AC 300 Practice Set: Assignment 1

Widgets R Us, Inc. Year 1 (2014)

Part A: Due Tuesday, February 24 (You must submit printouts of your work):

Step 1: Prepare journal entries (Word or Excel) in good form for the transactions below.

Step 2: Prepare adjusting journal entries (Word or Excel) in good form (see next page).

Step 3: Post these entries to the opening worksheet provided and complete it.

Notes:

This is a formal report. Use the exact account titles found in your worksheet and do not abbreviate. Points will be deducted for typos and spelling errors.

Insert each transaction number into the post reference columns (PR) found to

the left of each debit and credit column to organize your work.

Transactions for 2014:

1. Sales for the year were $2,500,000 of which $2,000,000 were on credit and

the remainder were cash sales (prepare a single compound entry).

2. Collected $1,980,000 from customers on account.

3. Accounts receivable totaling $6,000 were written off. Hint: Dont

use Bad Debt Expense! This item doesnt represent an estimate of bad debts.

4. Purchases of merchandise made on account totaled $1,800,000. Hint: Since

a periodic inventory system is used, you must use the Purchases account in

your entry and remember that it is a temporary account that must be removed

when you record the adjusting entry for Cost of Goods Sold.

5. In 2013, $12,000 was paid for insurance covering the period of August 1,

2013 to July 31, 2014. Both this cash payment and related adjusting journal

entries were recorded in 2013. In 2014, $12,600 was paid for insurance

covering the period of August 1, 2014 to July 31, 2015. Record the payment

made for this insurance.

6. Purchased a copier for $15,000.

7. Purchased store equipment (Store Equipment - 2014) for $180,000. To

finance the purchase, a $60,000 note payable due in one year was issued with

the remaining $120,000 paid in cash. Dont treat as a partial direct exchange.

8. Paid cash of $1,750,000 on accounts payable, $150,000 for salaries expense,

$75,000 for selling expenses, and $200,000 for administrative expenses.

9. Paid the amount due for 2013 taxes. Hint: Find the tax amount owed.

10. Incurred an extraordinary loss of $40,000 (paid cash)

11. Declared and paid dividends of $50,000.

12. In 2013, Widgets R Us, Inc. received $36,000 rental revenue for renting out a

portion of its warehouse for the period from May 1, 2013 to April 30, 2014.

Both this cash receipt and related adjusting journal entries were recorded in

2013. In 2014, the company collected rental revenue of $38,400 for the period

from May 1, 2014 to April 30, 2015. Record this cash receipt.

Adjustments needed in 2014:

Bad debt expense for 2014 is $6,300.

Ending inventory at December 31, 2014 is $155,000.

Twelve months of insurance were incurred in 2014.

Information for depreciation: The company uses straight-line depreciation for all of its assets. The useful lives are as follows: 20 years for the building, 5 years for the store equipment, and 3 years for the copier. Assume the copier and new store equipment were purchased on January 1, 2014.

In January 2015, the first payroll amounted to $12,000 covering a ten-day work period of which 8 days were in December and 2 days were in January.

Interest on the note payable needs to be accrued. The loan was created on January 1, 2014. The notes interest rate is 14.4%.

Twelve months of rental revenue were earned in 2014.

Income tax rate = 35%. Hint: Since extraordinary items must be reported net of tax, adjust the Extraordinary Loss account to its net of tax amount.

Net Income Check Figure for Part A: $79,339

Part B: Due Tuesday, March 3 (Bring Required Work to Class):

Prepare the required financial statements for Widgets R Us, Inc.

Prepare a condensed, multiple-step income statement that classifies its operating expenses into selling and administrative. Salaries expense is 60% selling and 40% administrative. Insurance expense is 10% selling and 90% administrative. Depreciation expense on store equipment is a selling expense, and the depreciation expense on the building and copier is an administrative expense. Bad debt expense is a selling expense.

Prepare a simple statement of retained earnings.

Prepare a classified, comparative balance sheet for 2014 and 2013.

Prepare the statement of cash flows using the direct method to report operating cash flows. Use the transaction-based statement of cash flows introduced in this course.

Prepare the closing entries for 2014.

Prepare a post-closing trial balance at December 31, 2014.

Special Notes:

1. To conserve space, all trial balances in the initial worksheet are displayed as a single

column in which all debit balances are positive numbers and all credit balances are

negative numbers. Note that the credit balances show up in red. In contrast, the

transaction entries and adjusting entries have both a debit and credit column.

2. You are encouraged to work in teams on this assignment but the maximum team size

allowed is three members. It is expected that each team member will work on all

parts of the project and that the project requirements will not be split up in any way.

