Bruin Corporation has been authorized to issue 5,000 shares of 12 percent noncumulative, nonparticipating preferred stock with

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Bruin Corporation has been authorized to issue 5,000 shares of 12 percent noncumulative, nonparticipating preferred stock with a par value of $100 per share and 200,000 shares of common stock with a par value of $10 per share. As of December 31, 2016, 2,600 shares of preferred stock and 19,000 shares of common stock had been issued. A condensed trial balance as of December 31, 2016, is provided below.

Bruin Corporation has been authorized to issue 5,000 shares of

INSTRUCTIONS
1. Enter the December 31, 2016, trial balance on an eight-column worksheet. Provide three lines for the Selling Expenses control account and three lines for the General Expenses control account. Total and rule the Trial Balance columns.
2. Record the following transactions in general journal form, using page number 6:
a. Ending merchandise inventory is $115,000. Close the beginning inventory and set up the ending inventory.
b. Depreciation of buildings is $14,500 ($11,000 is selling expense; $3,500 is general expense).
c. Depreciation of equipment is $27,000 ($18,000 is selling expense; $9,000 is general expense).
d. Accrued expenses are $10,000 ($7,000 is selling expense; $3,000 is general expense).
e. The balance in Allowance for Doubtful Accounts is adequate.
f. The $49,300 balance in Income Tax Expense represents the quarterly tax deposits. Adjust the Income Tax Expense account using the following procedure:
(1) Extend the adjusted income and expense items to the Income Statement columns and compute the net income before taxes.
(2) Assuming that taxable income is the same as net income before income taxes, use the tax rates given in this chapter to compute the federal income tax. Round the computed tax to the nearest whole dollar. Ignore state and local income taxes.
3. Complete the worksheet as shown in the text.
4. Prepare a condensed income statement for the year.
5. Prepare a balance sheet as of December 31, 2016. The balance of Retained Earnings on January 1, 2016, was $171,300. All dividends for the year were declared on December 5, 2016, and are payable January 4, 2017.
6. Journalize the adjusting and closing entries on December 31. Explanations are not required.
Analyze: Assume that dividends were declared in equal amounts over the four quarters of 2016. What percentage of Bruin Corporation's annual income before tax was spent on dividends to stockholders?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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College Accounting Chapters 1-30

ISBN: 978-0077862398

14th edition

Authors: John Price, M. David Haddock, Michael Farina

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