Comprehensive Problem Chapter 4: On December 1, 2017, Black Bird Company had the following account balances. Debit Credit Cash $19,500 Accumulated depreciation - equipment $3,290 Notes receivable 2,220 Accounts payable 6,340 Accounts receivable 7,780 Common stock 8 10 par value) 48,100 Inventory 15,500 Retained earnings 16,770 Prepaid insurance 2,000 Equipment 27,500 $74.500 $74.500 Prepare journal entries for the following transactions and post to T accounts. 127 Received $3,570 cash from customers in payment of account. Cash 3,570 Accounts receivable 3,570 12/12 Purchased merchandise on account from Blue Co. $13,400. Inventory 13,400 Accounts payable 13,400 12/17 Sold merchandise on account $15,700. The cost of merchandise sold was $10,000. Accounts receivable 15,700 Sales revenue 15,700 Cost of goods sold 10,000 Inventory 10,000 12/19 Paid salaries $2,170. Salaries and wages expense 2,170 Cash 2,170 12/22 Paid Blue Co. in full. Accounts payable 13,400 Cash 13,400 12/26 Received collections in full from customers billed on December 17. Cash 15,700 Accounts receivable 15,700 12/31 Received $2.740 cash from customers in payment of account. Cash 2,740 Accounts receivable 2,740 The statement from Green County Bank on December 31 showed a balance of $25,970. A comparison of the bank statement with the Cash account revealed the following facts. 1. The bank collected the $2,220 note receivable for Black Bird Co. on December 15 through electronic funds transfer. 2 The December 31 receipts were deposited in a night deposit vault on December 31. These deposits were recorded by the bank in January 3. Checks outstanding on December 31 totaled $1,250. 4. On December 31, the bank statement showed a NSF charge of $700 for a check received by the company from I. O You, a customer, on account. Prepare a bank reconciliation as of December 31 based on the available information. (Hint: The cash balance per books is $25,940. This can be proven by finding the balance in the Cash account from parts (a) and (b).) Black Bird Company, Bank Reconciliation, 12/31/Y7 Cash balance per bank statement Add: Subtotal Less: Adjusted cash balance per bank Cash balance per books Add: Subtotal Less: Adjusted cash balance per books Journalize the adjustment entries as follows, post to the ledger T-accounts and calculate T- account balances: 12/31 Electronic funds transfer received from bank reconciliation 12/31 NSF check from bank reconciliation 130 130 12/31 Depreciation of $130 per month Depreciation expense Accumulated depreciation equipment 12/31 Insurance expired $500 Insurance expense Prepaid insurance 12/31 Income tax expense $290. It was unpaid at December 31. Income tax expense Income taxes payable 500 500 290 290 Post the December transactions and adjusting entries Cash Notes receivable 12 Bal 19,500 72/1 Bal 2.220 Accounts receivable 12/1 Bal 7,760 Inventory 1211 Bal 15,500 Prepaid insurance 72/1 Bal 2.000 Equipment 7271 Bal 27,500 Accumulated depreciation equipment 12/18 al 3,290 Accounts payable 121 Bal 6,340 Income taxes payable Common stock 12/1 Bal 48,100 Retained earnings 12/1 Bal 16,770 Sales revenue Cost of goods sold Salaries and wages expense Insurance expense Depreciation expense Income tax expense Prepare an adjusted trial balance. Black Bird Company, Adjusted Trial Balance, 12/31/47 Cash Accounts receivable Inventory Prepaid insurance Equipment Accumulated depreciation - equipment Accounts payable Income taxes payable Common stock Retained earnings Sales revenue Cost of goods sold Salaries and wages expense Insurance expense Depreciation expense Income tax expense Total $90,620 $90,620 Prepare an income statement for December 31. Black Bird Company, Income Statement, For the Month Ended 12/31/Y7 Sales revenue Cost of goods sold Gross profit Operating expenses: Salaries and wages expense Insurance expense Depreciation expense Income before income taxes Income tax expense Net income (loss) EPS Prepare a balance sheet. Black Bird Company, Balance Sheet, 12/31/Y7 Assets Current assets: Cash Accounts receivable Inventory Prepaid insurance Total current assets Property, plant, and equipment Equipment Less: Accumulated depreciation - equipment Total property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Total current liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Comprehensive Problem Chapter 4: On December 1, 2017, Black Bird Company had the following account balances. Debit Credit Cash $19,500 Accumulated depreciation - equipment $3,290 Notes receivable 2,220 Accounts payable 6,340 Accounts receivable 7,780 Common stock 8 10 par value) 48,100 Inventory 15,500 Retained earnings 16,770 Prepaid insurance 2,000 Equipment 27,500 $74.500 $74.500 Prepare journal entries for the following transactions and post to T accounts. 