Obtain all data that is necessary from the worksheet prepared for Healthy Habits Foods Company in Problem 12.5A at the end of Chapter 12. Then follow the instructions to complete this problem.
INSTRUCTIONS
1. Record adjusting entries in the general journal as of December 31, 2013. Use 25 as the first journal page number. Include descriptions for the entries.
2. Record closing entries in the general journal as of December 31, 2013. Include descriptions.
3. Record reversing entries in the general journal as of January 1, 2014. Include descriptions.
Analyze: Assuming that the firm did not record a reversing entry for salaries payable, what entry is required when salaries of $5,000 are paid on January 3?
Problem 12.5A
Healthy Habits Foods Company is a distributor of nutritious snack foods such as granola bars. On December 31, 2013, the firm’s general ledger contained the accounts and balances that follow.
INSTRUCTIONS
1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2013.
2. Enter the adjustments in the Adjustments section of the worksheet. Identify each adjustment with the appropriate letter.
3. Complete the worksheet.
Note: This problem will be required to complete Problem 13.4A in Chapter 13.
ACCOUNTS AND BALANCES
Cash | $ 30,100 Dr. |
Accounts Receivable | 35,200 Dr. |
Allowance for Doubtful Accounts | 420 Cr. |
Merchandise Inventory | 86,000 Dr. |
Supplies | 10,400 Dr. |
Prepaid Insurance | 5,400 Dr. |
Office Equipment | 8,300 Dr. |
Accum. Depreciation—Office Equipment | 2,650 Cr. |
Warehouse Equipment | 28,000 Dr. |
Accum. Depreciation—Warehouse Equipment | 9,600 Cr. |
Notes Payable—Bank | 32,000 Cr. |
Accounts Payable | 12,200 Cr. |
Interest Payable |
|
Social Security Tax Payable | 1,680 Cr. |
Medicare Tax Payable | 388 Cr. |
Federal Unemployment Tax Payable |
|
State Unemployment Tax Payable |
|
Salaries Payable |
|
Phillip Tucker, Capital | 108,684 Cr. |
Phillip Tucker, Drawing | 56,000 Dr. |
Sales | 653,778 Cr. |
Sales Returns and Allowances | 10,000 Dr. |
Purchases | 350,000 Dr. |
Purchases Returns and Allowances | 9,200 Cr. |
Income Summary |
|
Rent Expense | 36,000 Dr. |
Telephone Expense | 2,200 Dr. |
Salaries Expense | 160,000 Dr. |
Payroll Taxes Expense | 13,000 Dr. |
Supplies Expense |
|
Insurance Expense |
|
Depreciation Expense—Office Equip. |
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Depreciation Expense—Warehouse Equip. |
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Uncollectible Accounts Expense |
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Interest Expense |
|
ADJUSTMENTS
a.–b. Merchandise inventory on December 31, 2013, is $78,000.
c. During 2013, the firm had net credit sales of $560,000; past experience indicates that 0.5 percent of these sales should result in uncollectible accounts.
d. On December 31, 2013, an inventory of supplies showed that items costing $1,180 were on hand.
e. On May 1, 2013, the firm purchased a one-year insurance policy for $5,400.
f. On January 2, 2011, the firm purchased office equipment for $8,300. At that time, the equipment was estimated to have a useful life of six years and a salvage value of $350.
g. On January 2, 2011, the firm purchased warehouse equipment for $28,000. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $4,000.
h. On November 1, 2013, the firm issued a four-month, 12 percent note for $32,000.
i. On December 31, 2013, the firm owed salaries of $5,000 that will not be paid until 2014.
j. On December 31, 2013, the firm owed the employer’s social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $5,000 of accrued wages.
k. On December 31, 2013, the firm owed the federal unemployment tax (assume 0.8 percent) and the state unemployment tax (assume 5.4 percent) on the entire $5,000 of accrued wages.
Analyze: When the financial statements for Healthy Habits Foods Company are prepared, what net income will be reported for the period ended December 31, 2013?
Problem 13.4A
Obtain all data that is necessary from the worksheet prepared for Healthy Habits Foods Company in Problem 12.5A at the end of Chapter 12. Then follow the instructions to complete this problem.
INSTRUCTIONS
1. Record adjusting entries in the general journal as of December 31, 2013. Use 25 as the first journal page number. Include descriptions for the entries.
2. Record closing entries in the general journal as of December 31, 2013. Include descriptions.
3. Record reversing entries in the general journal as of January 1, 2014. Include descriptions.
Analyze: Assuming that the firm did not record a reversing entry for salaries payable, what entry is required when salaries of $5,000 are paid on January 3?
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