Question

#10 Bond Homework Due Problem 199 A Challenging Cash Flow Problem- The following balances are from the beginning of the year for Sam's Town Company as of December 31 2018: EIE Celsa v /p Jutle tlExp 5000 19,.000 5000 120,000 40,000 2,000 60,000 (3 junkets) 3,000 200,000 60,000 10,000 92,000 5,000 5,000 8,000 100,000 (0,000 60,000 101,000 Cash Accounts Receivable Allowance for Doubtful Accts Inventory Prepaid Rent Equipment Accumulated Depreciation Security Deposit Accounts Payable Wages Payable Interest Payable Taxes Payable Note Payable Common Stock ($1 each) Retained Earnings 0, D00 Casn Mare puoT eoit nt Exp Cred. nt. y N/P 00,000 9o000 X t07 9o00X4/2-4500 For 2019: Received all beginning accounts receivable and paid all beginning accounts payable Bought five Junkets at $25,000 each, 20% down, rest next year Sold six Junkets, $50,000 each, 60% down, 40% next year Paid cash wages of $40,000 and at the end of the year owed employees $2,000 Paid utilities of $12,000 and advertising of $10,000. On June 30st, they paid the annual payment of $10,000 principal plus interest on the Note Payable. The note was taken out on June 30h of the previous year. (Can you figure out the interest rate?) On August 1, purchased a new wagon for delivery of the junkets for $20,000. On December 1, they declared and paid a dividend of $5,000. On December 31, the company borrowed $75,000 from the bank and used the proceeds to purchase a piece of land. The note is payable in five years. The interest at 6% is payable annually on December 31 of each year starting in 2019. During the year they paid $8,000 in rent (rent is $1,000 per month) The company uses the FIFO inventory flow assumption The depreciation for the year was $40,000 The company estimates that 4% of its accounts receivable will never be collected.During the year the company wrote off $1,500 in bad accounts The tax rate is 30%. During the year the company paid all of last year's taxes and50% of Intrale 101. 2019 taxes. Prepare Journal Entries, T-Accounts, and Financial Statements for the year 2019.

Problem 104 A Challenging Cash Flow Problem- The following balances are from the beginning of the year for Sam's Town Company as of 2018: s Town Company as of December 31, 19000 6130 12/31 2131 5000 5.000 NP 1.000 / 1 .00 BE Topo Cash 120,000 Accounts Receivable 40,000 Allowance for Doubtful Accts 2,000 Inventory 60,000 (3 junkets) Prepaid Rent 3,000 Equipment 200,000 Accumulated Depreciation 60,000 Security Deposit 10,000 6130 Accounts Payable 92,000 Wages Payable 5,000 Interest Payable 5,000 Taxes Payable 8,000 Note Payable 100,000 Common Stock ($1 each) 60,000 Retained Earnings 101,000 For 2019: 10% -usoo Received all beginning accounts receivable and paid all beginning accounts payable Bought five Junkets at $25,000 each, 20% down, rest next year Sold six Junkets, $50,000 each, 60% down, 40% next year Paid cash wages of $40,000 and at the end of the year owed employees $2,000 Paid utilities of $12,000 and advertising of $10,000. On June 30", they paid the annual payment of $10,000 principal plus interest on the Note Payable. The note was taken out on June 30 of the previous year. (Can you figure out the interest rate?) On August 1, purchased a new wagon for delivery of the junkets for $20,000. On December 1, they declared and paid a dividend of $5,000. On December 31, the company borrowed $75,000 from the bank and used the proceeds to purchase a piece of land. The note is payable in five years. The interest at 6% is payable annually on December 31 of each year starting in 2019. During the year they paid $8,000 in rent (rent is $1,000 per month) The company uses the FIFO inventory flow assumption The depreciation for the year was $40,000 The company estimates that 4% of its accounts receivable will never be collected. During the year the company wrote off $1,500 in bad accounts. The tax rate is 30%. During the year the company paid all of last year's taxes and 50% of 2019 taxes. 10% intrest rate Prepare Journal Entries, T-Accounts, and Financial Statements for the year 2019.

