Question

Trial Balance to general ledger, T accounts, Adjusted Trial Balance then finally additional questions

Name Financial Statement Homework #3 Part 1: At November 30, 2012, Silver Traders Company had the following trial balance. There is detailed information on the next page about December 2012 transactions that need to be recorded. Silver Traders Company Trial Balance 11/30/12 Cr Dr 287,000 Cash Accounts Receivable Allowance for Doubtful Accounts Short Term Note Recelvable Supplies Inventory Equipment Building Accumulated Depreciation Copyright Accounts Payable Dividends Payable Interest Payable Unearned Revenue ST Note Payable LT Mortgage Payable Bonds Payable Premium on Bonds Payable Common Stock - $1 par Paid In Capital In Excess of Par- CS Preferred Stock - $5 par Paid In Capital In Excess of Par - PS Treasury Stock Retained Earnings Dividends Sales Revenue Sales Returns & Allowances 62,000 5,000 24,000 6,000 65,000 195,000 75,000 44,000 45,000 46,000 15,000 200,000 26,840 3,000 86,000 1,000 50,000 105,000 5,000 819,000 3,840 9,000 380,000 5,000 50,000 260,000 63,000 16,000 6,000 Sales Discounts Cost of Goods Sold Bad Debts Expense Depreciation Expense Wages Expense Rent Expense Insurance Expense Supplies Expense Interest Revenue Interest Expense Gain on Sale of Equipment Income Tax Expense 1,000 8,000 15,000 4,000 1,492,840 Total 1,492,840 Page 1 of 9

Answer 1

1. Journal Entries

General Journal

DATE	ACCOUNT NAME	DEBIT	CREDIT
01.12.2012	Building	150000
	To LT Mortgage Payable		150000
	(Being Building purchased with a LT Mortgage)
25.12.2012	Cash	6000
	To Paid in Capital in excess of par-CS		5500
	To Common Stock		500
	(Being 500 shares of common stock issued)
29.12.2012	Dividend	10500
	To Dividend Payable		10500
	(Being $3 dividend for 3,500 common stock shares)
31.12.2012	LT Mortgage Payable	900
	Interest Expense	1000
	To Cash		1900
	(Being LT Mortgage Installment paid)
31.12.2012	Interest Expense	200
	To Interest Payable		200
	(Being Interest payable for 2 months on ST Note Payable)
31.12.2012	Premium on Bonds Payable	1853
	Interest Expense	18147
	To Interest Payable		20000
	(Being Premium on Bonds Payable amortized with effective market rate of 8% on 226840 deducted from 10% of Bonds Payable & interest accrued)
31.12.2012	Unearned Revenue	30000
	To Sales Revenue		30000
	(Being Sales recognized out of unearned revenue)
31.12.2012	Treasury Stock	550
	To Cash		550
	(Being 50 shares of preferred stock for treasury stock purchased at cash value method)

2. T-Accounts

Building

Date	Particulars	Amount	Date	Particulars	Amount
01.12.2012 01.12.2012	To Opening Balance To LT Mortgage Payable	0 150000	31.12.2012	By Closing Balance	150000
Total		150000	Total		150000

LT Mortgage Payable

Date	Particulars	Amount	Date	Particulars	Amount
30.12.2012 01.12.2012	To Cash To Closing Balance	900 149100	01.12.2012 01.12.2012	By Opening Balance By Building	0 150000
Total		150000	Total		150000

Common Stock

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012	To Closing Balance	3500	01.12.2012 01.12.2012	By Opening Balance By Cash	3000 500
Total		3500	Total		3500

Paid in Capital in Excess of Par-CS

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012	To Closing Balance	91500	01.12.2012 01.12.2012	By Opening Balance By Cash	86000 5500
Total		91500	Total		91500

Dividend

Date	Particulars	Amount	Date	Particulars	Amount
01.12.2012 29.12.2012	To Opening Balance To Dividend Payable	5000 10500	31.12.2012	By Closing Balance	15500
Total		15500	Total		15500

