1 BUS ADM 201 Introduction to Financial Accounting Spring 2019 10. Issued 1,400 shares of$100 par, 7% preferred stock for S2 15,000 cash. Name: TA: Disc #2 Purchased equipment on July 1, 2018, for S180,000 cash EXTRA CREDIT III Due at 11:59pm on Saturday, May 11 12. Purchased 750 shares of Jamukha Corp. common stock from a disgruntled shareholder for $37 per share. 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. 13. Recorded salaries and payroll taxes. Employee's gross salaries were S120,000. FICA tax was withheld at a rate of 765%, Federal income taxes (FIT) of$8,000 were withheld, and state income taxes (SIT) of $4,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA)ate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts. Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below Jamkha Corporation Baance Sheet December 31, 2017 14. The paychecks and payroll taxes from entry #13 were paid. 15. Straight-line depreciation with an 8 year useful life and no salvage value is used for equipment purchased in previous years. The cquipment purchased on July 1, 2018 (#11 ) is depreciated using double-declining balance with a useful life of 20 years and a S30,000 salvage value. (Hint The equipment was purchased 27,850 Accourts payable 44,070 Common stock (S1 par) (2,000) Pail-in captal in excess of par Comon stock 190,000 75,000 Retained earnings 94,750 10,000 Accounts receivable midway through the year.) Alowance for doubtful accounts Prepaid insurance AD-Equipment 6. Acerue bond interest payable and amortize bond discount premium. Jamukha Corp. uses effective-interest 77,610 amortization. (Hirt: The bond was issued midway through the year.) 7,440 360,000 (140,000) 17. The prepaid insurance relates to a policy purchased on December 31,2017. Tis insurance expires at a rate of $310 per month. Record as a general expense. 18. Jamukha estimates that 65% 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 joumal, ledger, and worksheet that follow and enter 372,360 During 2018 the following transactions occurred: Purchased $141,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. 2. Sales of$325,000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was 3. Received $36,000 cash down payment for orders that will be shipped next year 4. Issued 20 year, $65,000 face value, 4% bonds on July 1 at 103. The bonds were sold to yield an effective the following transactions. I suggest that you use a peneil. $175,000. The company uses a perpetual inventory system Enter the transactions mumbered 1-14 im 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 columm is a debit or a credit, particularly for contra accounts. a b. annual rate of 3.784784%, and they pay interest every January 1 and July 1 . c. Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet 5. Collected $306,000 on account. 6. Paid general expenses of SS5,750. 7. Paid S210,000 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 $24,000 cash equipment which originally cost $103,000. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare 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 statiements just complete them on the worksheet) e. Accumulated depreciation for this equipment as of December 31, 2017, was $77,000. This transaction is exempt from sales tax. EXTRA CREDIT III SOLUTION Journal: Requirement (a) Name General Ledger: Requirement (b) Debit Credit General Journal CR BALANCE DR 27,850 27,850 DR a.4. ACCOUNTS RECEIVABLE BALANCE DR DR a.8. ALLOWANCE FOR DOUBTFUL ACCOUNTS DR BALANCE CR CR BALANCE NVENTORY DR 75,000 D PREPAID INSURANCE BALANCE DR 7,440 7,440 DR EQUIPMENT DR CR BALANCE 360,000 DR ACCUM DEPRECIATION-EQUIPMENT DR BALANCE a.14. CR General Ledger: Requirement (b)continued General Ledger: Requirement (b) continued ACCOUNTS PAYABLE Beginnin DR CR BALANCE COMMON STOCK (S1 PAR) CR BALANCE 94,750 94,750 CR PREFERRED STOCK (S100 PAR BALANCE DR SALARIES PAYABLE CR BALANCE PAID-IN CAPITAL IN EXCESS OF PAR- COMMON STOCK DR BALANCE 190,000 CR DR SALES TAX PAYABLE BALANCE PAID-IN CAPITAL IN EXCESS OF PAR- PREFERRED STOCK CR BALANCE FICA PAYABLE BALANCE DR CR TREASURY STOCK BALANCE RETAINED EARNINGS DR BALANCE 7,610 CR DR FIT PAYABLE BALANCE SALES REVENUE BALANCE DR SIT PAYABLE CR BALANCE COST OF GOODS SOLD BALANCE GENERAL EXPENSES CR BALANCE DR FUTA PAYABLE BA.ANCE SALARIES EXPENSE DR BALANCE BALANCE SUTA PAYABLE DR CR PAYROLL TAX EXPENSE BALANCE DR UNEARNED REVENUF BALANCE LOSS ON DISPOSAL BALANCE BONDS PAYABLE DR CR BALANCE BALANCE PREMIUM ON BONDS PAYABLE DR CR State ment of Cash Flows T-Account Worksheet Requirement (e) Use the formal statement to show activity within the cash account. On this statement, debits to eash corres pond to increases and credits corespond to decreases AD E Common stock (Si 140,000 10,000 Accounts recelvable Accounts payable Pref. stock ($100 44,07 94,750 PICEP-CS llow, for doubtful acct Inte rest pavable 90,000 Invento 75 Unearned revenue PICEP-PS Bonds pavable Retained earnin 77,610 Premium on B/T Treasury stock 1 BUS ADM 201 Introduction to Financial Accounting Spring 2019 10. Issued 1,400 shares of$100 par, 7% preferred stock for S2 15,000 cash. Name: TA: Disc #2 Purchased equipment on July 1, 2018, for S180,000 cash EXTRA CREDIT III Due at 11:59pm on Saturday, May 11 12. Purchased 750 shares of Jamukha Corp. common stock from a disgruntled shareholder for $37 per share. 