Question
Flash Companys trial balance at November 30, 2020, is presented below. Flash Company uses a periodic inventory system (With FIFO cost flow method). Flash Company
Flash Companys trial balance at November 30, 2020, is presented below. Flash Company uses a periodic inventory system (With FIFO cost flow method).
Flash Company | ||
November 30, 2020 Trial Balance | ||
DR | CR | |
Accounts Receivable | $378,000 | |
Allowance for Doubtful Accounts | $45,000 | |
Accumulated Depreciation- Building | 79,000 | |
Accumulated Depreciation- Equipment | 45,600 | |
Accumulated Amortization - Patents | 3,000 | |
Building | 462,000 | |
Cash | 150,000 | |
Dividends | - | |
Equipment | 167,230 | |
Goodwill | 24,000 | |
Patents | 60,000 | |
Inventory | 251,000 | |
Land | 251,000 | |
Prepaid Insurance | 5,800 | |
Accounts Payable | 267,000 | |
Notes Payable | - | |
Unearned Revenue | 10,000 | |
Interest Payable | - | |
Share Capital ($5 par) | 880,000 | |
Retained Earnings | 295,730 | |
Sales | 833,720 | |
Sales Returns & Allowances | 10,000 | |
Amortization Expense | 200 | |
Bad Debt Expense | - | |
Cost of Goods Sold | 501,350 | |
Depreciation Expense- Building | 10,000 | |
Depreciation Expense- Equipment | 5,600 | |
Interest Expense | 6,000 | |
Insurance Expense | 1,670 | |
Entertainment Expense | ||
Postage Expense | ||
Miscellaneous Expense | ||
Gain/Loss on Disposal of Equipment | - | |
Rent Expense | 69,400 | |
Utility Expense | 11,000 | |
Wages & Salaries Expense | 94,800 | |
Totals | $2,459,050 | $2,459,050 |
December normal Journal Entries
Date | Transaction |
Dec 1 | Paid rent expense of $10,000 for December. |
Dec 1 | Took out bank note for $300,000 with an interest rate of 12% ($5,000 of the note payable become due in 2021). |
Dec 3 | Purchased 1,000 units of inventory for $500,000 terms 2/10 net 30 |
Dec 5 | Sold land with cost of $35,000 for $55,000. |
Dec 8 | Sold equipment with original cost of $50,000 and accumulated depreciation of $25,000 for $12,000. |
Dec 9 | Purchased building for $40,000. |
Dec 10 | Sold 400 units of inventory on account for $600,000. |
Dec 11 | Paid for inventory purchased December 3. |
Dec 12 | Paid postage $200, Miscellaneous $400, Entertainment $170 in cash. |
Dec 18 | Wrote off uncollectible account $25,000. |
Dec 20 | Received payment in full for sale on December 10. |
Dec 31 | Declared and paid dividends of $1 per share. |
Dec 31 | Paid wages and salaries of $15,000. |
Additional information:
1. A record stated that beginning inventory on December 1 should be 602 units. 2. Interest expense on the bank note on December 1 has not yet been accrued.
3. Depreciation expense for the month is $4,500 for building and $3,500 for equipment.
4. Prepaid insurance of $600 expired in December. 5. Unearned revenue of $15,000 was earned during the month. 6. Amortization expense for the month $500. 7. Recorded bad debts expense based on the aging of accounts receivable, as follows:
Age of Accounts | ||||
130 Days | 3160 Days | 6190 Days | Over 90 Days | |
Accounts Receivable | $ 600,000 | $ 500,000 | $ 60,000 | $ 40,000 |
Estimated percent uncollectible | 0.3% | 3% | 30% | 35% |
Requirements:
1. Journalize and post normal monthly transactions to general ledger accounts in T accounts.
2. Prepare a trial balance as at December 31, 2020. (Hint: Assets first in order of liquidity).
3. Journalize and post adjusting entries in the same T accounts as requirement #1 above.
4. Prepare an adjusted trial balance as at December, 2020.
5. Generate income statement, statement of owners equity, and classified balance sheet for the year ended December 31, 2020. (Note: November 30, 2020 Trial Balance represents the accumulated revenue and expenses of the first 11 months in 2020. Tax rate: 0% - There is no tax expense).
6. Journalize and post closing entries in the same T accounts in requirement #1 above. 7. Prepare a post closing trial balance as at December, 2020.
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