Dividend Payable

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012	To Closing Balance	10500	01.12.2012 29.12.2012	By Opening Balance By Dividend	0 10500
Total		10500	Total		10500

Interest Expense

Date	Particulars	Amount	Date	Particulars	Amount
01.12.2012 31.12.2012 31.12.2012 31.12.2012	To Opening Balance To Cash To Interest Payable To Interest Payable	8000 1000 200 18147	31.12.2012	By Closing Balance	27347
Total		27347	Total		27347

Cash

Date	Particulars	Amount	Date	Particulars	Amount
01.12.2012 25.12.2012 25.12.2012	To Opening Balance To paid in capital in excess of par-CS To Common Stock	287000 5500 500	31.12.2012 31.12.2012 31.12.2012 31.12.2012	By LT Mortgage Payable By Interest Expense By Treasury Stock By Closing Balance	900 1000 550 290550
Total		293000	Total		293000

Interest Payable

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012	To Closing Balance	20200	01.12.2012 31.12.2012 31.12.2012 31.12.2012	By Opening Balance By Interest Expense By Premium on Bonds Payable By Interest Expense	0 200 1853 18147
Total		20200	Total		20200

Premium on Bonds Payable

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012 31.12.2012	To Interest Payable To Closing Balance	1853 24987	01.12.2012	By Opening Balance	26840
Total		26840	Total		26840

Unearned Revenue

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012 31.12.2012	To Sales Revenue To Closing Balance	30000 16000	01.12.2012	By Opening Balance	46000
Total		46000	Total		46000

Sales Revenue

Date	Particulars	Amount	Date	Particulars	Amount
31.12.2012	To Closing Balance	849000	01.12.2012 31.12.2012	By Opening Balance By Unearned Revenue	819000 30000
Total		849000	Total		849000

Treasury Stock

Date	Particulars	Amount	Date	Particulars	Amount
01.12.2012 31.12.2012	To Opening Balance To Cash	0 550	31.12.2012	By Closing Balance	550
Total		550	Total		550

3. Adjusted Trial Balance

Particulars	Debit	Credit
Cash	290550
Accounts Receivable	62000
Allowance for Doubtful Accounts		5000
Short Term Note Receivable	24000
Supplies	6000
Inventory	65000
Equipment	195000
Building	150000
Accumulated Depreciation		75000
Copyright	44000
Accounts Payable		45000
Dividend Payable		10500
Interest Payable		20200
Unearned Revenue		16000
ST Note Payable		15000
LT Mortgage payable		149100
Bonds Payable		200000
Premium on Bonds Payable		24987
Common Stock		3500
Paid in capital in excess of Par-CS		91500
Preferred Stock		1000
Paid in capital in excess of Par-PS		50000
Treasury Stock	550
Retained Earnings		105000
Dividends	15500
Sales Revenue		849000
Sales Returns & Allowances	3840
Sale Discounts	9000
Cost of goods sold	380000
Bad Debts Expense	5000
Depreciation Expense	50000
Wages Expense	260000
Rent Expense	63000
Insurance Expense	16000
Supplies Expense	6000
Interest Revenue		1000
Interest Expense	27347
Gain on Sale of Equipment		15000
Income Tax Expense	4000
TOTAL	1677887	1677887

1. No effect on given accounting equation when treasury stock is purchased, as treasury stock amounting to 550 purchased in cash as cash and treasury stock both are assets.
2. Common stock amounting 3500 are outstanding at 12/31/2012.
3. If company had stock split then:

1. There would be 4375 shares.
2. Par Value per share in dollars is 0.8

4.   Carrying value of bonds payable and premium will decrease over the life of Bonds.

5. Balance in the Mortgage Payable account at 31^st Jan. 2013 after the second monthly payment of 1900/- will be 148194. As out of 1900/- interest will be 994 & mortgage account will be 906/-

Hence , balance in Mortgage payable account will be (149100-906) 148194.

6. If company sale these bonds after 5 years at market rate of interest 10% compounding factor, company will receive 3221020.