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GeneralProducts provides us financial and business related data for 2016 below. Trades Marks were acquired for $200,000 in 2015.Estimated useful at the time of acquisition
GeneralProducts provides us financial and business related data for 2016 below.
- Trades Marks were acquired for $200,000 in 2015.Estimated useful at the time of acquisition was 20 years There was a litigation brought out by a competitor against the Trade Mark. General Products could successfully defend 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.
- All sales are on credit and total $ 940,560. COGS are $780,650.
- 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 utensil. Based on past experience 60% of the coupons are redeemed by customers. During 2016 3,400 coupons were redeemed. Purchase of premiums during 2016 total 1,000 premiums @ $1.10 each on credit.
- 6% Bonds Payable are issued on Jan 1 2015 to yield 8% interest. Interest is paid semi-annualy on Jan 1st and June 30th. General Products can redeem these Bonds any time after June 30,2016 @ 101.
- To take advantage of lower interest 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 semi-annually 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.
- Selling Administrative Expenses excluding depreciation are $87,345. PP&E is depreciated on Striaght Line Method over 25 years of life.
- Cash collected from customers total $906,450
- Cash paid to suppliers for credit purchases total $728,254
- Purcahses of inventory total $689,525.All purchases are on credit.
- GeneralProducts purchased Land for $30,000 for construction of building
Requirements
Record the necessary journal entries for 2016
- Prepare Income Statement and Retained Earnings Statement for the year 2016
- Prepare Balance Sheet on December 31,2016
- Show full work of all the financial items reported in Income Statement and Balance Sheet. Please round your calculations closest to $. Ignore tax.
Balance Sheet of General Products Inc. on December 31, 2015 | |||
ASSETS | |||
Current Assets | |||
Cash and Cash Equivalent | 11,980 | ||
Accounts Receivables | 20,520 | ||
Inventory | 317,060 | ||
Inventory of Premiums (@0.10 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 | 50,772 | ||
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 in Capital in Excess of Par | 946,000 | ||
Retained Earnings | 35,455 | ||
Total Stockholders' Equity | 1,111,455 | ||
Total Liabilities and Stockholders' Equity | 1,266,995 |
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