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GeneralProducts Inc is incorporated in Nevada, USA on Jan 1,2013 to takeover a local retail chain. The objective of the company is to suuply goods
GeneralProducts Inc is incorporated in Nevada, USA on Jan 1,2013 to takeover a local retail chain. The objective of the company is to | |||||||||||
suuply goods of every day use to customers at the most competitive prices. GeneralProducts has chain of stores throughout | |||||||||||
USA. The retial operations of the company are so designed that customers can shop seamlessly in stores and online. | |||||||||||
Balance Sheet of GeneralProducts Inc. on Dec 31, 2015 | |||||||||||
Assets | $ | ||||||||||
Current Assets | |||||||||||
Cash and cash equivalent | 11,980 | ||||||||||
Accounts Receivables | 20,520 | ||||||||||
Inventory | 317,060 | ||||||||||
Inventory of Premiums ( @$1.10 per premium) | 660 | ||||||||||
Total Current Assets | 350,220 | ||||||||||
Long Term Assets | |||||||||||
Investments | 66,775 | ||||||||||
Property Plant and Equipment | 750,000 | ||||||||||
Less Accumulated Depreciation | 90,000 | 660,000 | |||||||||
Total Long Term Assets | 726,775 | ||||||||||
Intangible Assets | |||||||||||
Trade Marks | 190,000 | ||||||||||
Total Assets | 1,266,995 | ||||||||||
Liabilities and Shareholders' Equity | |||||||||||
Current Liabilities | |||||||||||
Accounts Payable | 50,722 | ||||||||||
Liability for Premiums and Coupons | 550 | ||||||||||
5% Short Term Notes Payable due on March 31,2016 | 8,000 | ||||||||||
Accrued Interest on 6% Bonds Payable | 3,000 | ||||||||||
Total Current Liabilities | 62,272 | ||||||||||
6% Bonds Payable due 2020 | 100,000 | ||||||||||
Unamortized Discount on Bonds Payable | 6,732 | 93,268 | |||||||||
Total Liabilities | 155,540 | ||||||||||
Stockholder's Equity | |||||||||||
Common Stock | |||||||||||
125,000 shares, par value $1 authorized | |||||||||||
100,000 shares issued and outstanding | 130,000 | ||||||||||
Paid inCapital in Excess of Par | 946,000 | ||||||||||
Retained Earnings | 35,455 | ||||||||||
total nStockholders' Equity | 1,111,455 | ||||||||||
Total Liabilities and Stockholders' Equity | 1,266,995 | ||||||||||
GeneralProducts provides us financial and business related data for 2016 below. | |||||||||||
1 | Trades Marks were acquired for $200,000 in 2015.Estimated useful at the time of acquisition was 20years | ||||||||||
There was a litiagation brought out by a competitor against the Trade Mark. GeneralProduct could successfully | |||||||||||
defended this litigation at a cost of $ 45,000. New useful life of Trade Mark is estimated to be 25 years from the date of acquisition. | |||||||||||
2 | All sales are on credit and totalled $ 940,560. COGS are $780,650. | ||||||||||
3 | Included in the total sales of $940,560 are the sales of GeneralProducts brand 6000 soap powder boxes | ||||||||||
GeneralProducts includes one coupon in every soap powder box. Customers can redeem 4 coupons for one | |||||||||||
Kitchen untensil. Based on past experience 60% of the coupons are redeemed by customers. | |||||||||||
During 2016 3,400 coupons were redeemed. Purchase of premiums during 2016 totalled | |||||||||||
1,000 premiums @ $1.10 each on credit. | |||||||||||
4 | 6% Bonds Payable are issued on Jan 1 2015 to yield 8% interest. Interest is paid semiannualy on Jan 1st and June 30th. | ||||||||||
General Products can redeem these Bonds any time after June 30,2016 @ 101. | |||||||||||
5 | To take advantage of lower interst rates and to finance the redemption of 6% Bonds, | ||||||||||
on Sept.1st 2016, GeneralProducts issued 5%Bonds in the face value of $100,000 to yield 6% | |||||||||||
The maturity period of these 5% Bonds is 10 years and interest is paid semiannually on 1st Jan and 30th June. | |||||||||||
The proceeds from the issue of 5% Bonds are used to redeem 6% Bonds Payable @ 101 on Sept.1st 2016. | |||||||||||
6 | Selling Administrative Expenses excluding depreciation are $87,345. PP&E is depreciated on Striaght Line Method over 25 years of life. | ||||||||||
7 | Cash collected from customers totalled $906,450 | ||||||||||
8 | Cash paid to suppliers for credit purchases totalled $728,254 | ||||||||||
9 | Purcahses of inventory totalled $ 689,525.All purchases are on credit. | ||||||||||
10 | GeneralProducts purchased Land for $30,000 for construction of building | ||||||||||
Requirements | |||||||||||
1 | Record the necessary journal entries for 2016 | ||||||||||
2 | Prepare Income Statement and Retained Earnings Statement for the year 2016 | ||||||||||
3 | Prepare Balance Sheet on December 31,2016 | ||||||||||
4 | Show full work of all the financial items reported in Income Statement and Balance Sheet. | ||||||||||
Please round your calculations closest to $. Ignore tax. | |||||||||||
Check Figures: | |||||||||||
Income Statement | |||||||||||
Net Income | 18,200.00 | ||||||||||
Retained Earnings | 53,655.00 | ||||||||||
Operating Income | 31,783.00 | ||||||||||
Balance Sheet | |||||||||||
Total Assets | 1,238,692.00 | ||||||||||
Liabilities | 109,037.00 | ||||||||||
Current Assets | 286,709.00 | ||||||||||
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