CP 10 & CP11 are the two questions that I am having troubles with, please help so I am able to compare answers. Information that is needed is in CP 10 & 11. Possible account titles are in the other document. Thank you!

The work may be done in Excel, Word, MS Works (word processor or spreadsheet), Open Office, or Rich Text. First Problem: Your ONLY have to do Instructions (1.) and (2.) [See Below for Alternate Instruction (3)]. For Adjustment Data #3 the Hint suggests that you prepare an Income Statement through Income Before Income Tax (this figure should come out to be $104,150) in order to calculate the amount of Income Tax Expense--you need to do this but it can be an informal (just revenues minus expenses) one that you DO NOT submit as part of your graded work. If you can come to this check figure before you move on, your chances of being correct are much better. Also, I would strongly suggest that you use T-accounts and post Beginning Balances and ALL journal entries and again these do NOT have to be turned in with your work, but you may have them in your file (they will not be graded). As a self-check, your Adjusted Trial Balance should first of all have equal Debit and Credit totals and second come out to be $687,695. In place of Instruction (3.), you need to prepare all necessary Closing Entries. CP10 Trevor Corporation's balance sheet at December 31, 2013, is presented below. TREVOR CORPORATION Balance Sheet December 31, 2013 Cash $30,000 Accounts payable $13,750 Inventory 30,750 Interest payable 2,500 Prepaid insurance 5,600 Bonds payable 50,000 Equipment 38,000 Common stock 25,000 $104,350 Retained earnings 13,100 $104,350 During 2014, the following transactions occurred: 1. Trevor paid $2,500 interest on the bonds on January 1, 2014. 2. Trevor purchased $241,100 of inventory on account. 3. Trevor sold for $480,000 cash inventory which cost $265,000. Trevor also collected $28,800 sales taxes. 4. Trevor paid $230,000 on accounts payable. 5. Trevor paid $2,500 interest on the bonds on July 1, 2014. 6. The prepaid insurance ($5,600) expired on July 31. 7. On August 1, Trevor paid $10,200 for insurance coverage from August 1, 2014, through July 31, 2015. 8. Trevor paid $17,000 sales taxes to the state. 9. Paid other operating expenses, $91,000. 10. Redeemed the bonds on December 31, 2014, by paying $48,000 plus $2,500 interest. 11. Issued $90,000 of 8% bonds on December 31, 2014, at 103. The bonds pay interest every June 30 and December 31. Adjustment data: 1. Recorded the insurance expired from item 7. 2. The equipment was acquired on December 31, 2013, and will be depreciated on a straight-line basis over 5 years with a $3,000 salvage value. 3. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) Instructions (You may want to set up T-accounts to determine ending balances.) 1. Prepare journal entries for the transactions listed above and adjusting entries. 2. Prepare an adjusted trial balance at December 31, 2014. Totals $687,695 3. Prepare an income statement and a retained earnings statement for the year ending December 31, 2014, and a classified balance sheet as of December 31, 2014. N.I. $72,905 Second Problem: Again, you ONLY have to do Instructions (1.) and (2.) [See below for same Alternate Instruction (3)] and the same Hint applies for calculating Income Tax Expense (Income Before Tax should be $117,100). One Big Caution on this problem--the Opening Document is a Balance Sheet (Net Assets = Liabilities + Stockholders' Equity) NOT, a Trial Balance (Debit Balances = Credit Balances)!!! Watch the Contra Accounts. My suggestion for T-accounts applies to this problem also. Just another suggestion, but a quick review of my Introduction to this Chapter might help :-) The check figure for this Adjusted Trial Balance is $740,690. All Necessary Closing Entries are again REQUIRED in place of Instruction (3.). CP11 Klinger Corporation's balance sheet at December 31, 2013, is presented below. KLINGER CORPORATION Balance Sheet December 31, 2013 Cash $24,600 Accounts payable $25,600 Accounts receivable 45,500 Common stock ($10 par) 80,000 Allowance for doubtful accounts (1,500) Retained earnings Supplies 4,400 Land 40,000 Buildings 142,000 Accumulated depreciationbuildings (22,000) 127,400 $233,000 $233,000 During 2014, the following transactions occurred. 