Question
Can you prepared an adjusted trail balance The 2015 balance sheet of the Stark Industries is attached. During 2016, the following events occurred. 1. On
Can you prepared an adjusted trail balance
The 2015 balance sheet of the Stark Industries is attached. During 2016, the following events occurred.
1. On January 10, sell merchandise on account to Rayms $9,800 and Fischer $8,600. Terms 1/10, n/30. Freight $100 for each sale, F.O.B. shipping point.
2. On January 12, purchase merchandise on account from Zapfel $3,000 and Liotta $2,400. Terms 2/10, n/30. Freight $120 for each sale, F.O.B. destination.
3. On January 13, receive checks, $4,000 from Longhini and $2,000 from Hall, for sales on account after discount period has lapsed.
4. On January 15, send checks to Joosten for 9,000 less 2% cash discount, and to Maida for $11,000 less 1% cash discount.
5. On January 16, issue credit of $200 to Fieber for merchandise returned.
6. On January 18, summary daily cash sales total $17,520.
7. On January 21, pay off the balances to Zapfel and Liotta for the purchases on January 12.
8. On Feburary 9, receive payment in full from Rayms and Fischer.
9. On January 1, pay rent of $6,000 for a two-year term.
10. On April 1, sell merchandise on account to Dunlap $1,600, term 2/10, n/30. Freight $100, F.O.B. shipping point.
11. Pay $500 cash for office supplies on May 1.
12. Cash dividends totaling $900 are declared on June 13 and paid to stockholders on June 23.
13. Issue a note of $120,000 to bank (one year, annual interest rate 2%) for cash on July 1.
14. On July 5, purchase merchandise from Maida $33,000, terms 2/10, n/30.
15. On July 7, issue common stock 1000 shares, $10 par, in exchange of a land with a fair market value of $15,000.
16. On July 8, return $200 of merchandise to Maida and receive credit.
17. On August 1, sell merchandise to Lachey on account $80,000, term 1/10, n/30. Freight $1,500, F.O.B. shipping point.
18. On August 4, pay off the balance to Maida.
19. On August 10, receive half of the payment from Lachey.
20. On August 14, write off $1,300 bad debt for one account, Tooket.
21. On August 21, pay utilities expense, $10,092.
22. On August 31, Lachey pays off its balance.
23. On September 1, pay cash $7,500 to Farmington for merchandise purchased last year.
24. On October 1, pay off notes payable $110,000 and associated accrued interest $6,000, of which $1,500 was shown on the balance sheet.
25. Over the year, sales and office employees earned $45,500 in salaries and wages, of which $1,500 was still payable at the end of year.
26. An unpaid utilities bill (December, $1,250) is due on January 10 next year.
Additional Information at the end of the year:
1. Depreciation expense for the year was $13,250.
2. The company estimated that it has to pay federal income tax, $3,250.
3. After physically counting, the company decided that the ending inventories worth $40,146.
4. Based on its historical data, the company estimated that the bad debts were about 1% of net credit 2 sales.
5. Unearned revenue is decreased by $12,000.
6. The company expenses all of the supplies purchased during the year.
7. No insurance policy is effective during the year.
8. The company used the gross method to record its purchases and sales on credit.
9. The company adopts the periodic inventory system.
Instructions:
1. Prepare journal entries for each event.
2. Prepare adjusting entries.
3. Prepare adjusted trial balance.
4. Prepare Income Statement, Retained Earnings Statement, Balance Sheet, and Statement of Cash Flows.
5. Prepare closing entries.
Stark Industries
BALANCE SHEET
DECEMBER 31, 2015
Current Assets
Cash 42,200
Notes Receivable 16,000
Accounts Receivable 41,800
Less: Allowance for Doubtful Accounts (3,000)
Inventories 38,800
Prepaid Insurance 540
Prepaid Rent 600
Total Current Assets 136,940
Non-Current Assets
Long-term Investments I
nvestments in held-for-maturity securities 52,000
Land held for future development 45,500
Property, Plant, and Equipment Land 85,000
Buildings 675,000
Less: Accumulated Depreciation (187,500)
Intangible Assets Capitalized Development Costs 8,000
Goodwill 76,700 Other Identifiable Intangible Assets 48,000
Total Non-Current Assets 802,700
Total Assets 939,640
Current Liabilities
Notes Payable 110,000
Accounts Payable 32,000
Unearned Revenues 13,500
Income Taxes Payable 8,440
Property Taxes Payable 6,600
Interest Payable 1,500
Total Current Liabilities 172,040
Non-Current Liabilities
Provisions Related to Pensions 84,100
Bonds Payable 300,000
Total Non-Current Liabilities 384,100
Total Liabilities 556,140
Stockholders' Equity Common Stock 100,000
Preferred Stock 100,000
Paid-in-capital - Common Stock 27,500
Paid-in-capital - Preferred Stock 10,000
Retained Earnings 152,750
Accumulated Other Comprehensive Income 6,000
Less: Treasury Stock (12,750)
Total Stockholders' Equity 383,500
Total Liabilities and Stockholders' Equity 939,640
Use the following check figures for Project One.
