Can someone please look over my adjustments and correct me on the errors? I have attached my work and prof. notes. Thanks!
Prof. Notes
1. Debit $265,000- Marketable Securities Credit $265,000- Unrealized Gain/(Loss)
2. Debit $375 ($1500 x 25% tax rate)- Income Taxes Credit $375- Income Tax Current Payable
3. Debit $52,325.25- Income Tax Currently Payable Credit $52,325.25- Deferred Tax Liability
4. Debit $107,041.70- Pension Expense Credit $107,041.70- Accrued Pension Liability
5. Debit $43,718.92- Retired Employee Health Insurance Credit $43,718.92- Accrued Employees Health Insurance
6. Debit $101,514 ($20000 x 5.0757)- Baking Equipment Credit $101,514- Lease Liability
7. Debit $20,000- Depreciaiton Expense Credit $20,000- Rent Expense
Comprehensive income items Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale Market value at the balance sheet date is $5,235,00 Prepare the adjusting entry to record the unrealized loss and include in comprehensive income Tax information and implications $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary adjusting entry. The company uses straight line depreciation for book and MACRS depreciation for the tax return MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. There have been recent tax structure changes the could impact the company. Peyton Approved has been a C Corp since the beginning of these changes. Peyton provides for taxes at 25% of oretax income (20% Federal. 5% statel. Stockholder Equity Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront locations and launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 5 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of after-tax profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 3% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees' health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability Leases Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years with an implicit interest rate of 5%. At the end of the 5 years, Peyton will own them. Make any necessary adjusting entries. Stockholder Equity / Earnings per share Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront locations and launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $500,000 of after-tax profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Other Items On December 31, 20xx, the company repaired a packaging machine at cost of $27,000.00. It is expected that the repair will extend the life of the machine by four years. No depreciation is necessary this year. The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The patent took effect on 1/1/20xx and provides 20 years of protection. The $50,000 amount was incorrectly charged to Misc. Expense Adjusting entries Dr Cr Cr 285.000.00 Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Land Building Baking Equipment As of December 31, 2017 Dr Cr 1,488 999.34 5,500,000.00 7,092.495.38 1,605.098.52 126.152.63 71.877.07 207.834,14 17.647.42 250,000.00 1,250,000.00 2.254.140.00 Dr 1,488.999.34 5,785,000.00 7,092.495.88 1,605 090.52 126.152.63 71.877.07 207.834.14 17.647.42 250,000.00 1.250.000.00 2,382.654.00 101.514.00 27,000.00 328 262.00 328 262.00 50,000.00 2.500.00 47,500.00 Accumulated Depreciation Patent Accounts Payable Wages Payable Interest Payable Current Portion of Bonds Payable Income Taxes Currently Payable Accrued Pension Liability Accrued Employees Health Insurance Lease Liability 1,555 212.85 250.203.31 21.888.22 1,000,000.00 1,042,118.16 1,555 212.85 250.203.31 21.888.22 1,000,000.00 990.167.91 107.041.00 43.718.92 101.514.00 52.325.25 375.00 107.041.00 43.718.92 101.514.00 52.325.25 4,000,000.00 500,000.00 1,750,000.00 2.213 122.59 52.325.25 4.000.000,00 500,000.00 1,750,000.00 2,213,122.59 50,000.00 5,250,000.00 33,881,157.15 124.795.80 33,881,157.15 124.795.80 20,000.00 Deferred Tax Liability Bonds Payable Preferred Stock Common Stock Beginning Relained earnings Dividends - Preferred 50.000.00 Dividends - Common 5,250,000.00 Bakery Sales Merchandise Sales Cost of Goods Sold-Bake 10,954.907.38 Cost of