Credit 49,000 The unadjusted trial balance of the general ledger of Mosaic Stone Co. at 12/31/18 is! Unadjusted Trial Balance December 31, 2018 Account Debit Cash 1,775,000 Accounts Receivable 896,000 Allowance for Doubtful Accounts Inventory 1,320,000 Prepaid Rent 282,000 Equipment (12 year useful life and $100,000 residual value) 804,400 Accumulated Depreciation Accounts Payable Deferred Revenue Notes payable Common Stock Retained Earnings Sales Revenue Purchases 590,000 Interest Expense 9,000 Salary Expense 1,110,000 Total 6,786,400 Information available at December 31, 2018 234,800 124,000 192,000 600,000 1,500,000 436,600 3,650,000 6,786,400 1. Mosaic Stone estimates depreciation on equipment using the straight-line method. The equipment was originally purchased on 1/1/2014 for $804,400. 2. Mosaic Stone estimates bad debts as 3% of credit sales. Credit sales for 2018 totaled $2,500,000. 3. In 2018, payments to employees for salaries totaled $1,430,000 of which $320,000 was for salaries accrued in 2017. Records indicate that salaries earned in the last week of Dec. 2018 amounted to $415,000 and would be paid the first week in January 2019. 4. The balance in deferred revenue reflects payment received on a customer order. The details of the customer order are: Mosaic Stone received an order on 11/20/2018 for 24 slabs of marble with a sales price of $16,000 per slab. Under the contract, the customer was required to pay 50% of the total order price on 11/20/2018 with the remaining due on 1/18/19. After the unadjusted trial balance, Mosaic checked delivery records and found that 10 of the 24 slabs in the order were delivered on 12/27/2018 and the delivery date on the 14 remaining slabs is set for 1/18/19. 5. Mosaic Stone purchases all inventory on account and the accounts payable balance reflects amounts owed to suppliers of inventory. During 2018, Mosaic Stone made payments to suppliers of inventory totaling $560,000 with inventory purchases during the year of $590,000. Mosaic Stone has strong internal controls and there is no evidence of inventory theft. Mosaic Stone has a periodic inventory system. At 12/31/2018, the count of inventory revealed $630,000 of inventory on hand. 6. Mosaic Stone rents warehouse space. Mosaic Stone's rent contracts are one year contracts with the 12 months of rent prepaid at the beginning of the contract. A 12/31 review of the rent contract revealed that a contract was signed on 5/1/18 upon the expiration of the previous year's contract. The amount paid on 5/1/18 was $216,000. 7. Per review of their only debt contract, the original amount of the note payable was $750,000. The principal of the note is being repaid in installments of 10 equal annual payments due each year on Mar. 1. The interest rate on the note is 8% and annual interest payments are required on March 1. 8. Mosaic's tax rate is 21% on all items included in the determination of pre-tax net income. Taxes for the year will be paid in 2019. ACCT 3110 Assignment 2: The Accounting Cycle (25 points) DUE DATE: In class on Monday, February 2, 2020 ASSIGNMENT OBJECTIVES: Specific Course Learning Objectives To review and solidify your understanding of how an accounting information system works; that is, to be able to start with the analysis of transactions and to create a flow of data through the journals and ledgers to the financial statements. To help you to be able to perform the analysis needed to prepare proper adjusting journal entries so as to ensure that the financial statements are up-to-date and in conformity with GAAP. To help you to improve your ability to prepare a balance sheet. REQUIREMENTS: Use the information on the following page related to the Mosaic Stone Company to perform the steps in the accounting cycle after the unadjusted trial balance. Assume all amounts are material. Requirements 2, 4, 5, 6 and 7 below must be typed. Requirements 1 and 3 can be legibly handwritten in a T-account worksheet (such as the worksheet provided in the Chapter 2 Handout | 1. Set up the necessary T-accounts starting with the balances from the unadjusted trial balance. 2. Prepare adjusting journal entries (give your entries a reference number to include in the posting of the entry). Below the preparation of all AJEs, provide supporting calculations/explanations to show how all recorded amounts were determined/computed. 3. Post adjusting journal entries to the general ledger (T-accounts). 4. Prepare an adjusted trial balance. 5. Prepare an income statement for 2018 and a classified balance sheet as of December 31, 2018. For the income statement, you must present the following subtotals: Gross Profit, Pretax Income and Net income. 6. Prepare closing journal entries (posting of closing entries not required). 