1. On January 1, 2014, Klinger issued 1,200 shares of $40 par, 7% preferred stock for $49,200 2. On January 1, 2014, Klinger also issued 900 shares of the $10 par value common stock for $21,000. 3. Klinger performed services for $320,000 on account. 4. On April 1, 2014, Klinger collected fees of $36,000 in advance for services to be performed from April 1, 2014, to March 31, 2015. 5. Klinger collected $276,000 from customers on account. 6. Klinger bought $35,100 of supplies on account. 7. Klinger paid $32,200 on accounts payable. 8. Klinger reacquired 400 shares of its common stock on June 1, 2014, for $28 per share. 9. Paid other operating expenses of $188,200. 10. On December 31, 2014, Klinger declared the annual preferred stock dividend and a $1.20 per share dividend on the outstanding common stock, all payable on January 15, 2015. 11. An account receivable of $1,700 which originated in 2013 is written off as uncollectible. Adjustment data: 1. A count of supplies indicates that $5,900 of supplies remain unused at year-end. 2. Recorded revenue from item 4 above. 3. The allowance for doubtful accounts should have a balance of $3,500 at year end. 4. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000. 5. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) Instructions (You may want to set up T-accounts to determine ending balances.) 1. Prepare journal entries for the transactions listed above and adjusting entries. 2. Prepare an adjusted trial balance at December 31, 2014. Totals $740,690 3. Prepare an income statement and a retained earnings statement for the year ending December 31, 2014, and a classified balance sheet as of December 31, 2014. Net income $81,970 Tot. assets $421,000 Possible Account Titles Finals Work Problems: Allowance for Doubtful Accounts Accumulated Depreciation Bad Debt Expense Cash Dividends Cost of Goods Sold Depreciation Expense Discount on Bonds Payable Dividends Payable Earned Service Revenue Gain on Bond Redemption Income Tax Expense Income Tax Payable Insurance Expense Insurance Payable Interest Expense Interest Payable Loss on Bond Redemption Operating Expenses Paid-in Capital in Excess of Par-CS Paid-in Capital in Excess of Par-PS Preferred Stock Premium on Bonds Payable Sales Tax Payable Sales Revenue Service Revenue Supplies Expense Supplies Payable Treasury Stock Unearned Service Revenue Req a TREVOR CORPORATION Journal Entries # Account Title 1 Interest payable Cash Debit 2,500 2 Inventory Credit Explanation 241,100 2,500 Accounts Payable 241,100 3 Cash 508,800 Sales Sales Tax Payable 480,000 28,800 Cost of Goods sold Inventory 265,000 265,000 4 Accounts payable Cash 230,000 230,000 5 Interest Expense Cash 2,500 6 Insurance expense Prepaid insurance 5,600 2,500 5,600 7 Prepaid insurance Cash 10,200 8 Sales tax payable Cash 17,000 9 Other Operating Expenses Cash 91,000 10,200 17,000 91,000 10 Bonds payable Interest Expense Gain on redemption Cash 50,000 2,500 11 Cash 92,700 2,000 50,500 Premium on bonds payable Bonds payable 2,700 90,000 12 Insurance expense Prepaid insurance 4,250 13 Depreciation expense Accumulated depreciation - equipment 7,000 14 Income tax expense Income tax payable Req b $10,200 x 5/12 4,250 ($38,000 - $3,000)/5 7,000 31,245 31,245 TREVOR CORPORATION Adjusted Trial Balance As at December 31, 2014 Account Cash Inventory Prepaid insurance Equipment Accumulated Depreciation - Equipment Accounts Payable Income Taxes Payable Sales Tax Payable Bonds Payable Premium on bonds payable Common Stock Retained Earnings Sales Revenue Gain on redemption Cost of goods sold Insurance Expense Depreciation Expense Interest Expense Other Operating Expenses Income Tax Expense Total Req c Debit 227,800 6,850 5,950 38,000 Credit 7,000 24,850 31,245 11,800 90,000 2,700 25,000 13,100 480,000 2,000 265,000 9,850 7,000 5,000 91,000 31,245 687,695 687,695 TREVOR CORPORATION Income Statement For the Year Ending December 31, 2014 Sales Revenue Operating Expenses 480,000 Cost of goods sold Insurance expense