Christy Corporation Accounting Problem.

Major Project Christy Corporation The Christy Corporation had the following balance sheet as of December 31, 20x2. The transactions for the first three months of 20x3 are also presented along with other information about specific accounts. Christy Corporation Balance Sheet December 31, 20x2 ASSETS LIABILITIES Cash $ 57,000 Accounts Payable $ 34,000 Marketable Securities 8,000 Wages Payable 11,500 Accounts Receivable 73,000 Taxes Payable 8,000 Uncollectible Accounts -2,000 Short-Term Note Payable 12,000 Inventory 84,000 Interest Payable 500 Supplies 9,000 Unearned Revenue 13,000 Prepaid Insurance 6,000 Total Current Assets $235,000 Total Current Liabilities $ 79,000 Land $114,000 Long-Term Notes Payable $ 20,000 Equipment 227,000 Bonds Payable 100,000 Accumulated Depreciation -87,000 Mortgage Payable 320,000 Building 560,000 Total Long-Term Liabilities $440,000 Accumulated Depreciation -130,000 Intangible Assets 70,000 STOCKHOLDER EQUITY Total Long-Term Assets $754,000 Capital Stock $100,000 Paid in Capital 250,000 Retained Earnings 120,000 Total Stockholders Equity $470,000 Total Assets $989,000 Total Liabilities & Equity $989,000 Additional Information Accounts Receivable The following table indicates the historical breakout of accounts receivable Days Current 30 to 60 60 to 90 Over 90 Percent of Balance 50% 30% 15% 5% Percent Collectible 95% 90% 80% 60% The company uses the gross method of recording all sales on accounts.Marketable Securities The interest rate earned on marketable securities is 6.0%. Inventory In 20x2, the company had used the gross method to record inventory purchases on account. As of January 1, 20x3, the company is using the net method to record inventory purchases on account. Prepaid Insurance A three-year insurance policy in the amount of $7,200 was purchased on July 1, 20x2. Equipment Equipment is depreciated at an average amount of $3,000 per month. Building The current building was purchased on January 1, ten years ago and has an expected 40- year life at which time its salvage value will be $40,000. Intangible Assets Intangible assets were initially valued at $80,000 and are being depreciated over 40 years at $2,000 per year. Short-Term Notes Payable The one-year short-term note payable is due on March 1, 20x3. The interest rate is 5.0% which is payable at maturity. Long-Term Notes Payable The long-term notes payable are due in ten years. The interest rate on the notes is 4.5%. Bonds Payable The bonds payable mature in twenty years. The interest rate on the bonds is 4.0%. Mortgage Payable The following amortization schedule can be used for the January, 20x3 mortgage payment on the 7.0%, 30- year mortgage. Pa ent Balance Jan . $3,500 $1,867 $1,633 $318,367 Capital Stock The capital stock is common stock at $10 par value with 50,000 shares authorized, and 10,000 shares issued and outstanding. Journal Entries (1) Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of $3,000 was sold for $6,000 (2) Jan 2 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300. (3) Jan 2 Christy Corporation borrowed $24,000 on a short-term 90 day, 3.0% note payable. (4) Jan 3 Christy Corporation paid $18,000 in advance for the 6 month rental of a warehouse. (5) Jan 5 Christy Corporation declared a dividend of $2.50 per share payable on February 10, 20x3 to all shareholders of record on January 20, 20x3. (6) Jan 6 The amount in wages payable and taxes payable was paid in full. (7) Jan 8 Christy Corporation paid a total of $18,000 on accounts payable and was able to take advantage of $1,500 in purchase discounts for early payment. The original inventory purchase was recorded at the ll amount (gross method). (8) Jan 15 Cash sales for two weeks equaled $22,800. The cost of inventory sold equaled $12,600. (9) Jan 20 Supplies in the amount of $4,200 were purchased for cash. (10) Jan 21 A customer who owed $10,000 on an account receivable, agreed to sign a 60-day note receivable with an interest rate of 3.0%. The interest earned on the note will be paid at the maturity date of the note receivable. (11) Jan 29 The balance of $14,500 in accounts payable was paid. (12) Jan 30 The company purchased $45,000 of inventory on account with the terms 2/10, net 30. The company has decided to switch to the net method for all inventory purchases on account beginning in 20x3. (13) Jan 31 Cash sales for two weeks equaled $24,000. The cost of inventory sold equaled $13,000. (14) Jan 31 Sales on account for the month of January totaled $55,000 with the terms 2110, net 30. The cost of inventory sold equaled $26,000. (15) Jan 31 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $4,000 of the revenue was earned in January. (16) Jan 31 Collected cash of $48,000 from the accounts receivable, plus there was a total sales discount of $1,000 for the payment of receivables Within the ten day discount period. (17) Jan 31 Salary expenses in the amount of $14,000 and tax expenses in the amount of $8,000 were paid. (13) Jan 31 The utility bill of $2,500 was paid. (19) Jan 31 A bill in the amount of $3,600 for advertising expenses incurred during the month of January was received. (20) Jan 31 The monthly payment for January of the mortgage payable was made. (21) Feb 1 The Christy Corporation made a new issue of 5,000 shares of common stock for cash. The market price of the stock was $40 per share. (22) Feb 2 A petty cash fund in the amount of $500 was established. (23) Feb 3 The Christy