1 The Beginning Balances at the start of 2021 for Milano San Remo (MSR) Corp. 2 are as follows: 3 Debit Credit 4 Cash 145,000 5 Accounts Receivable 42,000 6 Allowance for Doubtful Accounts 4,600 7 Supplies 250 8 Inventory (48 units at $300 apiece) 14,400 9 Equipment 9,000 10 Van 25,000 11 Building 125,000 12 Accumulated Depreciation 30,000 13 Land 25,000 14 Sales Tax Payable 390 15 Employee Income Tax Payable 1,000 16 FICA -- Social Security Payable 840 17 FICA -- Medicare Payable 210 18 Warranty Payable 948 19 Notes Payable -- Building 92,762 20 Bonds Payable 50,000 21 Discount on Bonds Payable 800 22 Common Stock, $5 par value 50,000 23 Retained Earnings 155.700 24 Total 386,450 386,450 25 26 27 Place the transactions in a general journal below: 28 No. Account Title Debit Credit 29 Milano San Remo (MSR) had the following transactions for the 2021 year: 1. Paid sales tax payable from the prior year. 2. Issued 5,000 additional shares of its $5 par value common stock for $8 per share, and also issued 1,000 shares of $50 par value, 5% cumulative preferred stock for $52 per share. 3. Purchased $500 of supplies on account. 4. Purchased merchandise on account: 700 units at a cost of $300 each. 5. Wrote off $3,670 of uncollectible accounts receivable. 6. Sold 720 items of merchandise for $600 each plus sales tax of 5%. The sales were on account. Cost of goods sold was $300 for each item. 7. Paid the sales tax collected on $100,000 of merchandise sales. 8. Collected $198,000 of accounts receivable during the year. 9. Paid employee salaries of $96,000 for the year. Social Security rate is 6% and Medicare rate is 1.5%; total federal income tax withheld was $10,600. Net salaries were paid in cash. 10. Declared a dividend on the preferred stock and also a $1 per share dividend on the common stock. 11. Paid $850 in warranty repairs during the year. 12. Paid the dividends that had been previously declared. 13. Paid $18,500 in advertising expenses during the year. 14. Paid $6,100 in utilities expense during the year. 15. Paid $150,000 on accounts payable. 16. Paid bond interest and amortized the discount. Discount amortization is $200 a year and the interest rate is 6%. 17. Paid on the notes payable - it is an installment note with an annual payment of $14,238. Interest rate is 7% on the note. Adjustments: 18. There was a total of $190 in supplies on hand at the end of the year. 19. Uncollectible accounts expense is recorded using the allowance method and estimating 1% of sales on account to be uncollectible. 20. Warranty expense is estimated to be 2% of sales. 30 31 32 33 34 35 Prepare a Trial Balance based on beginning balances plus the result of the transactions recorded in the general journal: MSR Trial Balance at 12/31/21 Account Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Inventory Equipment Van Building Accumulated Depreciation Land Accounts Payable Sales Tax Payable Employee Income Tax Payable 36 37 38 39 40 41 42 43 A B D E F H M N 0 P Q R S T U V W Y Debit Credit 25 26 27 Place the transactions in a general journal below: 28 No. Account Title 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Prepare a Trial Balance based on beginning balances plus the result of the transactions recorded in the general journal: MSR Trial Balance at 12/31/21 Account Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Inventory Equipment Van Building Accumulated Depreciation Land Accounts Payable Sales Tax Payable Employee Income Tax Payable FICA -- Social Security Payable FICA -- Medicare Payable Warranty Payable Notes Payable -- Building Bonds Payable Discount on Bonds Payable Preferred Stock Paid in Capital in Excess of Par -- Preferred Common Stock, $5 par value Paid in Capital in Excess of Par -- Common Retained Earnings Dividends Sales Revenue Cost of Goods Sold Salaries Expense Advertising Expense Utilities Expense Interest Expense Supplies Expense Uncollectible Accounts Expense Warranty Expense Totals 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 B D F M N 0 P U V W X Z AA AB AC AD AE 58 From the Trial Balance, Prepare a Mult-Step Income Statement: MSR Corp. Income Statement For the Year Ended December 31, 2021 Sales Revenue Less: Cost of Goods Sold Gross Margin After the Income Statement, Prepare a Classified Balance Sheet: MSR Corp. Balance Sheet As of December 31, 2021 Current Assets: -4 Operating Expenses: Total Current Assets Property, Plant, & Equipment: 6 7 8 -9 50 31 $2 33 34 55 36 57 38 59 30 1 22 Total Operating Expenses Operating Income Other Income/Expense: Total Property, plant, & Equipment TOTAL ASSETS Net Income Current Liabilities: FINALLY, prepare the closing entries to close out revenue, expense and dividends into Retained Earnings. Debit Credit Close Revenue: Total Current Liabilities Long-Term Liabilities: Close Expenses: Total Long-Term Liabilities TOTAL LIABILITIES Stockholders' Equity: 24 25 26 27 28 29 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Close Dividends: Total Stockholders' Equity TOTAL LIABILITIES & STOCKHOLDERS' EQUITY Sheet1 # Ready P 85% 