AC 300 Practice Set: Assignment 1 Widgets R Us, Inc. - Year 1 (2014) Part A: Due Tuesday, February 24 (You must submit printouts of your work): Step 1: Step 2: Step 3: Notes: Prepare journal entries (Word or Excel) in good form for the transactions below. Prepare adjusting journal entries (Word or Excel) in good form (see next page). Post these entries to the opening worksheet provided and complete it. This is a formal report. Use the exact account titles found in your worksheet and do not abbreviate. Points will be deducted for typos and spelling errors. Insert each transaction number into the post reference columns (PR) found to the left of each debit and credit column to organize your work. Transactions for 2014: 1. Sales for the year were $2,500,000 of which $2,000,000 were on credit and the remainder were cash sales (prepare a single compound entry). 2. Collected $1,980,000 from customers on account. 3. Accounts receivable totaling $6,000 were written off. Hint: Don't use Bad Debt Expense! This item doesn't represent an estimate of bad debts. 4. Purchases of merchandise made on account totaled $1,800,000. Hint: Since a periodic inventory system is used, you must use the Purchases account in your entry and remember that it is a temporary account that must be removed when you record the adjusting entry for Cost of Goods Sold. 5. In 2013, $12,000 was paid for insurance covering the period of August 1, 2013 to July 31, 2014. Both this cash payment and related adjusting journal entries were recorded in 2013. In 2014, $12,600 was paid for insurance covering the period of August 1, 2014 to July 31, 2015. Record the payment made for this insurance. 6. Purchased a copier for $15,000. 7. Purchased store equipment (Store Equipment - 2014) for $180,000. To finance the purchase, a $60,000 note payable due in one year was issued with the remaining $120,000 paid in cash. Don't treat as a partial direct exchange. 8. Paid cash of $1,750,000 on accounts payable, $150,000 for salaries expense, $75,000 for selling expenses, and $200,000 for administrative expenses. 9. Paid the amount due for 2013 taxes. Hint: Find the tax amount owed. 10. Incurred an extraordinary loss of $40,000 (paid cash) 11. Declared and paid dividends of $50,000. 12. In 2013, Widgets R Us, Inc. received $36,000 rental revenue for renting out a portion of its warehouse for the period from May 1, 2013 to April 30, 2014. Both this cash receipt and related adjusting journal entries were recorded in 2013. In 2014, the company collected rental revenue of $38,400 for the period from May 1, 2014 to April 30, 2015. Record this cash receipt. Adjustments needed in 2014: 1. 2. 3. 4. 5. 6. 7. 8. Bad debt expense for 2014 is $6,300. Ending inventory at December 31, 2014 is $155,000. Twelve months of insurance were incurred in 2014. Information for depreciation: The company uses straight-line depreciation for all of its assets. The useful lives are as follows: 20 years for the building, 5 years for the store equipment, and 3 years for the copier. Assume the copier and new store equipment were purchased on January 1, 2014. In January 2015, the first payroll amounted to $12,000 covering a ten-day work period of which 8 days were in December and 2 days were in January. Interest on the note payable needs to be accrued. The loan was created on January 1, 2014. The note's interest rate is 14.4%. Twelve months of rental revenue were earned in 2014. Income tax rate = 35%. Hint: Since extraordinary items must be reported net of tax, adjust the Extraordinary Loss account to its net of tax amount. Net Income Check Figure for Part A: $79,339 Part B: Due Tuesday, March 3 (Bring Required Work to Class): 1. Prepare the required financial statements for Widgets R Us, Inc. Prepare a condensed, multiple-step income statement that classifies its operating expenses into selling and administrative. Salaries expense is 60% selling and 40% administrative. Insurance expense is 10% selling and 90% administrative. Depreciation expense on store equipment is a selling expense, and the depreciation expense on the building and copier is an administrative expense. Bad debt expense is a selling expense. Prepare a simple statement of retained earnings. Prepare a classified, comparative balance sheet for 2014 and 2013. Prepare the statement of cash flows using the direct method to report operating cash flows. Use the transaction-based statement of cash flows introduced in this course. 2. Prepare the closing entries for 2014. 3. Prepare a post-closing trial balance at December 31, 2014. Special Notes: 1. To conserve space, all trial balances in the initial worksheet are displayed as a single column in which all debit balances are positive numbers and all credit balances are negative numbers. Note that the credit balances show up in red. In contrast, the transaction entries and adjusting entries have both a debit and credit column. 