7. Prepare a post-closing trial balance. Credit 49,000 The unadjusted trial balance of the general ledger of Mosaic Stone Co. at 12/31/18 is! Unadjusted Trial Balance December 31, 2018 Account Debit Cash 1,775,000 Accounts Receivable 896,000 Allowance for Doubtful Accounts Inventory 1,320,000 Prepaid Rent 282,000 Equipment (12 year useful life and $100,000 residual value) 804,400 Accumulated Depreciation Accounts Payable Deferred Revenue Notes payable Common Stock Retained Earnings Sales Revenue Purchases 590,000 Interest Expense 9,000 Salary Expense 1,110,000 Total 6,786,400 Information available at December 31, 2018 234,800 124,000 192,000 600,000 1,500,000 436,600 3,650,000 6,786,400 1. Mosaic Stone estimates depreciation on equipment using the straight-line method. The equipment was originally purchased on 1/1/2014 for $804,400. 2. Mosaic Stone estimates bad debts as 3% of credit sales. Credit sales for 2018 totaled $2,500,000. 3. In 2018, payments to employees for salaries totaled $1,430,000 of which $320,000 was for salaries accrued in 2017. Records indicate that salaries earned in the last week of Dec. 2018 amounted to $415,000 and would be paid the first week in January 2019. 4. The balance in deferred revenue reflects payment received on a customer order. The details of the customer order are: Mosaic Stone received an order on 11/20/2018 for 24 slabs of marble with a sales price of $16,000 per slab. Under the contract, the customer was required to pay 50% of the total order price on 11/20/2018 with the remaining due on 1/18/19. After the unadjusted trial balance, Mosaic checked delivery records and found that 10 of the 24 slabs in the order were delivered on 12/27/2018 and the delivery date on the 14 remaining slabs is set for 1/18/19. 5. Mosaic Stone purchases all inventory on account and the accounts payable balance reflects amounts owed to suppliers of inventory. During 2018, Mosaic Stone made payments to suppliers of inventory totaling $560,000 with inventory purchases during the year of $590,000. Mosaic Stone has strong internal controls and there is no evidence of inventory theft. Mosaic Stone has a periodic inventory system. At 12/31/2018, the count of inventory revealed $630,000 of inventory on hand. 6. Mosaic Stone rents warehouse space. Mosaic Stone's rent contracts are one year contracts with the 12 months of rent prepaid at the beginning of the contract. A 12/31 review of the rent contract revealed that a contract was signed on 5/1/18 upon the expiration of the previous year's contract. The amount paid on 5/1/18 was $216,000. 7. Per review of their only debt contract, the original amount of the note payable was $750,000. The principal of the note is being repaid in installments of 10 equal annual payments due each year on Mar. 1. The interest rate on the note is 8% and annual interest payments are required on March 1. 8. Mosaic's tax rate is 21% on all items included in the determination of pre-tax net income. Taxes for the year will be paid in 2019. ACCT 3110 Assignment 2: The Accounting Cycle (25 points) DUE DATE: In class on Monday, February 2, 2020 ASSIGNMENT OBJECTIVES: Specific Course Learning Objectives To review and solidify your understanding of how an accounting information system works; that is, to be able to start with the analysis of transactions and to create a flow of data through the journals and ledgers to the financial statements. To help you to be able to perform the analysis needed to prepare proper adjusting journal entries so as to ensure that the financial statements are up-to-date and in conformity with GAAP. To help you to improve your ability to prepare a balance sheet. REQUIREMENTS: Use the information on the following page related to the Mosaic Stone Company to perform the steps in the accounting cycle after the unadjusted trial balance. Assume all amounts are material. Requirements 2, 4, 5, 6 and 7 below must be typed. Requirements 1 and 3 can be legibly handwritten in a T-account worksheet (such as the worksheet provided in the Chapter 2 Handout | 1. Set up the necessary T-accounts starting with the balances from the unadjusted trial balance. 2. Prepare adjusting journal entries (give your entries a reference number to include in the posting of the entry). Below the preparation of all AJEs, provide supporting calculations/explanations to show how all recorded amounts were determined/computed. 3. Post adjusting journal entries to the general ledger (T-accounts). 4. Prepare an adjusted trial balance. 5. Prepare an income statement for 2018 and a classified balance sheet as of December 31, 2018. For the income statement, you must present the following subtotals: Gross Profit, Pretax Income and Net income. 6. Prepare closing journal entries (posting of closing entries not required). 7. Prepare a post-closing trial balance