GRADING: Worth up to 15 points. Carefully READ the instructions on page 3 first. Partially completed problems will earn no creditthat means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will earn at least 7.5 points. The remaining points are dependent upon the accuracy of your answers! Round amounts to the nearest dollar, if applicable. Jamukha Corporation prepares quarterly financial statements, ending March 31, 2018. The balance sheet at December 31, 2017, is presented below. Jamukha Corporation Balance Sheet December 31, 2017 Liabilities and Stockholders' Equity Accounts payable 65,750 Common stock 50,000 Retained earnings 294,000 Assets Cash Accounts receivable Allowance for doubtful accounts Land Equipment A/D - equipment Building A/D - building 13,250 46,500 (5,000) 60,000 80,000 (25,000) 300,000 (60,000) 409,750 409,750 During the first quarter the following transactions occurred: 1. Performed services for $95,000 on account. 2. On February 1, collected fees of $51,000 in advance. $4,250 worth of services are to be performed each month from February 1, 2018, to January 31, 2019. (Wait to make adjusting entries.) On February 1, purchased equipment for $32,000 plus 5% sales tax. $6,600 cash was paid with the remaining balance on account. Check #755 was used (hint: use accounts payable for the liability). On March 5, collected $120,250 from customers on account. Paid $77,750 on accounts payable. Check #756 was used. 6. Paid administrative expenses of $67,750. Check #757 was used. 7. Acquired a patent with a 10-year life for $15,500 cash on March 1. Check #758 was used. 8. Wrote off a receivable of $4,500 from a customer who went bankrupt. 9. On March 31, Jamukha Corp. sold equipment, which originally cost $26,000, for $4,250 cash. It had an estimated life of 10 years and a salvage of $2,000. Accumulated depreciation as of December 31, 2017, was $20,000 using the straight line method. (1) Record depreciation on the equipment sold, (2) record the sale. Adjusting Journal Entries: 10. Record revenue earned from item 2 above. 11. Jamukha Corp. estimated that 5.2% of its revenues will end up uncollected. Record bad debt expense. Hint: You will need to calculate the revenue balance before calculating bad debt expense. You should do this by looking at the ledger after posting entries 1-10. 12. Record depreciation on the equipment as of March 31. The new equipment purchased in February is being depreciated using the double declining balance method over 5 years. The equipment has an estimated salvage value of $1,000. The equipment that was on the books on December 31, 2017, and that is still owned by Jamukha is being depreciated over a 10-year life using straight line with no salvage value. 13. Depreciation is recorded on the building on a straight-line basis using a 20-year life and a salvage value of $4,000. 14. Amortization is recorded on the patent. 15. The company reconciles its bank statement every quarter. Information from the December 31, 2017, bank reconciliation is provided below. Make the necessary journal entry. You will need the facts in this item to complete the bank reconciliation for Requirement (e). There were no errors. Deposit in transit 12/30/17 $4,250 Outstanding Checks #740 #752 #753 #754 $3,444 500 600 9,750 The bank statement received for the quarter ended March 31, 2018, was: Beginning balance per bank 23,294 Deposits: 1/2/18 $4,250; 2/2/18 $51,000; 3/6/18 $120,250 175,500 Checks: #752 $500; #753 $600; #756 $77,750; #757 $67,750 ( 146,600) Debit memo: Bank service charge (Record as Administrative expense.") ( 115) Ending balance per bank 52,079 16. Jamukha's income tax rate is 21%. The tax will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 21% to compute the amount of income tax expense. Round the tax expense to the nearest whole dollar. Instructions Print out the solution pages for the general journal, ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil. You must complete all requirements (a) through (h) to receive any credit. You may work with 2 other people on the extra credit (group of no more than 3), from any lecture or discussion. Turn in one completed work to any TA in discussion, or in their mailbox by midnight on Saturday, November 23rd. a. Enter the December 31, 2017, balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages. Look at the cash account for an example of how to use the running balance ledger. I have posted the first entry to cash for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts. b. Enter the transactions numbered 1-9 in the general journal provided on the following pages. c. Post the journal entries to the ledger accounts for items 1-9. d. Prepare an unadjusted trial balance at March 31 and enter on the worksheet. Then complete the other worksheet columns as you prepare your financial statements. (See below.) Worksheet requirement: Using your unadjusted trial balance (d) above and the data for adjusting entries, (e) and (f) below, prepare a 12 column worksheet. Use the example for Sierra Corporation from Chapter 4 in the text (Illustration 4A-1 in Chapter 4 Appendix) for guidance. You will not receive any credit if the worksheet is incomplete. e. Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE in the journal, the ledger, and the worksheet. f. Journalize and post all other adjusting entries. (Items 10-16 above.) Add them to the worksheet. g. Prepare an income statement and a retained earnings statement for the quarter ended March 31, 2018, and a classified balance sheet at March 31, 2018. Appropriate name the gain/loss account on your income statement (you must call it either a gain or a loss, not both.) Use your own paper. (No formatted sheets are supplied as for the other items.) h. Journalize closing entries. You are not required to post the closing entries or prepare a post-closing trial balance for this assignment. Name EXTRA CREDIT II SOLUTION Requirements (b), (e), and (f) Extra Credit II - General Journal a.1. Debit Credit a.2. a.3. a.4. a.5. a.6. a.7. a.8. a.9 a. 10. a.11. a.12. a.13. a.14. a.15. a.16. cl.1. cl.2. cl.3. General Ledger Requirements (a), (e), and (d) CR CASH Beginning DR 13,250 BALANCE 13,250 DR CR BALANCE ACCOUNTS RECEIVABLE Beginning DR C R BALANCE ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning DR BALANCE LAND Beginning DR CR BALANCE EQUIPMENT Beginning DR CR BALANCE ACCUM DEPRECIATION - EQUIPMENT Beginning General Ledger - continued DR CR BALANCE BUILDING Beginning BALANCE ACCUM DEPRECIATION - BUILDING Beginning PATENTS CR BALANCE DR CR BALANCE ACCOUNTS PAYABLE Beginning UNEARNED SERVICE REVENUE DR CR BALANCE INCOME TAXES PAYABLE DR CR BALANCE CR BALANCE COMMON STOCK Beginning CR BALANCE RETAINED EARNINGS Beginning SERVICE REVENUE CR BALANCE ADMINISTRATIVE EXPENSES CR BALANCE General Ledger - continued DEPRECIATION EXPENSE DR CR BALANCE AMORTIZATION EXPENSE CR DR - DR BALANCE GAIN/LOSS ON DISPOSAL DR - CR BALANCE BAD DEBT EXPENSE DR CR CR BALANCE INCOME TAX EXPENSE DR CR BALANCE Worksheet (d), (e), (f) GRADING: Worth up to 15 points. Carefully READ the instructions on page 3 first. Partially completed problems will earn no creditthat means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will earn at least 7.5 points. The remaining points are dependent upon the accuracy of your answers! Round amounts to the nearest dollar, if applicable. Jamukha Corporation prepares quarterly financial statements, ending March 31, 2018. The balance sheet at December 31, 2017, is presented below. Jamukha Corporation Balance Sheet December 31, 2017 Liabilities and Stockholders' Equity Accounts payable 65,750 Common stock 50,000 Retained earnings 294,000 Assets Cash Accounts receivable Allowance for doubtful accounts Land Equipment A/D - equipment Building A/D - building 13,250 46,500 (5,000) 60,000 80,000 (25,000) 300,000 (60,000) 409,750 409,750 During the first quarter the following transactions occurred: 1. Performed services for $95,000 on account. 2. On February 1, collected fees of $51,000 in advance. $4,250 worth of services are to be performed each month from February 1, 2018, to January 31, 2019. (Wait to make adjusting entries.) On February 1, purchased equipment for $32,000 plus 5% sales tax. $6,600 cash was paid with the remaining balance on account. Check #755 was used (hint: use accounts payable for the liability). On March 5, collected $120,250 from customers on account. Paid $77,750 on accounts payable. Check #756 was used. 6. Paid administrative expenses of $67,750. Check #757 was used. 7. Acquired a patent with a 10-year life for $15,500 cash on March 1. Check #758 was used. 8. Wrote off a receivable of $4,500 from a customer who went bankrupt. 9. On March 31, Jamukha Corp. sold equipment, which originally cost $26,000, for $4,250 cash. It had an estimated life of 10 years and a salvage of $2,000. Accumulated depreciation as of December 31, 2017, was $20,000 using the straight line method. (1) Record depreciation on the equipment sold, (2) record the sale. Adjusting Journal Entries: 10. Record revenue earned from item 2 above. 11. Jamukha Corp. estimated that 5.2% of its revenues will end up uncollected. Record bad debt expense. Hint: You will need to calculate the revenue balance before calculating bad debt expense. You should do this by looking at the ledger after posting entries 1-10. 