Adjusted Trial Balance: Total $1,276,554
Income Statement:
Earning after income tax: $8,928
Retained Earnings Statement:
Retained Earnings: $160,778
Balance Sheet:
Inventory: $40,146
Total assets: $938,868
Statement of Cash Flows
Net cash flows from this year: ($1,274)
Cash (ending): $40,926
General Journal | ||||
Date | Description | Post Ref. | Debit | Credit |
Jan. 1 | Rent Expense | 6,000 | ||
Cash | 6,000 | |||
(Rent paid for two-year term) | ||||
Jan. 10 | Account Receivable | 18,400 | ||
Freight-In | 200 | |||
Sales | 18,400 | |||
Cash | 200 | |||
(Sales on account terms 1/10,n/30 and Freight F.O.B) | ||||
Jan. 12 | Merchandise | 5,400 | ||
Freight-In | 240 | |||
Accounts Payable | 5,400 | |||
Cash | 240 | |||
(Purchase Merchandise terms 2/10, n/30 and Freight F.O.B) | ||||
Jan. 13 | Cash | 6,000 | ||
Accounts Receivable | 6,000 | |||
(Received payment from Longhini and Hall) | ||||
Jan. 15 | Accounts Payable | 19,600 | ||
Cash Discount | 400 | |||
Cash | 19,600 | |||
(Paid Joosten with 2% discount and Maida with 1% discount) | ||||
Jan. 16 | Inventory | 200 | ||
Accounts Receivable | 200 | |||
(Issued credit to Fieber for merchandise returned) | ||||
Jan. 18 | Cash | 17,520 | ||
Sales Revenue | 17,520 | |||
(Daily cash sales total) | ||||
Jan. 21 | Accounts Payable | 5,400 | ||
Cash | 5,400 | |||
(Paid balance to Zapfel and Liotta) | ||||
Feb. 9 | Cash | 18,400 | ||
Accounts Receivable | 18,400 | |||
(Received payment from Rayms and Fischer) | ||||
Apr. 1 | Account Receivable | 1,600 | ||
Freight-In | 100 | |||
Sales | 1,600 | |||
Cash | 100 | |||
(Sales on account terms 2/10,n/30 and Freight F.O.B) | ||||
May. 1 | Office Supplies | 500 | ||
Cash | 500 | |||
(Purshased Supplies) | ||||
Jun. 13 | Retained Earnings | 900 | ||
Dividends Payable | 900 | |||
(Dividends Declared) | ||||
Jun. 23 | Dividends Payable | 900 | ||
Cash | 900 | |||
(Paid Dividends) | ||||
Jul. 1 | Cash | 120,000 | ||
Notes Payable | 120,000 | |||
(Issue Note 1 year, annual interest rate 2%) | ||||
Jul. 5 | Merchandise | 33,000 | ||
Accounts Payable | 33,000 | |||
(Purchase Merchandise terms 2/10, n/30) | ||||
Jul. 7 | Land | 15,000 | ||
Common Stock | 10,000 | |||
Paid-in capital in excess of par | 5,000 | |||
(Issued Common Stock 1000 shares, $10 par, in exchange for land) | ||||
Jul. 8 | Account Payable | 200 | ||
Inventory | 200 | |||
(Returned Merchandise to Maida and received credit) | ||||
Aug. 1 | Accounts Receivable | 80,000 | ||
Freight-In | 1,500 | |||
Sales | 80,000 | |||
Cash | 1,500 | |||
(Sales on account term 2/10,n/30; Freight F.O.B) | ||||
Aug. 4 | Accounts Payable | 32,800 | ||
Cash | 32,800 | |||
(Paid balance to Maida) | ||||
Aug. 10 | Cash | 36,000 | ||
Sales Discounts | 4,000 | |||
Accounts Receivable | 40,000 | |||
(Received half payment from Lachey) | ||||
Aug. 14 | Bad Debt Expense | $1,300 | ||
Accounts Receivable | $1,300 | |||
(Write off bad debt for Tooket) | ||||
Aug. 21 | Utilities Expense | 10,092 | ||
Cash | 10,092 | |||
(Paid utilites expense) | ||||
Aug. 31 | Cash | 40,000 | ||
Accounts Receivable | 40,000 | |||
(Received other half of payment from Lachey) | ||||
Sept. 1 | Accounts Payable | $7,500 | ||
Cash | $7,500 | |||
(Paid for equiptment from Farmington purchased last year) | ||||
Oct. 1 | Interest Expense | 4,500 | ||
Interest Payable | 4,500 | |||
(Record Accumulated interest) | ||||
Oct. 1 | Notes Payable | 110,000 | ||
Interest Payable | 4,500 | |||
Cash | 114,500 | |||
(Paid off note payable plus interest) | ||||
Dec. 31 | Salaries and Wages Expense | 45,500 | ||
Salaries and Wages Payable | 45,500 | |||
(Record salaries and wages earned) | ||||
Dec. 31 | Salaries and Wages Payable | 44,000 | ||
Cash | 44,000 | |||
(Paid Sales and Office Employees) | ||||
Dec. 31 | Utilities Expense | 1,250 | ||
Accounts Payable | 1,250 | |||
(Unpaid December utility bill) |
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