26 The board of directors voted to purchase 1,000 shares of its own stock from stockholder Dionne Schivone at $85 per share and issued check No. 1595 in payment. Stock repurchases are recorded at cost. Rockford is purchasing these shares because Ms. Schivone had been a valuable employee. 82 26 The board of directors declared a $3.10 per-share cash dividend payable on January 14 to stockholders of record on December 26 (after purchase of stock). 26 The president informs you that Beverlys Building Products agrees to convert the $14,000 overdue accounts receivable (invoice No. 1119) balance to a 9% note due six months from today. 27 A half-acre parcel of land adjacent to the building is acquired in exchange for 400 shares of unissued common stock. The land has a fair value of $45,000 and will be used immediately as an outside storage lot and parking lot. 27 An invoice in the amount of $2,500 is received from Wayne McManus, lawyer, for legal services involved in the acquisition of the adjacent parcel of land; check No. 1596 is issued in payment. 27 Sold pipe and plumbing materials to Boecker Builders on account, invoice No. 1210 for $45,680. 28 Issued check No. 1597 in the amount of $655 to the Northern Star for advertisement run in the home building supplement of December 13. 28 Issued check No. 1598 in the amount of $1,250 to Standard Oil Co. in payment of gas, oil, and truck repairs from Standard Oil Co. (use Freight-out). 28 Purchased copper and cast iron pipe from Oxenford Copperworks on account, purchase order No. 320 for $65,760, terms 1/10, n/30. 28 Check No. 1599 for $17,500 is issued to the bond sinking fund trustee, Chicago Trust Co., for deposit in the sinking fund. (Use Other Assets). 28 Sold plumbing supplies to Swanson Brothers Construction on account, invoice No. 1211 31 Received a check for $24,730 from Boecker Builders in payment of invoice No. 1207. 31 Issued check No. 1600 for $60,192 to Smith Pipe Company in payment of purchase 31 The custodian of the petty cash fund submits the following receipts for reimbursement and reports a cash-on-hand count of $25. Postage stamps used (supplies expense).................. $45 United Parcel (freight-out) .................................... 25 C.O.D. postage (inventory cost)................................. 55 Check No. 1601 is issued and cashed to reimburse the fund. 31 Sold an electric truck-lift to Leila Stierman Co. for $4,200 cash. The original cost was $10,000 with salvage value of $1,000, a life of 10 years, and accumulated depreciation recorded through 12/31/17 of $3,600. The straight-line method is used. (Note: the company follows the practice of recording a half years depreciation in the year of acquisition and a half year in the year of disposal.) First, bring the depreciation expense up to date in the general journal. Then journalize the entire entry for the sale in the cash receipts journal. 31 Sold bathroom fixtures and plumbing supplies to Trudys Plumbing on account, invoice No. 1212 for $52,500. 83 for $29,250. order No. 317. 31 Because for some time the petty cash fund has been smaller than required for monthly expenditures, the fund is increased by $95 by cashing check No. 1602 and placing the money in the petty cash fund. 31 The payroll summary for the monthly paid employees is submitted so that December checks can be distributed before the year-end; the details are as follows: Office and administrative salaries.......................... $40,500 Federal income taxes withheld .............................. 6,350 State income taxes withheld .................................. 1,640 FICA taxes withheld ................................................ 3,098 Net pay.............................................................. $ 29,412 Issued check No. 1603 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were prepared for distribution to all monthly employees by the end of the day. Employers payroll taxes: FICA tax (all office and administrative).......... $3,098 Federal unemployment tax.............................. State unemployment tax .................................. 31 Cash sales since December 14 total $44,230. INSTRUCTIONS 1. Make the entries in the appropriate journals for December 26 through December 31. 2. Post any amounts to be posted as individual amounts from the journals to the general ledger and any amounts to be posted to the subsidiary ledger accounts. (If the normal practice of daily posting were followed, the postings would be in chronological order; proper date sequence for this practice set is not necessary.) 3. Foot and cross-foot the columnar journals and complete the month-end postings of all books of original entry. 4. Prepare a trial balance by entering the account balances from the general ledger in the first two columns of the ten-column work sheet (list all accounts, including those with zero balances). 5. From the following information prepare adjusting entries in the general journal and enter them in the adjustments columns of the work sheet and cross-reference the amounts using the related alphabetic characters (round all calculations to the nearest dollar). a. The annual provision for doubtful accounts receivable is recorded in an amount equal to 3.2% of gross accounts receivable less the ending Allowance account balance.(This entry should be entered below the middle of General Journal page 10.) b. An inventory count of the office supplies revealed $870 of supplies on hand at yearend. c. The insurance premium outstanding on January 1, 2018, covers the period January 1 through August 31, 2018. The insurance premium of $7,800 recorded in August covers the period of September 1, 2018 through August 31, 2019. 84 d. The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2018: Delivery and Warehouse Wages ............................ $7,500 FICA Taxes Payable ................................................ 574 Federal Withholding Taxes .................................... 1,150 State Withholding Taxes.......................................... 226 Net pay.............................................................. $5,550 e. The employers share of the FICA tax ($574) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salaries earned during the last quarter exceed the maximum subject to unemployment tax. f. Interest has accrued at 8% on the long-term notes payable since July 1, 2018. The next six-month interest payment at 7.2% on the bonds is due on March 1, 2019. The original discount on bonds payable was $14,300. No portion of the discount has been amortized for any part of 2018; the bonds are 10-yr maturity. (Use straight-line.) g. The interest accrued to 12/31/18 on notes receivable is composed of the following: Platteville Plumbers, 10%, 6 months, due March 31, 2019 $1,150 Bilder Construction, 8%, 6 months, due June 17, 2019 120 Beverlys Building, 9%, 6 months, due June 26, 2019 70 $1,340 The interest accrued at 12/31/18 on the note payable of $15,000 @ 8% is $1,200. Interest is payable on January 2, 2019. (The note is due in 2019.) h. A warehouse lease payment of $18,000 was made on September 1, 2018, for rental through February 28, 2019. (The Prepaid Rent account is for advance lease payments on the warehouse. This is the only outstanding lease agreement at year end.) i. $650 is owed to Northern Electric Co. and $295 is owed to City of Rockford for utility services provided during December 2018. j. Plant and equipment depreciation expense is composed of the following: Accumulated Depreciation-Buildings $16,850 Accumulated Depreciation-Equipment $ 5,225 Accumulated Deprecation-Trucks $ 9,720 85 6. Income Tax expense for 2018 is $115,300 in total. Prepare the journal entry for the income tax. (Take into consideration what has already been recognized in 2018 as income tax expense.) 7. Post all adjusting entries. 8. Prepare schedules of subsidiary accounts receivable and accounts payable and determine that the total per each subsidiary schedule agrees with the related control account. 9. Prepare an income statement (assume the weighted-average number of shares outstanding for the year 2018 is 5,000 shares for EPS). Assume that bad debt expense and depreciation expense are operating expenses. Use a multi-step format. 10. Prepare a statement of retained earnings. 11.Prepare a classified balance sheet. (Hint: combine Petty Cash with Cash for balance sheet purposes.) 12. 13. Prepare and post closing entries. Prepare a post-closing trial balance