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Acc 300 Practice set 1 Required: Journalize the transactions Post to ledger (T accounts) Prepare Trial...

Acc 300

Practice set 1

Required:

Journalize the transactions

Post to ledger (T accounts)

Prepare Trial Balance

Journalize the adjusting entries

Post to the ledger

Prepare Adjusted Trial Balance

Prepare the four financial statements

Net income equals $11,583

Purchased inventory on account $23,000

Sales on account $35,000

Cash Sales $22,000

Paid salaries $6,000

Purchased supplies on account for $500

Cash collected from customers $19,000

Purchased inventory for cash $13,000

Wrote off customer account as uncollectable $300

Made payment on account $18,000, received a 2% discount

Declared dividend to be paid next month $5,000

A piece of equipment costing $600 was stolen. The insurance company reimbursed the company $300. The accumulated depreciation on the equipment amounted to $250

New equipment purchased for $1200 cash

The short term note payable was paid. The note was for 30 days with 6% interest. (No interest has been accrued.)

Adjustments

It is estimated that 10% of accounts receivable is uncollectable

Supplies used $2,800

Depreciation Expense $650

Our employees are owed $740 at the end of the month

Interest on the note payable is 6%

Ending inventory is $35,000

$1,000 of prepaid insurance has expired

The income tax rate is 25% (round to the nearest dollar)

Beginning Trial Balance

Cash

             3,700

Accounts Receivable

           12,000

Allowance for Doubtful Accounts

             2,400

Supplies

             4,000

Prepaid Insurance

             2,100

Inventory

           29,500

Buildings

           40,000

Equipment

           10,000

Accumulated Depreciation

           15,000

Accounts Payable

             3,300

Salaries Payable

                 600

Note Payable

             1,200

interest payable

                 250

Note Payable (Due in 18 months)

           20,000

Common Stock

           40,000

Retained Earnings

           18,550

         101,300

         101,300
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Answer #1

Interest on LT Note Payable was to be calculated for 1 month. Since period was not given, I assumed its for whole year in previous solution.

Bad debt expense of 10% is ending balance, I mistakenly took it as expense during year, have rectified that.

Because of above changes, income tax expense and payable also updated.

All changes has been marked in yellow below. Income Statement subtotals will also change.