Goods Sold - Merc 88.994.79 Rent Experise 1,576,731.95 Wages Expense 2,604.526.23 Misc. Supplies Expense 263 224,56 Repairs and Maintenance 47.353.05 Business License Expense 211.757.65 Misc. Expense 141.171.08 Depreciation Experte 634,520.00 Insurance Experise 112.937.69 Advertising Expense 160.413.49 Interest Expense 484.703.27 Telephone Experts 50.821.34 Pension Expense Retired Employees Health Ins. Patent Amortization 27.000.00 50,000.00 20.000.00 10,954.907.38 88.994.79 1,566.731.95 2,604.526.23 263 224.58 20,353.05 211,757.65 91.171.08 654.520.00 112.937.69 160.413.49 484.703.27 50.821.34 107.041.00 43.718.92 2.500.00 107,041.00 43.718.92 2,500.00 Unrealized Gain/Loss) on Marketable Securities Held for Sale 265,000.00 (265.000.00) 4.168.472.62 375.00 Income Taxes Deferred Tax Expense 52.325.25 4,168,847.62 (52.325.25) 46,666.780.08 46.666.780.00 669.474.17 721,799.42 46.867.103.75 46,919.429.00 DF Year Capital Leases Year 1 2 3 4 5 un Lease Payment 20,000.00 20,000.00 5 20,000.00 S 20,000.00 S 20,000.00 5 20,000.00 0.9524 5 0.9070 S 0.8638 S 0.6227 5 0.78355 0.7462 S PV 19,047.62 18,140.59 17,276.75 16,454.05 15,670.52 14,924.31 2 3 4 5 Lease Payment Interest Finance Charges Lease Rental Balance Due $ 20,000.00 5.076 5 14,924.31 5 86,589.53 $ 20,000.00 4.329 S 15,670.52 570,919.01 $ 20,000.00 3.546 5 16,454.05 5 54,464.96 $ 20,000.00 2.723 S 17,276.75 5 37,188.21 $ 20,000.00 1.859 5 18,140.59 5 19,047.62 $ 20,000.00 0.952 S 19,047.62 6 Fair value of Lease Obligation 101,513.84 Pension payouts PV = 20000* 5.0757 = 101514 Debit Credit Debit Credit Journal Current Service Cost 101,514.00 43718.91 101,514.00 43718.91 S 14,924.31 5.076 $20,000.00 Short Term Liability Long Term Liability Pension Payout Pension Liability Health Inusrance Liability 43718.91 63322.79 63322.79 107041.7 43718.91 20000 20000 S 15,670.52 4.329 S 20,000.00 20000 2000g S 16,454.05 3.546 S 20,000.00 Journal Lease (ovens) Lessor Lease Rental (1) Finance Charge Lease Payment Lessor Bank Lease Rental (2) Finance Charge Lease Payment Lessor Bank Lease Rental (3) Finance Charge Lease Payment Lessor Bank Lease Rental (4) Finance Charge Lease Payment Lessor Bank Lease Rental (5) Finance Charge Lease Payment Lessor Bank Lease Rental (6) Finance Charge Lease Payment Lessor Bank 20000 20000 S 17,276.75 2.723 S 20,000.00 S 18,140.59 1.859 5 20,000.00 S 19,047.62 0.952 5 20,000.00 20000 20000 Comprehensive income items Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale Market value at the balance sheet date is $5,235,00 Prepare the adjusting entry to record the unrealized loss and include in comprehensive income Tax information and implications $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary adjusting entry. The company uses straight line depreciation for book and MACRS depreciation for the tax return MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. There have been recent tax structure changes the could impact the company. Peyton Approved has been a C Corp since the beginning of these changes. Peyton provides for taxes at 25% of oretax income (20% Federal. 5% statel. Stockholder Equity Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront locations and launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 5 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of after-tax profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 3% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees' health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability Leases Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years with an implicit interest rate of 5%. At the end of the 5 years, Peyton will own them. Make any necessary adjusting entries. Stockholder Equity / Earnings per share Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront locations and launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $500,000 of after-tax profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Other Items On December 31, 20xx, the company repaired a packaging machine at cost of $27,000.00. It is