Corporation bought back 1,000 shares of its own common stock for $40 per share and reports the purchase as treasury stock. (24) Feb 8 The purchase of inventory on account on Jan 30th which was reported at the net amount was paid in ll. (25) Feb 10 The dividend declared on January 5111 was paid. (26) Feb 15 Cash sales for two weeks equaled $20,200. The cost of inventory sold equaled $11,000. (27) Feb 20 The company purchases $20,000 of inventory on account with the terms 2/10, net 30. The net method was used to record the purchase. (28) Feb 27 The company paid an advertising bill for $5,600 which included the February advertising expense of $2,000 plus the balance due from January. (29) Feb 28 Cash sales for two weeks equaled $25,000. The cost of inventory sold equaled $14,000. (30) Feb 28 The monthly payment for February of the mortgage payable was made. (31) Feb 28 The company collected cash of $59,000 from the accounts receivable, plus there was a total sales discount of $1,100 for the payment of receivables Within the ten day discount period. (32) Feb 28 Salary expenses in the amount of $21,000 and tax expenses in the amount of $9,000 were paid. (33) Feb 28 The utility bill of $2,100 was paid. (34) Feb 28 Sales on account for the month of February totaled $60,000 with the terms 2/ 10, net 30. The cost of inventory sold equaled $30,000. (35) Mar 1 The short-term note payable of $12,000 that was due on March 15't plus all appropriate interest was paid. (36) Mar 3 The amount of the petty cash nd was increased by $200. (37) Mar 10 Supplies in the amount of $2,700 were purchased for cash. (38) Mar 15 Cash sales for two weeks equaled $26,000. The cost of inventory sold equaled $14,400. (39) Mar 20 Christy Corporation reissued 300 shares of its own treasury stock for $42 per share. (40) Mar 21 The note receivable from January 21St had been paid in full plus interest. (41) Mar 25 The company purchased $50,000 of inventory on account using the net method with the terms 2/10, net 30. (42) Mar 28 The purchase of inventory on account on February 20th was paid in full. (43) Mar 29 The petty cash fund had $150 in cash and receipts in total amounts for the following expense categories: entertainment$160, travel $170, postage $90, and supplies $115. The petty cash fund was replenished. (44) Mar 30 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $1 1,000. (45) Mar 30 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $9,000 of the revenue was earned in March. (46) Mar 31 Sales on account for the month of March totaled $67,000 with the terms 2/ 10, net 30. The cost of inventory sold equaled $36,000. (47) Mar 31 Salary expenses in the amount of $16,000 and tax expenses in the amount of $7,000 were paid. (48) Mar 31 Collected cash of $70,000 from the accounts receivable, plus there was a total sales discount of $1,200 for the payment of receivables within the ten day discount period. (49) Mar 31 A warehouse building was acquired for $250,000. Closing costs on the acquisition equaled $7,000, and there were costs of $10,300 to get the building into an operational condition to be used by Christy Corporation. Christy Corporation paid $100,000 in cash as a down payment with the balance due being added to the mortgage payable account. (50) Mar 31 The utility bill of $3,000 was paid. (51) Mar 31 Christy Corporation repaid the 90 day note payable from January 2nd in full plus interest. (52) Mar 31 The equipment depreciation entry for the three months of 20x3 was completed. (53) Mar 31 The depreciation entry for the building for the months of January, February, and March was entered. (54) Mar 31 The amortization of intangible assets for the three months of 20x3 was completed. (55) Mar 31 The bad debt expense based on 1.0% of credit sales for the quarter was recorded. (56) Mar 31 Salary expenses incurred during the month of March but not yet paid equaled $8,400 (57) Mar 31 Tax expenses incurred during the month of March but not yet paid equaled $2,800. (58) Mar 31 A physical inventory of supplies indicated a total amount of $5,000 of supplies still on hand. A journal entry was completed for the supplies used during the quarter. (59) Mar 31 A customer sent an advance payment of $10,000 for the use of special equipment in April and May. (60) Mar 31 The amount of rent expense for the warehouse for the rst three months of 20x3 was recognized. (61) Mar 31 Christy Corporation provided services to a customer in the amount of $3,000 during March but a bill has not been sent. (62) Mar 31 The amount of insurance expense for the rst three months of 20x3 was recognized. (63) Mar 31 The amount of interest earned on marketable securities for the three months of 20x3 was recognized. (64) Mar 31 The amount of interest expense for the total long-term notes payable for the rst three months of 20x3 was recognized. (65) Mar 31 The amount of interest expense for the bonds payable for the three months of 20x3 was recognized. (66) Mar 31 The monthly payment for March of the mortgage payable was made. Required 1. Complete journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar. 2. Develop a single income statement representing January through March in good form for Christy Corporation for the rst three months of 20x3. Ignore Federal Income Tax. 3. Develop a single statement of retained earnings in good form as of March 31, 20x3 for Christy Corporation 4. Develop a balance sheet in good form as of March 31, 20x3 for Christy Corporation