Depreciation expense Other operating expenses Interest expense Gain on redemption Total operating expenses Income before taxes Income tax expense Net income 265,000 9,850 7,000 91,000 5,000 (2,000) 375,850 104,150 31,245 72,905 TREVOR CORPORATION Statement of Retained Earnings For the Year Ending December 31, 2014 Retained earnings, 12/31/2013 Add: Net Income 13,100 72,905 86,005 0 86,005 Less: Dividends Retained earnings, 12/31/2014 TREVOR CORPORATION Balance Sheet At December 31, 2014 Assets Current Assets Cash Inventory Prepaid insurance Total current assets Equipment Accumulated Depreciation - Equipment Total assets 227,800 6,850 5,950 240,600 38,000 (7,000) Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Sales Tax Payable Total current liabilities Bonds payable Premium on bonds payable Total liabilities Stockholders' equity Common Stock Retained Earnings Total Stockholders' equity Total liabilities and stockholders' equity 31,000 271,600 24,850 31,245 11,800 67,895 90,000 2,700 92,700 160,595 25,000 86,005 111,005 271,600 TREVOR CORPORATION Closing Entries # 1 2 3 Account Title Sales Revenue Gain on redemption Income Summary Debit 480,000 2,000 Income Summary Cost of goods sold Insurance expense Depreciation expense Other operating expenses Interest expense Income tax expense 409,095 Income Summary Retained Earnings Credit 482,000 265,000 9,850 7,000 91,000 5,000 31,245 72,905 72,905 Req a KLINGER CORPORATION Journal Entries # Account Title 1 Cash Preferred Stock Paid-in Capital in Excess of Par Value - Preferred Stock 2 Cash Debit 49,200 1200 shares x $40 par $49,200 - $48,000 9,000 12,000 900 shares x $10 par $21,000 - $9,000 21,000 3 Accounts Receivable Service Revenue 320,000 320,000 4 Cash 36,000 Unearned Service Revenue 5 Cash 36,000 276,000 Accounts Receivable 276,000 6 Supplies 35,100 Accounts Payable 35,100 7 Accounts Payable Cash 32,200 8 Treasury Stock Cash 11,200 32,200 400 shares x $28 11,200 9 Other Operating Expenses Cash 188,200 188,200 10 Cash Dividends Dividends Payable 13,560 13,560 11 Allowance for Doubtful Accounts Accounts Receivable Preferred Dividend = 1200 shares x $40 x 7% =$3,360 Equity Dividend = (8000 shares + 900 shares - 400 shares) x $1.20 = $10,200 1,700 1,700 12 Supplies Expense Supplies 33,600 13 Unearned Service Revenue Service Revenue $4,400 + $35,100 - $5,900 27,000 33,600 $36,000 x 9/12 27,000 14 Bad Debt Expense Allowance for Doubtful Accounts 3,700 15 Depreciation Expense Accumulated Depreciation - Building 4,400 16 Income Tax Expense Income Tax Payable $3,500 - ($1,500 - $1,700) 3,700 ($142,000 - $10,000) / 30 years 4,400 35,130 35,130 KLINGER CORPORATION Adjusted Trial Balance As at December 31, 2012 Account Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Land Buildings Accumulated Depreciation - Buildings Accounts Payable Income Taxes Payable Unearned Service Revenue Dividends Payable Preferred Stock Paid-in Capital in Excess of Par Value - Preferred Stock Common Stock Paid-in Capital in Excess of Par Value - Common Stock Retained Earnings Cash Dividends Treasury Stock Service Revenue Bad Debt Expense Depreciation Expense Supplies Expense Other Operating Expenses Income Tax Expense Total Req c Explanation 48,000 1,200 Common Stock Paid-in Capital in Excess of Par Value - Common Stock Req b Credit KLINGER CORPORATION Debit 175,200 87,800 Credit 3,500 5,900 40,000 142,000 26,400 28,500 35,130 9,000 13,560 48,000 1,200 89,000 12,000 127400 13,560 11,200 347,000 3,700 4,400 33,600 188,200 35,130 740,690 740,690 Income Statement For the Year Ending December 31, 2012 Service Revenue Operating Expenses Supplies expense Bad debt expense Depreciation expense Other operating expenses Total operating expenses Income before taxes Income tax expense Net income 347,000 33,600 3,700 4,400 188,200 229,900 117,100 35,130 81,970 KLINGER CORPORATION Statement of Retained Earnings For the Year Ending December 31, 2012 Retained earnings, 1/1/2012 Add: Net Income 127,400 81,970 209,370 13,560 195,810 Less: Dividends Retained earnings, 12/31/2012 KLINGER CORPORATION Balance Sheet At December 31, 2012 Assets Current Assets Cash Accounts Receivable Allowance for