Financial Statement Homework #2 Name___________________

YOU MUST STAPLE YOUR PAGES TOGETHER!

Gold, Inc.

December 31, 2015

Unadjusted Trial balance

Cash	42,000
Accounts Receivable	24,000
Allowance for Doubtful Accounts		1,000
Short Term Note Receivable	50,000
Interest Receivable	0
Supplies	5,000
Prepaid Insurance	48,000
Inventory	12,000
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		503,000
Sales Returns & Allowances	7,000
Sales Discounts	3,000
Cost of Goods Sold	46,000
Delivery Expense	5,000
Depreciation Expense	16,000
Bad Debt Expense	0
Rent Expense	98,000
Insurance Expense	25,000
Wages Expense	195,000
Supplies Expense	16,000
Interest Revenue		0
Loss on Disposal	0
Interest Expense	6,500
Income Tax Expense	36,000
Total	727,500	727,500

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).

On Dec. 31, 2015 Gold, Inc. sold merchandise on account for $16,500 with a cost of $5,500 terms 3/10, net 30.

Gold, Inc. loaned Jackson Co. $50,000 (already on the TB) on Oct. 1, 2015 using a 6 month, 12% 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.

Uncollectable Accounts Receivables of $1,600 need to be written off for the year ended 2015.

Management estimates that of the remaining accounts receivable balance, $2,000 will be uncollectible. Record the adjustment based on this information. Hint: Use the AFDA balance AFTER the above write off during 2015. Use an AFDA T-account!

A piece of equipment was retired on Dec. 31, 2015. The equipment originally cost $34,000 and has related A/D of $24,000 as of Jan. 1, 2015. Additional depreciation of $3,000 needs to be recorded on this piece of equipment at Dec. 31, 2015. Update the depreciation below (#5). Then record the retirement (#6).

Record the retirement of the equipment (from #5) including the gain or loss.

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.)

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
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 Returns & Allowances
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

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.)

Gold, Inc.

Income Statement

Year Ended Dec. 31, 2015

Prepare a Statement of Retained Earnings.

Gold, Inc.

Statement of Retained Earnings

Year Ended Dec. 31, 2015

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.)

Gold, Inc.

Balance Sheet

As of Dec. 31, 2015

Part 5: Answer the following questions using the above completed financial statements:

What is Gross Profit?

What is Income from Operations?

What is Income before Income Tax?

What are Total Current Assets?

What are Total Current Liabilities?

What is Net PPE?

What is the discount the customer will take if they pay their balance within the discount period (AJE #1)?

What is the journal entry Gold, Inc. will record when they receive payment (within discount period) in January 2016?

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?