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. 13. Recorded salaries and payroll taxes. Employee's gross salaries were S120,000. FICA tax was withheld at a rate of 765%, Federal income taxes (FIT) of$8,000 were withheld, and state income taxes (SIT) of $4,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA)ate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts. Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below Jamkha Corporation Baance Sheet December 31, 2017 14. The paychecks and payroll taxes from entry #13 were paid. 15. Straight-line depreciation with an 8 year useful life and no salvage value is used for equipment purchased in previous years. The cquipment purchased on July 1, 2018 (#11 ) is depreciated using double-declining balance with a useful life of 20 years and a S30,000 salvage value. (Hint The equipment was purchased 27,850 Accourts payable 44,070 Common stock (S1 par) (2,000) Pail-in captal in excess of par Comon stock 190,000 75,000 Retained earnings 94,750 10,000 Accounts receivable midway through the year.) Alowance for doubtful accounts Prepaid insurance AD-Equipment 6. Acerue bond interest payable and amortize bond discount premium. Jamukha Corp. uses effective-interest 77,610 amortization. (Hirt: The bond was issued midway through the year.) 7,440 360,000 (140,000) 17. The prepaid insurance relates to a policy purchased on December 31,2017. Tis insurance expires at a rate of $310 per month. Record as a general expense. 18. Jamukha estimates that 65% 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 joumal, ledger, and worksheet that follow and enter 372,360 During 2018 the following transactions occurred: Purchased $141,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. 2. Sales of$325,000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was 3. Received $36,000 cash down payment for orders that will be shipped next year 4. Issued 20 year, $65,000 face value, 4% bonds on July 1 at 103. The bonds were sold to yield an effective the following transactions. I suggest that you use a peneil. $175,000. The company uses a perpetual inventory system Enter the transactions mumbered 1-14 im 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 columm is a debit or a credit, particularly for contra accounts. a b. annual rate of 3.784784%, and they pay interest every January 1 and July 1 . c. Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet 5. Collected $306,000 on account. 6. Paid general expenses of SS5,750. 7. Paid S210,000 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 $24,000 cash equipment which originally cost $103,000. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare 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 statiements just complete them on the worksheet) e. Accumulated depreciation for this equipment as of December 31, 2017, was $77,000. This transaction is exempt from sales tax. EXTRA CREDIT III SOLUTION Journal: Requirement (a) Name General Ledger: Requirement (b) Debit Credit General Journal CR BALANCE DR 27,850 27,850 DR a.4. ACCOUNTS RECEIVABLE BALANCE DR DR a.8. ALLOWANCE FOR DOUBTFUL ACCOUNTS DR BALANCE CR CR BALANCE NVENTORY DR 75,000 D PREPAID INSURANCE BALANCE DR 7,440 7,440 DR EQUIPMENT DR CR BALANCE 360,000 DR ACCUM DEPRECIATION-EQUIPMENT DR BALANCE a.14. CR General Ledger: Requirement (b)continued General Ledger: Requirement (b) continued ACCOUNTS PAYABLE Beginnin DR CR BALANCE COMMON STOCK (S1 PAR) CR BALANCE 94,750 94,750 CR PREFERRED STOCK (S100 PAR BALANCE DR SALARIES PAYABLE CR BALANCE PAID-IN CAPITAL IN EXCESS OF PAR- COMMON STOCK DR BALANCE 190,000 CR DR SALES TAX PAYABLE BALANCE PAID-IN CAPITAL IN EXCESS OF PAR- PREFERRED STOCK CR BALANCE FICA PAYABLE BALANCE DR CR TREASURY STOCK BALANCE RETAINED EARNINGS DR BALANCE 7,610 CR DR FIT PAYABLE BALANCE SALES REVENUE BALANCE DR SIT PAYABLE CR BALANCE COST OF GOODS SOLD BALANCE GENERAL EXPENSES CR BALANCE DR FUTA PAYABLE BA.ANCE SALARIES EXPENSE DR BALANCE BALANCE SUTA PAYABLE DR CR PAYROLL TAX EXPENSE BALANCE DR UNEARNED REVENUF BALANCE LOSS ON DISPOSAL BALANCE BONDS PAYABLE DR CR BALANCE BALANCE PREMIUM ON BONDS PAYABLE DR CR State ment of Cash Flows T-Account Worksheet Requirement (e) Use the formal statement to show activity within the cash account. On this statement, debits to eash corres pond to increases and credits corespond to decreases AD E Common stock (Si 140,000 10,000 Accounts recelvable Accounts payable Pref. stock ($100 44,07 94,750 PICEP-CS llow, for doubtful acct Inte rest pavable 90,000 Invento 75 Unearned revenue PICEP-PS Bonds pavable Retained earnin 77,610 Premium on B/T Treasury stock