Doubtful accounts Supplies Total current assets Property, plant and euqipment Land Buildings Accumulated Depreciation Total assets 175,200 87,800 (3,500) 40,000 142,000 (26,400) Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Dividends payable Unearned service revenue Total current liabilities Stockholders' equity Paid-in capital Capital Stock Preferred stock Common stock Total capital stock Additional paid-in capital Paid-in Capital in Excess of Par Value - Preferred Stock Paid-in Capital in Excess of Par Value - Common Stock Total additional paid-in capital Total paid-in capital Retained Earnings Total paid-in capital and retained earnings Less: Treasury Stock Total Stockholders' equity Total liabilities and stockholders' equity 84,300 5,900 265,400 155,600 421,000 28,500 35,130 13,560 9,000 86,190 48,000 89,000 137,000 1,200 12,000 13,200 150,200 195,810 346,010 11,200 334,810 421,000 TREVOR CORPORATION Closing Entries # 1 2 3 4 Account Title Service Revenue Income Summary Debit 347,000 Income Summary Supplies expense Bad debt expense Depreciation expense Other operating expenses Income tax expense Credit 265,030 347,000 33,600 3,700 4,400 188,200 35,130 Income Summary Retained Earnings 81,970 Retained Earnings Dividends 13,560 81,970 13,560 0 Req a TREVOR CORPORATION Journal Entries # Account Title 1 Interest payable Cash Debit 2,500 2 Inventory Credit Explanation 241,100 2,500 Accounts Payable 241,100 3 Cash 508,800 Sales Sales Tax Payable 480,000 28,800 Cost of Goods sold Inventory 265,000 265,000 4 Accounts payable Cash 230,000 230,000 5 Interest Expense Cash 2,500 6 Insurance expense Prepaid insurance 5,600 2,500 5,600 7 Prepaid insurance Cash 10,200 8 Sales tax payable Cash 17,000 9 Other Operating Expenses Cash 91,000 10,200 17,000 91,000 10 Bonds payable Interest Expense Gain on redemption Cash 50,000 2,500 11 Cash 92,700 2,000 50,500 Premium on bonds payable Bonds payable 2,700 90,000 12 Insurance expense Prepaid insurance 4,250 13 Depreciation expense Accumulated depreciation - equipment 7,000 14 Income tax expense Income tax payable Req b $10,200 x 5/12 4,250 ($38,000 - $3,000)/5 7,000 31,245 31,245 TREVOR CORPORATION Adjusted Trial Balance As at December 31, 2014 Account Cash Inventory Prepaid insurance Equipment Accumulated Depreciation - Equipment Accounts Payable Income Taxes Payable Sales Tax Payable Bonds Payable Premium on bonds payable Common Stock Retained Earnings Sales Revenue Gain on redemption Cost of goods sold Insurance Expense Depreciation Expense Interest Expense Other Operating Expenses Income Tax Expense Total Req c Debit 227,800 6,850 5,950 38,000 Credit 7,000 24,850 31,245 11,800 90,000 2,700 25,000 13,100 480,000 2,000 265,000 9,850 7,000 5,000 91,000 31,245 687,695 687,695 TREVOR CORPORATION Income Statement For the Year Ending December 31, 2014 Sales Revenue Operating Expenses 480,000 Cost of goods sold Insurance expense Depreciation expense Other operating expenses Interest expense Gain on redemption Total operating expenses Income before taxes Income tax expense Net income 265,000 9,850 7,000 91,000 5,000 (2,000) 375,850 104,150 31,245 72,905 TREVOR CORPORATION Statement of Retained Earnings For the Year Ending December 31, 2014 Retained earnings, 12/31/2013 Add: Net Income 13,100 72,905 86,005 0 86,005 Less: Dividends Retained earnings, 12/31/2014 TREVOR CORPORATION Balance Sheet At December 31, 2014 Assets Current Assets Cash Inventory Prepaid insurance Total current assets Equipment Accumulated Depreciation - Equipment Total assets 227,800 6,850 5,950 240,600 38,000 (7,000) Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Sales Tax Payable Total current liabilities Bonds payable Premium on bonds payable Total liabilities Stockholders' equity Common Stock Retained Earnings Total Stockholders' equity Total liabilities and stockholders' equity 31,000 271,600 24,850 31,245 11,800 67,895 90,000 2,700 92,700 160,595 25,000 86,005 111,005 271,600 TREVOR CORPORATION Closing Entries # 1 2 3 Account Title Sales Revenue Gain on redemption Income Summary Debit 480,000 2,000 Income Summary Cost of goods sold Insurance expense Depreciation expense Other operating