1) Making

journal ent

ries

for each

transaction

in chronological order

.

2) Prepare

adjusting

entries and

adjust

ed tri

al balan

ce.

3) Prepare Income St

ateme

nt, R

etain

ed E

arni ngs Stat

ement,

and

Balance Sheet

.

4) Making

closing

entri

es.

5) Put all your work

on exce

l spr

eadsheet. Each group

should

submit one

com

plet ed copy

to

Assignment tab

.

The

2015 Balance

Sheet of the

Katy

Co

.

is a

s follows

:

Katy Co.

Balance She

e

t

As of December 31, 2015

Current Assets

Cash

53,160

Notes Receivable

16,000

Accounts Receivable

41,800

Less: Allowance for Doubtful Accounts

(3,000)

Inventories

40,000

Prepaid Insurance

540

Prepaid Rent

500

Total Current Assets

149,000

Non

-

Current Assets

Long

-

term Investments

Investments in held

-

for

-

maturity securities

51,000

Land held for future development

45,500

Property, Plant, and Equipment

Land

85,000

Buildings

675,000

Less: Accumulated Depreciation

(187,500)

Intangible Assets

Capitalized Development Costs

8,000

Goodwill

76,000

Other Identifiable Intangible Assets

48,000

Total Non

-

Current Assets

801,000

Total Assets

950,000

1

Current Liabilities

Notes Payable

110,000

Accounts Payable

33,500

Unearned Revenue

12,000

Property Tax Payable

6,600

Interest Payable

1,500

Income Tax Payable

9,440

Salary and Wages Payable

0

Utilities Payable

0

Total Current Liabilities

173,040

Non

-

Current Liabilities

Provisions Related to Pensions

93,100

Bonds Payable

300,000

Total Non

-

Current Liabilities

393,100

Total Liabilities

566,140

Stockholders' Equity

Common Stock

100,000

Preferred Stock

100,000

Paid

-

in

-

capital

-

Common Stock

27,500

Paid

-

in

-

capital

-

Preferred Stock

10,000

Retained Earnings

154,110

Accumulated Other

Comprehensive Income

5,000

Less: Treasury Stock

(12,750)

Total Stockholders' Equity

383,860

Total Liabilities and Stockholders' Equity

950,000

Du

ring 2016

, the

following

eve nts occu

rred in Katy Co

.:

1) On January 10, sold merchandise on account to Abby $12,000 and Bob $

9,000. Terms 2/10,

n/30, F.O.B. shipping point.

2) On

January 12, purchased merchandise on account from Charles $4,00

0 and David

3,500.

Terms 1/10, n/30, F.O.B. destination.

3) On January 14, received checks, $4,500 from Esther and $2,500 from Fred, for sales on

account after discount period has lapsed.

4) On January 15, send checks to James for 1

2,000 less 3% cash discount, and to Kimberly for

$8,000 less 2% cash discount.

5) On January 16, issued credit of $500 to Bob for merchandise returned.

6) On

January 21, paid off the balances to Charles and David for the purchases on January 12.

7) On Feb

ruary 9, received payment in full from Abby and Bob.

8) On March 1, paid rent of $4,800 for a two-

year term starting from May 1, 2013.

9) On

April 1, the company CEO paid $60,000

from her savings bank account to purchase a car

for personal use.

2

10)

On April 12, paid $1

,200 cash for office supplies.

11)

Cash dividends totaling $5

,000 were declared on June 13 and paid to stockholders

on June 23.

12)

Issued a note of $120,000 to bank (one year, annual interest rate 4%) for cash on July 1.

13)

On July 5, purchased merchandise from Kimberly $45,000, terms 3/10, n/30.

14)

On July 7, issued common stock 1

,000 shares, $10 par, in exchange of a land with a fair market

value of $60,000.

15)

On July 8, returned $5

00 of merchandise to Kimberly and received credit.

16)

On August 1,

sold merchandise to Linda on account $120

,000, term 1/10, n/30, FOB shipping

point.

17)

Paid off the balance to Kimberly on August 4.

18)

On August 8, paid utilities expense, $12,000.

19)

On August 18, Linda paid off its balance.

20)

On Sept

ember 1, paid cash $7,500 to Mary for merchandise purchased last year.

21)

On October 1, paid off notes payable $110,000 (issued in 2015

) and associated interest $5,

500

(including $1,500 interest payable on the balance sheet).

22)

Over the year, daily cash sales were $16,000.

23)

Over the year, sales and office employees earned $60,000

in salaries and wages, of which

$2,500 remained as payable at the end of year.

24)

On Dec 31, received a utilities bill of $2,

000 (for December 2016

) and paid off the bill on

January 10, 2016

.

Additional Information at the end of 2016

:

1) Depreciation expense for the year was $14,500.

2) The company estimated that it will pay federal income tax, $6,500.

3) After physically counting, the company decided that the ending inventory was $6

1,000.

4) Based on its historical data, the bad debts are about 1% of net credit sales.

5) Unearned revenue was decreased by $14

,000.

6) The company expenses all of the supplies purchased during the year.

7) No insurance policy was effective during the year.

8) The company uses the gross method to record its purchases and sales on credit.

9) The company adopts the periodic inventory system.

10)

Abby, Bob, and Linda had zero

balance on account as of Jan 1, 2012