12. Record depreciation on the equipment as of March 31. The new equipment purchased in February is being depreciated using the double declining balance method over 5 years. The equipment has an estimated salvage value of $1,000. The equipment that was on the books on December 31, 2017, and that is still owned by Jamukha is being depreciated over a 10-year life using straight line with no salvage value. 13. Depreciation is recorded on the building on a straight-line basis using a 20-year life and a salvage value of $4,000. 14. Amortization is recorded on the patent. 15. The company reconciles its bank statement every quarter. Information from the December 31, 2017, bank reconciliation is provided below. Make the necessary journal entry. You will need the facts in this item to complete the bank reconciliation for Requirement (e). There were no errors. Deposit in transit 12/30/17 $4,250 Outstanding Checks #740 #752 #753 #754 $3,444 500 600 9,750 The bank statement received for the quarter ended March 31, 2018, was: Beginning balance per bank 23,294 Deposits: 1/2/18 $4,250; 2/2/18 $51,000; 3/6/18 $120,250 175,500 Checks: #752 $500; #753 $600; #756 $77,750; #757 $67,750 ( 146,600) Debit memo: Bank service charge (Record as Administrative expense.") ( 115) Ending balance per bank 52,079 16. Jamukha's income tax rate is 21%. The tax will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 21% to compute the amount of income tax expense. Round the tax expense to the nearest whole dollar. Instructions Print out the solution pages for the general journal, ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil. You must complete all requirements (a) through (h) to receive any credit. You may work with 2 other people on the extra credit (group of no more than 3), from any lecture or discussion. Turn in one completed work to any TA in discussion, or in their mailbox by midnight on Saturday, November 23rd. a. Enter the December 31, 2017, balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages. Look at the cash account for an example of how to use the running balance ledger. I have posted the first entry to cash for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts. b. Enter the transactions numbered 1-9 in the general journal provided on the following pages. c. Post the journal entries to the ledger accounts for items 1-9. d. Prepare an unadjusted trial balance at March 31 and enter on the worksheet. Then complete the other worksheet columns as you prepare your financial statements. (See below.) Worksheet requirement: Using your unadjusted trial balance (d) above and the data for adjusting entries, (e) and (f) below, prepare a 12 column worksheet. Use the example for Sierra Corporation from Chapter 4 in the text (Illustration 4A-1 in Chapter 4 Appendix) for guidance. You will not receive any credit if the worksheet is incomplete. e. Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE in the journal, the ledger, and the worksheet. f. Journalize and post all other adjusting entries. (Items 10-16 above.) Add them to the worksheet. g. Prepare an income statement and a retained earnings statement for the quarter ended March 31, 2018, and a classified balance sheet at March 31, 2018. Appropriate name the gain/loss account on your income statement (you must call it either a gain or a loss, not both.) Use your own paper. (No formatted sheets are supplied as for the other items.) h. Journalize closing entries. You are not required to post the closing entries or prepare a post-closing trial balance for this assignment. Name EXTRA CREDIT II SOLUTION Requirements (b), (e), and (f) Extra Credit II - General Journal a.1. Debit Credit a.2. a.3. a.4. a.5. a.6. a.7. a.8. a.9 a. 10. a.11. a.12. a.13. a.14. a.15. a.16. cl.1. cl.2. cl.3. General Ledger Requirements (a), (e), and (d) CR CASH Beginning DR 13,250 BALANCE 13,250 DR CR BALANCE ACCOUNTS RECEIVABLE Beginning DR C R BALANCE ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning DR BALANCE LAND Beginning DR CR BALANCE EQUIPMENT Beginning DR CR BALANCE ACCUM DEPRECIATION - EQUIPMENT Beginning General Ledger - continued DR CR BALANCE BUILDING Beginning BALANCE ACCUM DEPRECIATION - BUILDING Beginning PATENTS CR BALANCE DR CR BALANCE ACCOUNTS PAYABLE Beginning UNEARNED SERVICE REVENUE DR CR BALANCE INCOME TAXES PAYABLE DR CR BALANCE CR BALANCE COMMON STOCK Beginning CR BALANCE RETAINED EARNINGS Beginning SERVICE REVENUE CR BALANCE ADMINISTRATIVE EXPENSES CR BALANCE General Ledger - continued DEPRECIATION EXPENSE DR CR BALANCE AMORTIZATION EXPENSE CR DR - DR BALANCE GAIN/LOSS ON DISPOSAL DR - CR BALANCE BAD DEBT EXPENSE DR CR CR BALANCE INCOME TAX EXPENSE DR CR BALANCE Worksheet (d), (e), (f)