expenses Interest expense Income tax expense 409,095 Income Summary Retained Earnings Credit 482,000 265,000 9,850 7,000 91,000 5,000 31,245 72,905 72,905 Req a KLINGER CORPORATION Journal Entries # Account Title 1 Cash Preferred Stock Paid-in Capital in Excess of Par Value - Preferred Stock 2 Cash Debit 49,200 1200 shares x $40 par $49,200 - $48,000 9,000 12,000 900 shares x $10 par $21,000 - $9,000 21,000 3 Accounts Receivable Service Revenue 320,000 320,000 4 Cash 36,000 Unearned Service Revenue 5 Cash 36,000 276,000 Accounts Receivable 276,000 6 Supplies 35,100 Accounts Payable 35,100 7 Accounts Payable Cash 32,200 8 Treasury Stock Cash 11,200 32,200 400 shares x $28 11,200 9 Other Operating Expenses Cash 188,200 188,200 10 Cash Dividends Dividends Payable 13,560 13,560 11 Allowance for Doubtful Accounts Accounts Receivable Preferred Dividend = 1200 shares x $40 x 7% =$3,360 Equity Dividend = (8000 shares + 900 shares - 400 shares) x $1.20 = $10,200 1,700 1,700 12 Supplies Expense Supplies 33,600 13 Unearned Service Revenue Service Revenue $4,400 + $35,100 - $5,900 27,000 33,600 $36,000 x 9/12 27,000 14 Bad Debt Expense Allowance for Doubtful Accounts 3,700 15 Depreciation Expense Accumulated Depreciation - Building 4,400 16 Income Tax Expense Income Tax Payable $3,500 - ($1,500 - $1,700) 3,700 ($142,000 - $10,000) / 30 years 4,400 35,130 35,130 KLINGER CORPORATION Adjusted Trial Balance As at December 31, 2012 Account Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Land Buildings Accumulated Depreciation - Buildings Accounts Payable Income Taxes Payable Unearned Service Revenue Dividends Payable Preferred Stock Paid-in Capital in Excess of Par Value - Preferred Stock Common Stock Paid-in Capital in Excess of Par Value - Common Stock Retained Earnings Cash Dividends Treasury Stock Service Revenue Bad Debt Expense Depreciation Expense Supplies Expense Other Operating Expenses Income Tax Expense Total Req c Explanation 48,000 1,200 Common Stock Paid-in Capital in Excess of Par Value - Common Stock Req b Credit KLINGER CORPORATION Debit 175,200 87,800 Credit 3,500 5,900 40,000 142,000 26,400 28,500 35,130 9,000 13,560 48,000 1,200 89,000 12,000 127400 13,560 11,200 347,000 3,700 4,400 33,600 188,200 35,130 740,690 740,690 Income Statement For the Year Ending December 31, 2012 Service Revenue Operating Expenses Supplies expense Bad debt expense Depreciation expense Other operating expenses Total operating expenses Income before taxes Income tax expense Net income 347,000 33,600 3,700 4,400 188,200 229,900 117,100 35,130 81,970 KLINGER CORPORATION Statement of Retained Earnings For the Year Ending December 31, 2012 Retained earnings, 1/1/2012 Add: Net Income 127,400 81,970 209,370 13,560 195,810 Less: Dividends Retained earnings, 12/31/2012 KLINGER CORPORATION Balance Sheet At December 31, 2012 Assets Current Assets Cash Accounts Receivable Allowance for Doubtful accounts Supplies Total current assets Property, plant and euqipment Land Buildings Accumulated Depreciation Total assets 175,200 87,800 (3,500) 40,000 142,000 (26,400) Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Dividends payable Unearned service revenue Total current liabilities Stockholders' equity Paid-in capital Capital Stock Preferred stock Common stock Total capital stock Additional paid-in capital Paid-in Capital in Excess of Par Value - Preferred Stock Paid-in Capital in Excess of Par Value - Common Stock Total additional paid-in capital Total paid-in capital Retained Earnings Total paid-in capital and retained earnings Less: Treasury Stock Total Stockholders' equity Total liabilities and stockholders' equity 84,300 5,900 265,400 155,600 421,000 28,500 35,130 13,560 9,000 86,190 48,000 89,000 137,000 1,200 12,000 13,200 150,200 195,810 346,010 11,200 334,810 421,000 TREVOR CORPORATION Closing Entries # 1 2 3 4 Account Title Service Revenue Income Summary Debit 347,000 Income Summary Supplies expense Bad debt expense Depreciation expense Other operating expenses Income tax expense Credit 265,030 347,000 33,600 3,700 4,400 188,200 35,130 Income Summary Retained Earnings 81,970 Retained Earnings Dividends 13,560 81,970 13,560 0