2. You are encouraged to work in teams on this assignment but the maximum team size allowed is three members. It is expected that each team member will work on all parts of the project and that the project requirements will not be split up in any way. AC 300 Practice Set: Assignment 1 Widgets R Us, Inc. - Year 1 (2014) Part A: Due Tuesday, February 24 (You must submit printouts of your work): Step 1: Step 2: Step 3: Notes: Prepare journal entries (Word or Excel) in good form for the transactions below. Prepare adjusting journal entries (Word or Excel) in good form (see next page). Post these entries to the opening worksheet provided and complete it. This is a formal report. Use the exact account titles found in your worksheet and do not abbreviate. Points will be deducted for typos and spelling errors. Insert each transaction number into the post reference columns (PR) found to the left of each debit and credit column to organize your work. Transactions for 2014: 1. Sales for the year were $2,500,000 of which $2,000,000 were on credit and the remainder were cash sales (prepare a single compound entry). 2. Collected $1,980,000 from customers on account. 3. Accounts receivable totaling $6,000 were written off. Hint: Don't use Bad Debt Expense! This item doesn't represent an estimate of bad debts. 4. Purchases of merchandise made on account totaled $1,800,000. Hint: Since a periodic inventory system is used, you must use the Purchases account in your entry and remember that it is a temporary account that must be removed when you record the adjusting entry for Cost of Goods Sold. 5. In 2013, $12,000 was paid for insurance covering the period of August 1, 2013 to July 31, 2014. Both this cash payment and related adjusting journal entries were recorded in 2013. In 2014, $12,600 was paid for insurance covering the period of August 1, 2014 to July 31, 2015. Record the payment made for this insurance. 6. Purchased a copier for $15,000. 7. Purchased store equipment (Store Equipment - 2014) for $180,000. To finance the purchase, a $60,000 note payable due in one year was issued with the remaining $120,000 paid in cash. Don't treat as a partial direct exchange. 8. Paid cash of $1,750,000 on accounts payable, $150,000 for salaries expense, $75,000 for selling expenses, and $200,000 for administrative expenses. 9. Paid the amount due for 2013 taxes. Hint: Find the tax amount owed. 10. Incurred an extraordinary loss of $40,000 (paid cash) 11. Declared and paid dividends of $50,000. 12. In 2013, Widgets R Us, Inc. received $36,000 rental revenue for renting out a portion of its warehouse for the period from May 1, 2013 to April 30, 2014. Both this cash receipt and related adjusting journal entries were recorded in 2013. In 2014, the company collected rental revenue of $38,400 for the period from May 1, 2014 to April 30, 2015. Record this cash receipt. Adjustments needed in 2014: 1. 2. 3. 4. 5. 6. 7. 8. Bad debt expense for 2014 is $6,300. Ending inventory at December 31, 2014 is $155,000. Twelve months of insurance were incurred in 2014. Information for depreciation: The company uses straight-line depreciation for all of its assets. The useful lives are as follows: 20 years for the building, 5 years for the store equipment, and 3 years for the copier. Assume the copier and new store equipment were purchased on January 1, 2014. In January 2015, the first payroll amounted to $12,000 covering a ten-day work period of which 8 days were in December and 2 days were in January. Interest on the note payable needs to be accrued. The loan was created on January 1, 2014. The note's interest rate is 14.4%. Twelve months of rental revenue were earned in 2014. Income tax rate = 35%. Hint: Since extraordinary items must be reported net of tax, adjust the Extraordinary Loss account to its net of tax amount. Net Income Check Figure for Part A: $79,339 Part B: Due Tuesday, March 3 (Bring Required Work to Class): 1. Prepare the required financial statements for Widgets R Us, Inc. Prepare a condensed, multiple-step income statement that classifies its operating expenses into selling and administrative. Salaries expense is 60% selling and 40% administrative. Insurance expense is 10% selling and 90% administrative. Depreciation expense on store equipment is a selling expense, and the depreciation expense on the building and copier is an administrative expense. Bad debt expense is a selling expense. Prepare a simple statement of retained earnings. Prepare a classified, comparative balance sheet for 2014 and 2013. Prepare the statement of cash flows using the direct method to report operating cash flows. Use the transaction-based statement of cash flows introduced in this course. 2. Prepare the closing entries for 2014. 3. Prepare a post-closing trial balance at December 31, 2014. Special Notes: 1. To conserve space, all trial balances in the initial worksheet are displayed as a single column in which all debit balances are positive numbers and all credit balances are negative numbers. Note that the credit balances show up in red. In contrast, the transaction entries and adjusting entries have both a debit and credit column. 2. You are encouraged to work in teams on this assignment but the maximum team size allowed is three members. It is expected that each team member will work on all parts of the project and that the project requirements will not be split up in any way