ACCT 101 - PROBLEM 1

Step 1 - Journalize the transactions

Step 2 - Prepare a Trial Balance

Click on the Trial Balance tab and prepare the Trial Balance. The total of the Trial Balance should be $4,450,816. If your balance does not agree, make any necessary corrections before you proceed.

Step 3 - Prepare Adjusting Entries

Record the adjusting entries in the Gen. Journal tab after the journal entries you recorded in step #2. Skip a line after the last entry and write Adjusting Entries in the middle of the account column then journalize the adjusting entries. You do not need an explanation, but skip a line between entries. All the adjusting entries should be dated December 31. Post the adjusting entries to the T-Accounts in Excel.

Step 4 - Prepare an Adjusted Trial Balance

Click on the Adjusted Trial Balance tab and prepare the Adjusted Trial Balance. The total of the Adjusted Trial Balance should be $4,489,500. If your balance does not agree, make any necessary corrections before you proceed.

Step 5 - Prepare the Income Statement

Click on the Income Statement tab in the Excel file to prepare the Income Statement using the amounts from the Adjusted Trial Balance. The Income Statement has been formatted using the outlined cells. Entries should only be made in the outlined cells. The exact number of rows needed are outlined so you should not add any rows or columns to the Income Statement. The Net Income should be $681,957.

Step 6 Prepare a Retained Earnings Statement and Balance Sheet

Prepare the Retained Earnings Statement and the Balance Sheet the same way you did the Income Statement using the amounts from the Adjusted Trial Balance. Both statements have been formatted with the exact number of rows needed. Entries should only be made in the outlined cells; do not add any rows or columns. The Total Assets on the Balance Sheet should be $3,158,382.

ACCT 101

Fundamentals of Accounting

PROBLEM 1

Dinah Soars, Biff Wellington and Duane Pipe are the stockholders of Sharpe Incorporated. The charter of the corporation authorized 500,000 shares of $5 par common stock, and 100,000 shares of $30 par, 3%, preferred stock. As of January 1, 2018, there were 25,000 shares of common stock issued and outstanding and 4,000 shares of preferred stock issued and outstanding.

Selected transactions completed by Sharpe Incorporated during the fiscal year-ending December 31, 2018, are as follows:

Jan 1 Issued 13,000 shares of $5 par common stock at $19, receiving cash.

Jan 1 Issued 6,700 shares of $30 par, 3%, preferred stock at $69 for cash.

Feb 1 Purchased equipment for $220,000, paying $20,000 cash and financing the remainder with a 180-day, 5% note payable.

Mar 15 Purchased land for $352,000 by issuing 18,000 shares of common stock.

Mar 31 Purchased a two-year insurance policy for $39,000.

May 1 Purchased 1,600 shares of the companys own common stock at $23 per share.

May 31 Issued $1,000,000 of 8-year, 7% bonds with interest payable semiannually. The amount of cash received was

$1,087,936.

July 30 Paid the amount due on the note payable signed on February 1.

Aug 1 Sold 500 shares of treasury common stock purchased on May 1 for $26 per share.

Sept 15 Declared a 2% stock dividend on common stock to be distributed on September 30 to stockholders of record on September 20. The market price per share on September 15 is $26 per share.

Sept 30 Distributed the stock dividend declared September 15.

Oct 1 Borrowed $36,000 from Second Bank by issuing an 7% note. The note is to be repaid in quarterly payments of principal plus interest totaling $2,130 per quarter.

Oct 16 Sold 370 shares of treasury common stock purchased on May 1 for $20 per share.

Nov 30 Paid the semiannual interest and amortized the premium on the bonds issued on May 31.

Dec 1 Declared a cash dividend at the stated amount to preferred stockholders and .50 per share to common

stockholders payable on December 30 to stockholders of record on December 16.

(Hint: dont forget the shares distributed from the stock dividend)

Dec 30 Paid the cash dividends declared on December 1.

Dec 31 Paid the first quarterly installment of the note issued on October 1. Hint: remember that interest expense on an

installment note is calculated on the outstanding loan balance, and the balance of the payment is principal.

Dec 31 Record revenue for the year of $1,975,000, received $500,000 in cash, the remainder is on account.

Dec 31 Record expenses for the year, paid in cash (one compound entry):

Rent $170,000

Utilities 13,200

Salaries 760,000

Advertising 140,000

Medical insurance 32,000

Commissions 63,000

Legal and accounting 18,000

Miscellaneous 8,400

Adjusting Entries

(1) The employees accrued vacation pay at the end of the year was $12,482.

(2) Record depreciation on the equipment purchased on February 1, using the straight-line method. The equipment has an estimated 9-year useful life and an

estimated residual value of $11,020.

(3) Record insurance expired on the policy purchased March 31.

(4) Record the adjusting entry for the interest accrued and the amortization of the premium on the bonds payable since the last interest payment.

(round the amount to the nearest dollar)

_{THE OPENING TRIAL BALANCE IS NOT GIVEN NOR REQUIRED FOR THE PROBLEM. AS YOU GO ALONG WITH THE PROBLEM, HE GAVES US THE NUMBER THAT WERE SUPPOSED TO HAVE TO MAKE SURE WE ARE ON THE RIGHT TRACK. FOR EXAMPLE, STEP # 4, WHEN YOU DO THE TRIAL BALANCE, YOU SHOULD HAVE A BALANCE OF $4,489,500.00}

n Home Layout Tables Charts smartArt Formulas Data Review Aig Fall v |Calibri (Body) 11 AA abcT Wrap Text General Normal 2 T Vo Conditional Norma For matti Clean Merge Paste Cash Accounts Receivable Prepaid Insurance Land quipment Accumulated Depreciation Vacation Pay Payable 100 nterest payable 11 Notes Payable Common Dividends Payable referred Dividends Payable 14 Bonds payable 15 Bond Premium 16 Common Stock 17 IC in Excess of Common Stock 18 referred Stock IC in Excess of P Preferred Stock 20 IC-Treasury Stock 21 Stock Dividend Distributable 22 Retained Earnings 23 Treasury Stock 24 Fees Earned 25 Advertising Expense 26 Commissions Expense Depreciation Expense 28 pense 29 Legal & Accounting Expense 30 Medical Expense 31 Miscel eous Expense 32 Rent Expense 33 Salary Expense 34 tilities Expense 35 Vacation Pl Expense 36 nterest Expense 37 38 39 40 41 42 43 Chart of AcctsTNames Gen. JournalTT Accts Trial Balance Adj Trial Balance Income StmtTRet Earn. Stmt Bal Cells Insert Delete Format Themes Aa