1 The Beginning Balances at the start of 2021 for Milano San Remo (MSR) Corp. 2 are as follows: 3 Debit Credit 4 Cash 145,000 5 Accounts Receivable 42,000 6 Allowance for Doubtful Accounts 4,600 7 Supplies 250 8 Inventory (48 units at $300 apiece) 14,400 9 Equipment 9,000 10 Van 25,000 11 Building 125,000 12 Accumulated Depreciation 30,000 13 Land 25,000 14 Sales Tax Payable 390 15 Employee Income Tax Payable 1,000 16 FICA -- Social Security Payable 840 17 FICA -- Medicare Payable 210 18 Warranty Payable 948 19 Notes Payable -- Building 92,762 20 Bonds Payable 50,000 21 Discount on Bonds Payable 800 22 Common Stock, $5 par value 50,000 23 Retained Earnings 155.700 24 Total 386,450 386,450 25 26 27 Place the transactions in a general journal below: 28 No. Account Title Debit Credit 29 Milano San Remo (MSR) had the following transactions for the 2021 year: 1. Paid sales tax payable from the prior year. 2. Issued 5,000 additional shares of its $5 par value common stock for $8 per share, and also issued 1,000 shares of $50 par value, 5% cumulative preferred stock for $52 per share. 3. Purchased $500 of supplies on account. 4. Purchased merchandise on account: 700 units at a cost of $300 each. 5. Wrote off $3,670 of uncollectible accounts receivable. 6. Sold 720 items of merchandise for $600 each plus sales tax of 5%. The sales were on account. Cost of goods sold was $300 for each item. 7. Paid the sales tax collected on $100,000 of merchandise sales. 8. Collected $198,000 of accounts receivable during the year. 9. Paid employee salaries of $96,000 for the year. Social Security rate is 6% and Medicare rate is 1.5%; total federal income tax withheld was $10,600. Net salaries were paid in cash. 10. Declared a dividend on the preferred stock and also a $1 per share dividend on the common stock. 11. Paid $850 in warranty repairs during the year. 12. Paid the dividends that had been previously declared. 13. Paid $18,500 in advertising expenses during the year. 14. Paid $6,100 in utilities expense during the year. 15. Paid $150,000 on accounts payable. 16. Paid bond interest and amortized the discount. Discount amortization is $200 a year and the interest rate is 6%. 17. Paid on the notes payable - it is an installment note with an annual payment of $14,238. Interest rate is 7% on the note. Adjustments: 18. There was a total of $190 in supplies on hand at the end of the year. 19. Uncollectible accounts expense is recorded using the allowance method and estimating 1% of sales on account to be uncollectible. 20. Warranty expense is estimated to be 2% of sales. 30 31 32 33 34 35 Prepare a Trial Balance based on beginning balances plus the result of the transactions recorded in the general journal: MSR Trial Balance at 12/31/21 Account Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Inventory Equipment Van Building Accumulated Depreciation Land Accounts Payable Sales Tax Payable Employee Income Tax Payable 36 37 38 39 40 41 42 43 A B D E F H M N 0 P Q R S T U V W Y Debit Credit 25 26 27 Place the transactions in a general journal below: 28 No. Account Title 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Prepare a Trial Balance based on beginning balances plus the result of the transactions recorded in the general journal: MSR Trial Balance at 12/31/21 Account Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Inventory Equipment Van Building Accumulated Depreciation Land Accounts Payable Sales Tax Payable Employee Income Tax Payable FICA -- Social Security Payable FICA -- Medicare Payable Warranty Payable Notes Payable -- Building Bonds Payable Discount on Bonds Payable Preferred Stock Paid in Capital in Excess of Par -- Preferred Common Stock, $5 par value Paid in Capital in Excess of Par -- Common Retained Earnings Dividends Sales Revenue Cost of Goods Sold Salaries Expense Advertising Expense Utilities Expense Interest Expense Supplies Expense Uncollectible Accounts Expense Warranty Expense Totals 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 B D F M N 0 P U V W X Z AA AB AC AD AE 58 From the Trial Balance, Prepare a Mult-Step Income Statement: MSR Corp. Income Statement For the Year Ended December 31, 2021 Sales Revenue Less: Cost of Goods Sold Gross Margin After the Income Statement, Prepare a Classified Balance Sheet: MSR Corp. Balance Sheet As of December 31, 2021 Current Assets: -4 Operating Expenses: Total Current Assets Property, Plant, & Equipment: 6 7 8 -9 50 31 $2 33 34 55 36 57 38 59 30 1 22 Total Operating Expenses Operating Income Other Income/Expense: Total Property, plant, & Equipment TOTAL ASSETS Net Income Current Liabilities: FINALLY, prepare the closing entries to close out revenue, expense and dividends into Retained Earnings. Debit Credit Close Revenue: Total Current Liabilities Long-Term Liabilities: Close Expenses: Total Long-Term Liabilities TOTAL LIABILITIES Stockholders' Equity: 24 25 26 27 28 29 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Close Dividends: Total Stockholders' Equity TOTAL LIABILITIES & STOCKHOLDERS' EQUITY Sheet1 # Ready P 85%