Question

Issued 700,000 shares of common stock for $9,800,000, which is the par value of the stock. January 10: Acquired equipment in exchange for $1,500,000 cash and a $3,000,000 note payable. The note is due in 10 years. February 10: Paid $31,200 for a business insurance policy covering the two-year period beginning on March 1. February 14: Purchased $950,000 of supplies on account. March 1: Paid wages of $199,000. March 15 Billed $2,590,000 for services rendered on account. April 3: Paid $130,000 of the amount due on the supplies purchased on February 14. April 17: Billed $1,800,000 for services rendered on account. May 1: Paid wages of $160,000. May 7 Collected $230,500 of the outstanding accounts receivable. May 8: Received bill and paid $98,700 for utilities May 24 Paid $37,000 for sales commissions. June 4: Made the first payment on the note issued on January 10. The payment consisted of $18,000 of interest and $120,000 to be applied against the principal of the note. June 18 Billed customers for $669,000 of services rendered June 29 Collected $500,000 on accounts receivable. July 10: Purchased $42,000 of supplies in cash. Aug 25 Paid $160,000 for administrative expenses. Sept 23: Paid $34,500 for warehouse repairs. October 1: Paid wages of $60,000. Nov 23: Purchased supplies for $550,000 on account Dec 19 Collected $155,000 in advance for services to be provided in December and January of the following year. Dec 30 Declared and paid a $30,000 dividend to shareholders.

Requirement a. Journalize the transactions for the year.

Requirement b. Post the journal entries to​ t-accounts. Use the dates as posting references for the journal entries to post each entry to the relevant​ accounts, then compute the unadjusted balance of each account. Label the unadjusted balances with Unadj.. Bal. ​(For accounts with a​ $0 ending​ balance, select​ "Unadj. Bal." and enter​ "0" on the normal balance side of the​ t-account.) Review the journal entries prepared in Requirement a.

Requirement c. Prepare an unadjusted trial balance as of December 31. ​(Exclude any accounts with a zero balance from the trial​ balance.) Review the t-accounts prepared in Requirement b.

Requirement d. Journalize and post adjusting entries to​ t-accounts. Begin by preparing the adjusting journal entries​ (AJEs). ​(Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

1. AJE​ i: Ten months of the insurance policy had expired by the end of the year.

2. AJE​ ii: Depreciation for the equipment is $225,000.

3. AJE iii. The company provided a portion of the services related to the advance collection of December 19. The company recognized $47,000

4. AJE iv. An additional $60,000 of interest had accrued on the note by the end of the year. as service revenue for services performed.

5. AJE v. Feng He Corporation accrued wages in the amount of $210,000.

Post the adjusting entries to​ t-accounts.

​First, enter the unadjusted balances you determined in Requirement b. Label the unadjusted balances with Unadj. Bal and enter a​ "0" for any zero balances. Then post the adjusting journal entries to the​ t-accounts to obtain the adjusted balances. Use the adusting journal entry numbers​ (AJE i. through AJE​ v.) as posting references to post each adjusting entry to the relevant​ accounts, then compute the adjusted ending balance of each account. Label the adjusted balances with Adj. Bal. ​(For accounts with a​ $0 unadjusted or adjusted​ balance, select​ "Unadj. Bal." or​ "Adj. Bal." where appropriate and enter​ "0" on the normal balance side of the​ t-account.)

Review the t-accounts prepared in Requirement b.

Review the adjusting journal entries prepared above.

Requirement e. Prepare an adjusted trial balance as of December 31. ​(Exclude any accounts with a zero balance from the trial​ balance.) Review the t-accounts prepared in Requirement d.

Requirement f. Prepare a​ single-step income statement and statement of​ stockholders' equity for the current year and a classified balance sheet as of the end of the year. Begin by preparing Feng He ​Corporation's single-step income statement for the year ended December 31. ​(If a box is not used in the​ statement, leave the box​ empty; do not select a label or enter a​ zero.) Review the adjusted trial balance prepared in Requirement e.

Complete Feng He ​Corporation's statement of​ stockholders' equity for the year ended December 31. ​(Enter a​ "0" for any beginning or ending balances in the statement. If a box is not used in the​ statement, leave the box​ empty; do not enter a zero. Use a minus sign or parentheses to show a decrease in any of the​ accounts.)

Review the adjusted trial balance prepared in Requirement e.

Complete Feng He ​Corporation's statement of​ stockholders' equity for the year ended December 31. ​(Enter a​ "0" for any beginning or ending balances in the statement. If a box is not used in the​ statement, leave the box​ empty; do not enter a zero. Use a minus sign or parentheses to show a decrease in any of the​ accounts.) Review the adjusted trial balance prepared in Requirement e.

Complete Feng He ​Corporation's classified balance sheet as of the end of the year. ​(Use a minus sign or parentheses to show a decrease in any of the​ accounts.)

Requirement g. Journalize and post closing entries. Next, enter the adjusted balances from the adjusted trial balance prepared in Requirement e. Label the adjusted balances with Adj. Bal and enter a​ "0" for any zero balances. Then post the closing journal entries to the​ t-accounts to obtain the​ post-closing balances. Use the closing entry numbers​ (CJE1 through​ CJE4) as posting references to post each closing entry to the relevant accounts and compute the ending balance of each account. Label the ending balances with End. Bal.

Review the adjusted trial balance prepared in Requirement e.

Review the closing journal entries prepared above.

Requirement h. Prepare a​ post-closing trial balance as of December 31. ​(Exclude any accounts with a zero balance from the trial​ balance.)

Review the t-accounts prepared in Requirement g.

