Question

Prepare in proper form a classified Statement of Financial Position as at December 31, 2019

On October 31st, 2019, the company declared $30,000 cash dividends. The dividends were paid on February 12, 2020.

On February 15th, 2019, the company declared a 20% common stock dividends when market share price was $30. The shares were distributed on November 15th, 2019 when market share price was $32.

On December 31, 2019, the company declared a two-for-one stock split on common shares.

Client/Customer List was purchased on December 31, 2019. It is expected to have an economic life of 3 years.

The furniture was purchased on Jan 1, 2017. It has a useful life of 10 years, with no expected residual value. Company uses the straight-line depreciation method. No depreciation was recorded for year 2019.

Jolly Party Inc. TRIAL BALANCE 31-Dec-19 Account name Debit Credit 16,000 50,000 14,000 12,000 14,000 5,000 4,000 187,000 15,000 20,000 10,000 Accounts Payable Accounts Receivable Accumulated Depreciation - Furniture Accumulated Other Comprehensive Income Advertising Expense Allowance for Doubtful accounts Bad debt expense Cash Client List Common Shares (unlimited number of shares authorized, 1,000 issued) Contributed Surplus Depreciation Expense-Furniture Furniture Goodwill Income tax expense Income tax payable Note Payable (instalments of $10,000/year) Preferred Shares (non-cumulative $2,100,000 of shares authorized, 2,000 issued) Prepaid Rent Rent Expense Retained Earnings, beginning of year Salary Expense Service Revenue Unearned Service Revenue 70,000 40,000 30,000 10,000 20,000 35,000 9,000 35,500 80,000 109,000 332,500 9,000 Totals 563500 563500

Answer 1

1,462 answers

	Adjusting entries :
	Date	Account titles and explanation					Debit	Credit
	2019
	Oct 31.	Dividends					30000
		Dividend payable						30000
		(Dividend recorded)
	Feb 15. & Nov 15.	Stock dividend		(1000*20%*30)			6000
		Common shares		(1000*20%*20)				4000
		Contributed surplus			(Plug)			2000
		(Par value=20000/1000=$20 per share)
		(Stock dividend declared and paid)
	Dec 31.	No entry required
		Number of shares will double and par value will halve.
		Number of shares=[1000+(1000*20%)]*2=(1000+200)*2=2400 shares
		Par value=20/2=$10 per share
	Dec 31.	No adjustment required
		(Amortization will start from next year since acquiaition was on
		iast day of current year)
	Dec 31.	Depreciation expense-Furniture				(70000/10)	7000
		Accumulated depreciation-Furniture						7000
		(Depreciation recorded)
		Revised trial balance
						Debit	Credit
	Accounts payable						16000
	Accounts receivable					50000
	Accumulated depreciation-Furniture			(14000+7000)			21000
	Accumulated other comprehensive income						12000
	Advertising expense					14000
	Allowance for doubtful accounts						5000
	Baddebt expense					4000
	Cash					187000
	Client list					15000
	Common shares			(20000+4000)			24000
	Contributed surplus			(10000+2000)			12000
	Depreciation expense-Furniture					7000
	Furniture					70000
	Goodwill					40000
	Income tax expense					30000
	Income tax payable						10000
	Note payable						20000
	Preferred shares						35000
	Prepaid rent					9000
	Rent expense					35500
	Retained earnings,beginning of year						80000
	Salary expense					109000
	Service revenue						332500
	Unearned service revenue						9000
	Dividends					30000
	Dividend payable						30000
	Stock dividend					6000
	Totals					606500	606500
a)		Statement of earnings
						$	$
	Revenue:
	Service revenue						332500
	Expenses:
	Advertising expense					14000
	Baddebt expense					4000
	Depreciation expense-Furniture					7000
	Rent expense					35500
	Salary expense					109000	169500
	Income before taxes						163000
	Less: Income tax expense						30000
	Net income						133000
b)		Statement of changes in shareholder's equity
				Common shares	Preferred shares	Contributed surplus	Retained earnings	Accumulated other comprehensive income	Total
	Beginning balance			20000	35000	10000	80000	12000	157000
	Stock dividend			4000		2000	-6000		0
	Cash dividend						-30000		-30000
	Net income						133000		133000
	Ending balance			24000	35000	12000	177000	12000	260000