expected that the repair will extend the life of the machine by four years. No depreciation is necessary this year. The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The patent took effect on 1/1/20xx and provides 20 years of protection. The $50,000 amount was incorrectly charged to Misc. Expense Adjusting entries Dr Cr Cr 285.000.00 Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Land Building Baking Equipment As of December 31, 2017 Dr Cr 1,488 999.34 5,500,000.00 7,092.495.38 1,605.098.52 126.152.63 71.877.07 207.834,14 17.647.42 250,000.00 1,250,000.00 2.254.140.00 Dr 1,488.999.34 5,785,000.00 7,092.495.88 1,605 090.52 126.152.63 71.877.07 207.834.14 17.647.42 250,000.00 1.250.000.00 2,382.654.00 101.514.00 27,000.00 328 262.00 328 262.00 50,000.00 2.500.00 47,500.00 Accumulated Depreciation Patent Accounts Payable Wages Payable Interest Payable Current Portion of Bonds Payable Income Taxes Currently Payable Accrued Pension Liability Accrued Employees Health Insurance Lease Liability 1,555 212.85 250.203.31 21.888.22 1,000,000.00 1,042,118.16 1,555 212.85 250.203.31 21.888.22 1,000,000.00 990.167.91 107.041.00 43.718.92 101.514.00 52.325.25 375.00 107.041.00 43.718.92 101.514.00 52.325.25 4,000,000.00 500,000.00 1,750,000.00 2.213 122.59 52.325.25 4.000.000,00 500,000.00 1,750,000.00 2,213,122.59 50,000.00 5,250,000.00 33,881,157.15 124.795.80 33,881,157.15 124.795.80 20,000.00 Deferred Tax Liability Bonds Payable Preferred Stock Common Stock Beginning Relained earnings Dividends - Preferred 50.000.00 Dividends - Common 5,250,000.00 Bakery Sales Merchandise Sales Cost of Goods Sold-Bake 10,954.907.38 Cost of Goods Sold - Merc 88.994.79 Rent Experise 1,576,731.95 Wages Expense 2,604.526.23 Misc. Supplies Expense 263 224,56 Repairs and Maintenance 47.353.05 Business License Expense 211.757.65 Misc. Expense 141.171.08 Depreciation Experte 634,520.00 Insurance Experise 112.937.69 Advertising Expense 160.413.49 Interest Expense 484.703.27 Telephone Experts 50.821.34 Pension Expense Retired Employees Health Ins. Patent Amortization 27.000.00 50,000.00 20.000.00 10,954.907.38 88.994.79 1,566.731.95 2,604.526.23 263 224.58 20,353.05 211,757.65 91.171.08 654.520.00 112.937.69 160.413.49 484.703.27 50.821.34 107.041.00 43.718.92 2.500.00 107,041.00 43.718.92 2,500.00 Unrealized Gain/Loss) on Marketable Securities Held for Sale 265,000.00 (265.000.00) 4.168.472.62 375.00 Income Taxes Deferred Tax Expense 52.325.25 4,168,847.62 (52.325.25) 46,666.780.08 46.666.780.00 669.474.17 721,799.42 46.867.103.75 46,919.429.00 DF Year Capital Leases Year 1 2 3 4 5 un Lease Payment 20,000.00 20,000.00 5 20,000.00 S 20,000.00 S 20,000.00 5 20,000.00 0.9524 5 0.9070 S 0.8638 S 0.6227 5 0.78355 0.7462 S PV 19,047.62 18,140.59 17,276.75 16,454.05 15,670.52 14,924.31 2 3 4 5 Lease Payment Interest Finance Charges Lease Rental Balance Due $ 20,000.00 5.076 5 14,924.31 5 86,589.53 $ 20,000.00 4.329 S 15,670.52 570,919.01 $ 20,000.00 3.546 5 16,454.05 5 54,464.96 $ 20,000.00 2.723 S 17,276.75 5 37,188.21 $ 20,000.00 1.859 5 18,140.59 5 19,047.62 $ 20,000.00 0.952 S 19,047.62 6 Fair value of Lease Obligation 101,513.84 Pension payouts PV = 20000* 5.0757 = 101514 Debit Credit Debit Credit Journal Current Service Cost 101,514.00 43718.91 101,514.00 43718.91 S 14,924.31 5.076 $20,000.00 Short Term Liability Long Term Liability Pension Payout Pension Liability Health Inusrance Liability 43718.91 63322.79 63322.79 107041.7 43718.91 20000 20000 S 15,670.52 4.329 S 20,000.00 20000 2000g S 16,454.05 3.546 S 20,000.00 Journal Lease (ovens) Lessor Lease Rental (1) Finance Charge Lease Payment Lessor Bank Lease Rental (2) Finance Charge Lease Payment Lessor Bank Lease Rental (3) Finance Charge Lease Payment Lessor Bank Lease Rental (4) Finance Charge Lease Payment Lessor Bank Lease Rental (5) Finance Charge Lease Payment Lessor Bank Lease Rental (6) Finance Charge Lease Payment Lessor Bank 20000 20000 S 17,276.75 2.723 S 20,000.00 S 18,140.59 1.859 5 20,000.00 S 19,047.62 0.952 5 20,000.00 20000 20000