Answer 1

Financial Statements Journal Enteries Date Particulars Jan-01 Cash a/c Dr. To Common Stock (Common stock issued for cash) Debit in $ Credit in $ 9800000 9800000 Jan-10 Dr. 1800000 Equipment a/c To Cash To Note Payable (Equipment purchased) 1500000 300000 Feb-10 31200 Prepaid Insurance a/c Dr. To Cash ( 24 months insurance paid) 31200 950000 Feb-14 Supplies a/c Dr. To Accounts Payable (Supplies on account) 950000 Dr. 199000 Mar-01 Wages Expense a/c To Cash (Wages paid) 199000 2590000 Mar-15 Accounts Receivable a/c Dr. To Service Revenue (Services provided on account) 2590000 Dr. 130000 Apr-03 Accounts Payable a/c To Cash (Creditors paid) 130000 1800000 Apr-17 Accounts Receivable a/c Dr. To Service Revenue (Services provided on account) 1800000 Dr. 160000 May-01 Wages Expense a/c To Cash (Wages paid) 160000

Date Particulars May-07 Cash a/c Dr. To Accounts Receivable (Cash from debtors) Debit in $ Credit in $ 230500 230500 Dr. 98700 May-08 Uilities Expense a/c To Cash (Expense paid) 98700 37000 May-24 Sales Commission Expense a/c Dr. To Cash (Commission expense paid) 37000 120000 18000 Jun-04 Note Payable a/c Dr. Interest Expense a/c Dr. To Cash (Note Payable installment paid) 138000 Jun-18 669000 Accounts Receivable a/c Dr. To Service Revenue (Services provided on account) 669000 Dr. 500000 Jun-29 Cash a/c To Accounts Receivable (Cash from debtors) 500000 Jul-10 Dr. 42000 Supplies a/c To Cash (Supplies in cash) 42000 Dr. 160000 Aug-25 Administrative expense a/c To Cash (Expense paid) 160000 Dr. 34500 Sep-23 Repairs Expense a/c To Cash (Expense paid) 34500 Dr. 60000 Oct-01 Wages Expense a/c To Cash (Wages paid) 60000 550000 Nov-23 Supplies a/c Dr. To Accounts Payable (Supplies on account) 550000 155000 Dec-19 Cash a/c Dr. To Unearned Service Revenue (2 Months advance from client) 155000 Dr. 30000 Dec-30 Dividend a/c To Cash (Dividend paid) 30000

Adjusting Enteries Date Particulars Dec-31 Insurance Expense a/c Dr. To Prepaid Insurance (Insurance expensed) 31200 x 10/24 Debit in $ Credit in $ 13000 13000 225000 Dec-31 Depreciation Expense a/c Dr. To Accum. Depre - Equip. (To record depreciation) 225000 Dr. 47000 Dec-31 Unearned Service Revenue a/c To Service Revenue (Revenue earned) 47000 60000 Dec-31 Interest Expense a/c Dr. To Interest Payable (Interest accrued) 60000 210000 Dec-31 Wages Expense a/c Dr. To Wages Payable (Wages accrued) 210000 Closing Enteries Date Particulars Dec-31 Income Summary a/c Dr. To Wages Expense To Vilities Expense To Sales Commission Expense To Interest Expense To Administrative expense To Repairs Expense To Insurance Expense To Depreciation Expense (Expense accounts closed) Debit in $ Credit in $ 1275200 629000 98700 37000 78000 160000 34500 13000 225000 5106000 Dec-31 Service Revenue a/c Dr. To Income Summary (Revenue accounts closed) 5106000 Dr. 3830800 Dec-31 Income Summary a/c To Retained Earnings (Profits transferred) 3830800 Dr. 30000 Dec-31 Retained Earnings a/c To Dividend (Dividends charged) 30000

Worksheet For the period ending December 31 Unadjusted Adjustments Adjusted Post Closing Particulars Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Cash 8065100 8065100 8065100 Accounts Receivable 4328500 4328500 4328500 Supplies 1542000 1542000 1542000 Prepaid Insurance 31200 13000 18200 18200 Equipment 1800000 1800000 1800000 Accum. Depre - Equip. 225000 225000 225000 Accounts Payable 1370000 1370000 1370000 Interest Payable 60000 60000 60000 Wages Payable 210000 210000 210000 Unearned Service Revenue 155000 47000 108000 108000 Note Payable 180000 180000 180000 Common Stock 9800000 9800000 9800000 Retained Earnings 3800800 Dividend 30000 30000 Service Revenue 5059000 47000 5106000 Wages Expense 419000 210000 629000 Uilities Expense 98700 98700 Sales Commission Expense 37000 37000 Interest Expense 18000 78000 Administrative expense 160000 160000 Repairs Expense 34500 34500 Insurance Expense 13000 13000 Depreciation Expense 225000 225000 Totals 16564000 16564000 555000 555000 17059000 17059000 15753800 15753800 60000 5106000 Statement of Income For the period ending December 31 Service Revenue Less: Wages Expense Uilities Expense Sales Commission Expense Interest Expense Administrative expense Repairs Expense Insurance Expense Depreciation Expense Net Income 629000 98700 37000 78000 160000 34500 13000 225000 1275200 3830800 Statement of Retained Earnings For the period ending December 31 Net Income 3830800 Dividend -30000 3800800

Amounts in $ Amounts in $ Balance sheet As at December 31 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Insurance Amounts in $ Amounts in $ Liabilities Current Liabilities 8065100 Accounts Payable 4328500 Interest Payable 1542000 Wages Payable 18200 13953800 Unearned Service Revenue 1370000 60000 210000 108000 1748000 Non Current Assets Equipment Accum. Depre - Equip 180000 1800000 -225000 Non Current Liabilities Note Payable 1575000 Shareholders Equity Common Stock Retained Earnings 15528800 Total Liabilities & Equity 9800000 3800800 13600800 15528800 Total Assets