Financial Statement Homework #2

Gold, Inc.

December 31, 2015

Unadjusted Trial balance Cash	44,000
Accounts Receivable	22,000
Allowance for Doubtful Accounts	500
Short Term Note Receivable	50,000
Interest Receivable
Supplies on Hand	5,000
Prepaid Insurance	48,000
Inventory	10,000
Vehicle	16,000
Equipment	75,000
Accumulated Depreciation	42,000
Accounts Payable	12,000
Unearned Revenue	14,000
Wages Payable	2,000
Long-Term Notes Payable	45,000
Common Stock	106,000
Retained Earnings (1/1/2015)	2,500
Dividends	2,000
Sales	503,500
Sales Discounts	10,000
Cost of Goods Sold	48,000
Delivery Expense	5,000
Depreciation Expense	16,000
Bad Debt Expense
Rent Expense	98,000
Insurance Expense	25,000
Wages Expense	195,000
Supplies Expense	16,000
Interest Revenue
Loss on Disposal
Interest Expense	6,500
Income Tax Expense	36,000
Total	727,500	727,500

Financial Statement Homework #2 Name___________________ Please circle section time: 8:00, 9:30, 11:00 YOU MUST STAPLE YOUR PAGES TOGETHER! Gold, Inc. December 31, 2015 Unadjusted Trial balance Cash Accounts Receivable Allowance for Doubtful Accounts Short Term Note Receivable Interest Receivable Supplies on Hand Prepaid Insurance Inventory Vehicle Equipment Accumulated Depreciation Accounts Payable Unearned Revenue Wages Payable Long-Term Notes Payable Common Stock Retained Earnings (1/1/2015) Dividends Sales Sales Discounts Cost of Goods Sold Delivery Expense Depreciation Expense Bad Debt Expense Rent Expense Insurance Expense Wages Expense Supplies Expense Interest Revenue Loss on Disposal Interest Expense Income Tax Expense Total 44,000 22,000 500 50,000 5,000 48,000 10,000 16,000 75,000 42,000 12,000 14,000 2,000 45,000 106,000 2,500 2,000 503,500 10,000 48,000 5,000 16,000 98,000 25,000 195,000 16,000 6,500 36,000 727,500 727,500 Page 1 of 8 Part 1: Prepare adjusting journal entries using the unadjusted trial balance on the previous page and the information provided below. Use only the account names provided on the previous page (do not create any new account names). 1. On Dec. 31, 2015 Gold, Inc. sold merchandise on account for $14,500 with a cost of $4,500 terms 3/10 net 30. 2. Gold, Inc. loaned Jackson Co. $50,000 (already on the TB) on Oct. 1, 2015 using a 6 month, 10% interest note. All interest and principal will be paid back at the end of the 6 months. Write the adjusting journal entry required by Gold, Inc. for its financial statements as of Dec. 31, 2015. 3. Uncollectable Accounts Receivables of $1,400 need to be written off for the year ended 2015. 4. Management estimates that of the remaining accounts receivable balance, $560 will be uncollectible. Record the adjustment based on this information. Hint: Use the AFDA balance AFTER the above write off during 2015. 5. Equipment was retired on Dec. 31, 2015. The equipment originally cost $30,000 and has related A/D of $24,000 as of Jan. 1, 2015. Additional depreciation of $2,000 needs to be recorded at Dec. 31, 2015. Update the depreciation below. (Record the retirement in #6). 6. And record the retirement of the equipment (from #5) including the gain or loss. Page 2 of 8 Part 2: Post the adjusting journal entries to t-accounts: (Specific instructions: Above each T-account, write the account name of each account affected by a journal entry. Write in the unadjusted balance for each of these accounts (from page 1)...the unadjusted balance might be a debit, a credit, or zero balance. Now you are ready to post your journal entries from page 2 onto the corresponding T-accounts and then calculate adjusted balances.) Page 3 of 8 Part 3: Prepare the Adjusted Trial Balance (i.e., use ending balances after the previous journal entries are posted) Gold, Inc. December 31, 2015 Adjusted Trial balance Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Short Term Note Receivable Interest Receivable Supplies on Hand Prepaid Insurance Inventory Vehicle Equipment Accumulated Depreciation Accounts Payable Unearned Revenue Wages Payable Long-Term Notes Payable Common Stock Retained Earnings (1/1/2015) Dividends Sales Sales Discounts Cost of Goods Sold Delivery Expense Depreciation Expense Bad Debt Expense Rent Expense Insurance Expense Wages Expense Supplies Expense Interest Revenue Loss on Disposal Interest Expense Income Tax Expense Total Page 4 of 8 Part 4: Prepare a Multi-step Income Statement (Be sure to include all the necessary headings, totals and subtotals as outlined in Chapter 5. You may not need to use all the lines provided. Note: The two columns below do not represent debit and credit balances like they do on a trial balance. On the Income Statement, use the right column for subtotals and totals.) ______________ ________________________ ____________________ Page 5 of 8 Prepare a Statement of Retained Earnings. ______________ ________________________ ____________________ Page 6 of 8 Prepare a Classified Balance Sheet (Be sure to include all the necessary subtotals and totals as outlined in Chapter 2. You may not need to use all of the lines provided. Note: The two columns below do not represent debit and credit balances like they do on a trial balance. On the Balance Sheet, use the right column for subtotals and totals.) _________________ ___________________ ____________________ Page 7 of 8 Part 5: Answer the following questions using the above completed financial statements: What is the Gross Profit? What is Income from Operations? What is Income before for Income Tax? What is Total Current Assets? What is Total Current Liabilities? What is Net PPE? If the company FAILS to record depreciation expense in the adjusting entries: What is the impact to the income statement? What is the impact to the balance sheet? Page 8 of 8