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GRADING: Worth up to 15 points. Carefully READ the requirements on page 2 first. Partially completed problems will earn no credit-that means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will earn at least 7.5 points. The remaining points are dependent upon the accuracy of your answers. Round amounts to the nearest dollar, if applicable. Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below. Jamukha Corporation Balance Sheet December 31, 2017 Assets Liabilities and Stockholders Equity 33,750 Accounts payable Cash Accounts receivable Allowance for doubtful accounts (2,000) Paid-in capital in excess of par Common stock Inventory Prepaid insurance Equipment A/D - Equipment 44,250 10,000 190,000 61,500 32,060 Common stock (S1 par) 64,500 Reained eamings 7,440 280,000 10,000) During 2018 the following transactions occurred: 1. Purchased S132,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. Sales of S3 45,000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was $190,500. Received $31,000 cash down payment for orders that will be shipped next year. Issued 15 year, $80,000 face value, 4.5% bonds on July 1 at 103. The 3. bonds were sold to yield an effective 4. . annual rate of 4.227885%, and they pay interest every January 1 and July I on account. 5. Collected $298,000 6. Paid general expenses of $49,250.7. Paid $175,170 for amount due to supplier. 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1, Jamukha Corp. sold for $25,000 cash equipment which originally cost $98,000. Accumulated depreciation for this oquipment as of December 31, 2017, was $64,000. This transaction is exempt from sales tax 10, issued 1,400 shares of$100 par, 7% preferred stock for S2 10,000 cash. 1. Purchased equipment on July 1, 2018, for $230,000 cash. 12. Purchased 750 shares of Jamukha Corp. common stock from a disgruntled shareholder for $42 per share. 13. Recorded salaries and payroll taxes. Employees gross salaries were $80,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of$6,000 were withheld, and state income taxes (sm of $3,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts. 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Journal Entries: 15. Straight-line depreciation with a 8 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on Jd , 2018 (#11) is depreciated using double declining balance with a useful life of 20 years and a 5 n en : ,vage value. (Hint: The equipment was purchased midway through the year) 16. Accrue bond interest payable and amortize bood discount/premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17. The prepaid insurance relates to a policy purchased on December 31, 2017. This insurance expires at a rate of S310 per month. Record as a general expense. 18. Jamukha estimates that 6.5% of accounts receivable are uncollectible. 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REQUIRED: Print out the solution pages for the general jourmal, ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil. Enter the transactions numbered 1-14 in the general journal provided on the following pages. Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts. a. b. Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet. c.d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entnes (#15-19), prepare a 12-column worksheet similar to worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete. To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements- just complete them on the worksheet.) e. Name EXTRA CREDIT III SOLUTION Journal: Requirement (a) General Journal Debit Credit a. l a.2. a.3. a.4 a.5 a.6. a.8. 29 a.10 a. 12 a.13a. 14 General Ledger: Requirement (b) CASH CR BALANCE 33.750 33,750 DR Item 3 31,000 64,750 DER ACCOUNTS RECEIVABLE DR CR BALANCE Beginning 32,060 32,060 DR DR BALANCE ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning CR 2,000 2,000 CR DR CR BALANCE INVENTORY 64,500 64,500 DR BeginningPREPAID INSURANCE DR CR BALANCE Beginning 7,440 7,440 DR EQUIPMENT Beginning DR CR BALANCE 280,000 280,000 DR DR CR 110,000 110,000 CR BALANCE ACCUM DEPRECIATION- EQUIPMENT Beginning General Ledger: Requirement (b) continued DR CR BALANCE ACCOUNTS PAYABLE Beginning 44,250 44,250 CR SALARIES PAYABLE DR CR BALANCE SALES TAX PAYABLE DR CR BALANCE FICA PAYABLE DR CR BALANCE FIT PAYABLE DR CR BALANCECR BALANCE DR SIT PAYABLE DR CR BALANCE FUTA PAYABLE DR CR BALANCE SUTA PAYABLE DR CR BALANCE UNEARNED REVENUE DR CR BALANCE BONDS PAYABLE DR CR BALANCE PREMIUM ON BONDS PAYABLE General Ledger: Requirement (b) continued DR CR BALANCE COMMON STOCK (SI PAR) Beginning 10,000 10,000 CR DR CR BALANCE PREFERRED STOCK (S100 PAR) PAID-IN CAPITAL IN EXCESS OF PAR- COMMON STOCK Beginning BALANCE CR 190,000 190,000 CR DR PAID-IN CAPITAL IN EXCESS OF PAR- PREFERRED STOCK DR CR BALANCE DR CR BALANCE TREASURY STOCKRETAINED EARNINGS Beginning DR CR BALANCE 61,500 61,500 CR SALES REVENUE DR CR BALANCE COST OF GOODS SOLD DR CR BALANCE GENERAL EXPENSES DR CR BALANCE SALARIES EXPENSH DR CR BALANCHE PAYROLL TAX EXPENSE DR CR BALANCHE LOSS ON DISPOSAL DR CR BALANCEJamukha Corporation Worksheet: Re quire ment (c), (d) For the Ye Ended December 31, 2018 Unadjusted Adjusted Income Retained Balance Sheet Trial BalanceAdjustments Trial Balance CR Statement arnings Stateme Account Title DR CR DR CR DR DR CR DR CR DR CR Totals Net loss Totals Ending retained earnings TotalsJamukha Corporation Statement of Cash Flows: Requirement (e) For the Year Ended December 31, 2018 CASH FROM OPERATING ACTIVITIES: Increases Decreases Net Cash From Operating Activities CASH FROM INVESTNG ACTIVITIES Net Cash From Investing Activities CASH FROM FINANCING ACTIVITIES: Net Cash From Financing Activities NET INCREASE IN CASH Cash at beginning of year Cash at end of yeare the fommalstatement to show activity within the cash account. On this statement, debits to cash correspond to increases and credita correapond to AD Common stock (Si nt 110,000 10,000 decreases Accounts receivable Accounts payable Pref. stock ($100 p 32,060 44,250 llow. for doubtful accts Interest pavable PICEP - CS 2,000 190,000 PICEP - PS Inventory 64,500 Uneamed revenue Prepaid insurance Bonds pavable Retained ea 7,440 61,500 nt Premium on BVF Treasury stock 280,000

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