Journal entries Date Debit Calculation Account Purchases Accounts Payable Credit $23,000 $23,000 $ 35,000 Accounts Receivable Sales $ 35,000 $22,000 Cash Sales $ 22,000 $ 5,400 Salaries expense Salaries Payable Cash -6000-600 $ 6,000 Supplies Accounts Payable 500 $ 19,000 Cash Accounts Receivable $ 19,000 $13,000 Purchases Cash $13,000 Allowance for doubful debts Accounts Receivable $300 300 $ 18,000 Accounts Payable Cash Purchase discount $ 17,640 18000-360 $ 360-18000*2% Dividend $ 5,000 Dividend Payable $ 5,000 $300 Cash Accumulated Depreciation$250 Loss on equipment stolen$50 Equipment 600 $ 1,200 Equipment Cash $ 1,200 $ 1,200 Note Payable Interest expense Cash -1200*6% * 30/3 60 $ 1,206Adiusting entries -(27700*10%)-2100 Bad debts expense Allowance for doubful debts 670 $ 2,800 Supplies expense Supplies $ 2,800 Depreciation expense Accumulated Depreciation 650 650 $740 Salaries expense Salaries Payable $740 $ 100 -20000*696 *1/12 Interest expense Interest Payable $ 100 Invento $ 35,000 Ending Invento Purchases $ 35,000 S1 Purchases $ 29,500 Beginning Inventory Invento $ 29,500 $ 1,000 Insurance expense Prepaid Insurance $ 1,000 $ 3,861 15444*25% Income tax expense Income tax Payable $ 3,861T Accounts Date Debit Date CreditDate Debit Accounts Receivable Date Credit Date Debit Date CreditDate Debit Date Credit Allowance for Doubtful Debts Op ba 3,700 d 22,000 g $19,000 i S 6,000 Op ba $13,000 b $17,640 s 1,200 $ 1,206 12,000 35,000 f 300 Op ba 2,400 Op ba4,000 o $ 2,800 19,000 $5,954 Prepaid Insurance S27,700 $ 2,770 Bal $ 1,700 Inventory Accum. Depreciation Equipment $ 1,200 10,600 Op bal 2,100 t $ 1,000 Op bal$ 29,500 s1 $29,500 Op ba $10,000 k $ 250 Op ba$15,000 35,000 650 $1,100 S35,000 15,400 Building Accounts Payable 18,000 Op ba 3,300 d Salaries Payable Notes Payable 1,200 Op ba 1,200 Op ba $40,000 $600 Op ba 600 m S 23,000 $40,000 Interest Payable $ 8,800 Dividend Payable Note Payable (due in 18 months) Income tax Payable Op ba $250 $5,000 Op ba$20,000 3,861 $ 350 $ 5,000 $20,000 $ 3,861 Common Stock Retained Earnings Dividends Op bal 18,550j 5,000 5,000 $ 5,400 Op bal $40,000 $40,000 $ 18,550 Bal Sales Purchases Salaries expense Insurance expense 35,000a $22,000 8 $23,000 S13,000 s $ 29,500 1,000 $35,000q $ 740 1,000 Bad debts expense $57,000Bal 30,500 6,140 Interest expense Depreciation expense Supplies expense б50 $ 2,800 $ 2,800 Income tax expense $ 3,861 Loss on equipment stolen Purchase discount $ 3,861 $ 360Beginning TB Debit Credit Unadjusted TB Adjusted TB Debit Credit Debit Credit Account Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Invento Buildings Equipment Accumulated Depreciation Accounts Payable Salaries Payable Note Payable interest payable Dividend Payable Income tax Payable Note Payable (Due in 18 months) Common Stock Retained Earnings Dividend Sales Purchases Purchase discount Salaries expense Supplies expense Insurance expense Depreciation expense Bad debts expense Interest expense Loss on equipment stolen Income tax expense Total 3,700 12,000 5,954 27,700 5,954 27,700 2,400 2,100 2,770 4,000 2,100 29,500 40,000 10,000 4,500 2,100 29,500 40,000 10,600 1,700 1,100 35,000 40,000 10,600 15,000 3,300 600 1,200 250 15,400 8,800 740 14,750 8,800 250 350 5,000 3,861 20,000 40,000 18,550 5,000 20,000 40,000 18,550 20,000 40,000 18,550 5,000 5,000 57,000 57,000 36,000 30,500 360 360 5,400 6,140 2,800 1,000 650 670 106 50 3,861 50 101,300 101,300 166,810 166,810172,831 172,831Income Statement Sales Purchases Less Purchase discount Cost of goods sold Gross profit Salaries expense Supplies expense Insurance expense Depreciation expense Bad debts expense Total Operating expenses Operating profit Other expense (income Interest expense Loss on equipment stolen Total other expense (income) Net profit before tax Income tax expense Net profit 57,000 30,500 360 30,140 26,860 6,140 2,800 1,000 650 670 11,260 15,600 106 50 156 15,444 3,861-1544425% 11,583Statement of Stockholders equity Common Shares Retained Earnings Total Stockholders equity 18,550 Beginning balance Net profit Dividends Ending Balance 40,000 58,550 (5,000) 25,133 (5,000) 65,133 40,000Balance Sheet Liabilities Current Liabilities Assets Current Assets Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Inventory Total Current Assets 5,954 Accounts Payable 8,800 740 350 5,000 3,861 27,700 Salaries Payable (2,770) interest payable 1,700 Dividend Payable 1,100 Income tax Payable 35,000 68,684 Total Current Liabilities 18,751 Non-Current Liabilties Note Payable (Due in 18 months) 20,000 Fixed Assets Buildings Equipment Accumulated Depreciation Ttoal Fixed Assets Stockholders Equity 40,000Common Stock 10,600 Retained earnings 15,400 35,200 Total Stockholders Equity 40,000 25,133 65,133 Total Assets 103,884 olities & Stockholders Equity 103,884

Cashflow Statement Cash from Operations Net income Noncash items Depreciation expense Loss on equipment stolen Changes in Working Capital Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Inventory Accounts Payable Salaries Payable interest payable Income tax Payable Total cash from Operations Cash from Investin Proceeds from sale of equipment Purchase of Equipment Total Cash from Investing Cash from Financin Repayment of Notes payable Total Cash from Financing Net change in cash Beginning cash balance Ending cash balance Indirect method Calculation 11,583 650 50 (15,700)12000-27700 Increase in current asset decreases cash 370 2770-2400 2,300 4000-1700 1,000 2100-1100 (5,500) 29500-35000 5.500 -8800-3300 Increase in current liabilities increases cash 140-740-600 100 350-250 3,861 4,354 300 1,200 (900) 1,200 (1,200) 2,254 3,700 5,954

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