127 Received $3,570 cash from customers in payment of account. Cash 3,570 Accounts receivable 3,570 12/12 Purchased merchandise on account from Blue Co. $13,400. Inventory 13,400 Accounts payable 13,400 12/17 Sold merchandise on account $15,700. The cost of merchandise sold was $10,000. Accounts receivable 15,700 Sales revenue 15,700 Cost of goods sold 10,000 Inventory 10,000 12/19 Paid salaries $2,170. Salaries and wages expense 2,170 Cash 2,170 12/22 Paid Blue Co. in full. Accounts payable 13,400 Cash 13,400 12/26 Received collections in full from customers billed on December 17. Cash 15,700 Accounts receivable 15,700 12/31 Received $2.740 cash from customers in payment of account. Cash 2,740 Accounts receivable 2,740 The statement from Green County Bank on December 31 showed a balance of $25,970. A comparison of the bank statement with the Cash account revealed the following facts. 1. The bank collected the $2,220 note receivable for Black Bird Co. on December 15 through electronic funds transfer. 2 The December 31 receipts were deposited in a night deposit vault on December 31. These deposits were recorded by the bank in January 3. Checks outstanding on December 31 totaled $1,250. 4. On December 31, the bank statement showed a NSF charge of $700 for a check received by the company from I. O You, a customer, on account. Prepare a bank reconciliation as of December 31 based on the available information. (Hint: The cash balance per books is $25,940. This can be proven by finding the balance in the Cash account from parts (a) and (b).) Black Bird Company, Bank Reconciliation, 12/31/Y7 Cash balance per bank statement Add: Subtotal Less: Adjusted cash balance per bank Cash balance per books Add: Subtotal Less: Adjusted cash balance per books Journalize the adjustment entries as follows, post to the ledger T-accounts and calculate T- account balances: 12/31 Electronic funds transfer received from bank reconciliation 12/31 NSF check from bank reconciliation 130 130 12/31 Depreciation of $130 per month Depreciation expense Accumulated depreciation equipment 12/31 Insurance expired $500 Insurance expense Prepaid insurance 12/31 Income tax expense $290. It was unpaid at December 31. Income tax expense Income taxes payable 500 500 290 290 Post the December transactions and adjusting entries Cash Notes receivable 12 Bal 19,500 72/1 Bal 2.220 Accounts receivable 12/1 Bal 7,760 Inventory 1211 Bal 15,500 Prepaid insurance 72/1 Bal 2.000 Equipment 7271 Bal 27,500 Accumulated depreciation equipment 12/18 al 3,290 Accounts payable 121 Bal 6,340 Income taxes payable Common stock 12/1 Bal 48,100 Retained earnings 12/1 Bal 16,770 Sales revenue Cost of goods sold Salaries and wages expense Insurance expense Depreciation expense Income tax expense Prepare an adjusted trial balance. Black Bird Company, Adjusted Trial Balance, 12/31/47 Cash Accounts receivable Inventory Prepaid insurance Equipment Accumulated depreciation - equipment Accounts payable Income taxes payable Common stock Retained earnings Sales revenue Cost of goods sold Salaries and wages expense Insurance expense Depreciation expense Income tax expense Total $90,620 $90,620 Prepare an income statement for December 31. Black Bird Company, Income Statement, For the Month Ended 12/31/Y7 Sales revenue Cost of goods sold Gross profit Operating expenses: Salaries and wages expense Insurance expense Depreciation expense Income before income taxes Income tax expense Net income (loss) EPS Prepare a balance sheet. Black Bird Company, Balance Sheet, 12/31/Y7 Assets Current assets: Cash Accounts receivable Inventory Prepaid insurance Total current assets Property, plant, and equipment Equipment Less: Accumulated depreciation - equipment Total property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Total current liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity