 The monthly payment for February of the mortgage payablewas made.
Feb 28 The company collected cash of $59,000 from the accountsreceivable, plus there was a total sales discount of $1,100 for thepayment of receivables within the ten day discount period.
Feb 28 Salary expenses in the amount of $21,000 and tax expensesin the amount of $9,000 were paid.
Feb 28 The utility bill of $2,100 was paid.
Feb 28 Sales on account for the month of February totaled$60,000 with the terms 2/10, net 30. The cost of inventory soldequaled $30,000.
Mar 1 The short-term note payable that was due on March 1st plusall appropriate interest was paid.
Mar 3 The amount of the petty cash fund was increased by$200.
Mar 10 Supplies in the amount of $2,700 were purchased forcash.
Mar 15 Cash sales for two weeks equaled $27,000. The cost ofinventory sold equaled $15,000.
Mar 20 Sanford Company reissued 300 shares of its own stock for$42 per share.
Mar 21 The bank notified Sanford Company that the notereceivable from January 21st had not been paid. The bank collectedthe amount of the note plus the interest due and a $20 protest feefrom Sanford Company. Sanford Company charged the full amount ofthe note receivable plus related fees against the customerâsaccount receivable balance.
Mar 25 The company purchased $50,000 of inventory on accountwith the terms 2/10, net 30.
Mar 28 The purchase of inventory on account on Feb 20th was paidin full.
Mar 29 The petty cash fund had $150 in cash and receipts intotal amounts for the following expense categories:entertainment$160, travel $170, postage $90, and supplies $115. Thepetty cash fund was replenished.
Mar 30 Cash sales for two weeks equaled $20,000. The cost ofinventory sold equaled $11,000.
Mar 30 The unearned revenue represented the rental of specialequipment that was used by another company on weekends. $9,000 ofthe revenue was earned in March.
Mar 31 Sales on account for the month of March totaled $67,000with the terms 2/10, net 30. The cost of inventory sold equaled$36,000.
Mar 31 Salary expenses in the amount of $16,000 and tax expensesin the amount of $7,000 were paid.
Mar 31 Collected cash of $70,000 from the accounts receivable,plus there was a total sales discount of $1,200 for the payment ofreceivables within the ten day discount period.
Mar 31 A warehouse building was acquired for $250,000. Closingcosts on the acquisition equaled $7,000, and there were costs of$10,300 to get the building into an operational condition to beused by Sanford Company. Employee salaries specifically related tothe building renovation were an additional $5,400. This salaryexpense was part of the normal monthly expenses and would have beenincurred regardless of whether the employees worked on thewarehouse or did other activities within the company. SanfordCompany paid $100,000 in cash as a down payment with the balancedue being added to the mortgage payable account.
Mar 31 The utility bill of $3,000 was paid.
Mar 31 Sanford Company repaid the 90 day discounted note payablefrom January 2nd in full.
Mar 31 The equipment depreciation entry for the three months of20x3 was completed.
Mar 31 The depreciation entry for the building for the months ofJanuary, February, and March was entered.
Mar 31 The amortization of intangible assets for the threemonths of 20x3 was completed.
Mar 31 The bad debt expense based on the aging schedule foraccounts receivable was determined for the three month period.Note: The total balance in accounts receivable should be$76,853.
Mar 31 Salary expenses incurred during the month of March butnot yet paid equaled $8,400 and tax expenses equaled $2,800.
Mar 31 A physical inventory of supplies indicated a total amountof $5,000 of supplies still on hand.
Mar 31 A customer sent an advance payment of $10,000 for the useof special equipment in April and May.
Mar 31 The amount of rent expense for the warehouse for thefirst three months of 20x3 was recognized.
Mar 31 Sanford Company provided services to a customer in theamount of $3,000 during March but a bill has not been sent.
Mar 31 The amount of insurance expense for the first threemonths of 20x3 was recognized.
Mar 31 The amount of interest earned on marketable securitiesfor the three months of 20x3 was recognized.
Mar 31 The amount of interest expense for the total long-termnotes payable for the first three months of 20x3 wasrecognized.
Mar 31 The amount of interest expense for the bonds payable forthe three months of 20x3 was recognized.
Mar 31 The monthly payment for March of the mortgage payable wasmade.
1. Develop a balance sheet in good form as of March 31, 20x3 forSanford Company. (Please with exact answers)