Answer 1

Sam's Town Company Journal Enteries Trans. Particulars 1 Cash a/c Dr. To Accounts Receivable (Cash from debtors) Debit in $ Credit in $ 40000 40000 2 92000 Accounts Payable a/c Dr. To Cash (Creditors paid) 92000 3 125000 Inventory a/c Dr. To Cash To Accounts Payable (Inventory purchased) 25000 100000 180000 120000 Cash a/c Dr. Accounts Receivable a/c Dr. To Sales (Sales on account) 50000 x 6 = 300000 300000 x 0.60 = 180000 300000 135000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 135000 37000 5000 Wages Expense a/c Dr. Wages Payable a/c Dr. To Cash To Wages Payable (Salary expense recorded) 40000 2000 12000 10000 Utilities Expense a/c Dr. Advertising Expense a/c Dr. To Cash (Expenses paid) 22000 7 10000 5000 5000 Note Payable a/c Dr. Interest Payable a/c Dr. Interest Expense a/c Dr. To Cash (Note Payable installment paid) 100000 x x% x 6/12 = 5000 x = 10% 20000 5000 Interest Expense a/c Dr. To Interest Payable (Accrued interest) 5000 20000 Wagon a/c Dr. To Cash (Wagon purchased for delivery) 20000 9 Dr 5000 Dividend a/c To Cash (Dividend paid) 5000 10 75000 Land a/c Dr. To Note Payable (Land purchased) 75000 11 Dr. 8000 Prepaid Rent a/c To Cash Rent paid in advance 8000 Dr. 12000 Rent Expense a/c To Prepaid Rent To Rent Payable (Rent expensed) 11000 1000 12 40000 Depreciation Expense a/c Dr. To Accum. Depre- Equip (To record depreciation) 40000 1500 Allowance for doubtful accts Dr. To Accounts Receivable (Uncollectibles written off) 1500 4300 Bad Debts a/c Dr. 4300 To Allowance for Doubtful accts (To estimate bad debts) 120000 x 4% = 4800 - 500 = 4300 Allowance for Doubtful accts = 2000 - 1500 = 500 8000 11910 Income Tax Payable a/c Income Tax Expense a/c Dr. To Income Tax Payable To Cash (Income tax recorded) 13410 / 2 = 6705 5955 13955

Worksheet For the period ending 31.12.2019 4800 Particulars Cash Accounts Receivable Allowance for doubtful accts Inventory Prepaid Rent Land Equipment Accumulated Depreciation Wagon Security Deposit Accounts Payable Wages Payable Interest Payable Taxes Payable Rent Payable Note Payable Common Stock Retained Earnings Dividend Sales Cost of goods sold Wages Expense Utilities Expense Advertising Expense Interest Expense Rent Expense Depreciation Expense Bad Debts Income Tax Expense Totals Previous period Current Enteries Year end Balances Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 120000 220000 245955 94045 40000 120000 41500 118500 2000 1500 4300 60000 125000 135000 50000 3000 8000 11000 75000 75000 200000 200000 60000 40000 100000 20000 20000 10000 10000 92000 92000 100000 100000 5000 5000 2000 2000 5000 5000 5000 5000 8000 8000 5955 5955 1000 1000 100000 10000 75000 165000 60000 60000 101000 101000 5000 5000 300000 300000 135000 135000 37000 37000 12000 12000 10000 10000 10000 10000 12000 12000 40000 40000 4300 4300 11910 11910 433000 433000 966710 966710 844755 844755

300000 -135000 165000 Statement of Income For the period ending 31.12.2019 Sales Cost of goods sold Gross Profit Wages Expense 37000 Utilities Expense 12000 Advertising Expense 10000 Interest Expense 10000 Rent Expense 12000 Depreciation Expense 40000 Bad Debts 4300 125300 39700 -11910 27790 Income Tax Expense @ 30% Net Income Statement of Retained Earnings For the period ending 31.12.2019 Beginning Balance 101000 Net Income 27790 128790 Dividend -5000 123790

Amounts in $ Amounts in $ Balance Sheet As at 31.12.2019 Assets Current Assets Cash Accounts Receivable Allowance for doubtful accts Inventory Amounts in $ Amounts in $ Liabilities Current Liabilities 94045 Accounts Payable 118500 Wages Payable -4800 Interest Payable 50000 257745 Taxes Payable Rent Payable 100000 2000 5000 5955 1000 113955 Non Current Liabilities 75000 Note Payable 165000 Non Current Assets Land Equipment Accumulated Depreciation Wagon Security Deposit Total Assets 200000 - 100000 100000 Shareholders Equity 20000 Common Stock 10000 Retained Earnings 462745 Total Liabilities & Equity 60000 123790 183790 462745