GRADING: Worth up to 15 points. Carefully READ the requirements on page 2 first. Partially completed problems will carn no credit that means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will cam at least 7.5 points. The remaining points are dependent upon the accuracy of your answers. Round amounts to the nearest dollar, if applicable. You can work with 2 other people for a total of 3 people. Please put all your names on the top and turn it into one of your TA's mailbox Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below. Jamukha Corporation Balance Sheet December 31, 2017 Assets Cash Accounts receivable Allowance for doubtful accounts Inventory Prepaid insurance Equipment AD-Equipment Liabilities and Stockholders' Equity Accounts payable Common stock (S1 par) Paid-in capital in excess of par - Common stock Retained earnings 66.750 10,000 190,000 134.115 18,250 39,175 (3,000) 84,000 7,440 375.000 (120,000) 400,865 400,865 During 2018 the following transactions occurred: 1. Purchased $111.500 inventory on account. Jamukha Corp uses a perpetual inventory system. 2. Sales of $225.000, plus 5.6% sales tax, were made to customers on account Cost of goods sold was $125,000. The company uses a perpetual inventory system. 3. Received $45,000 cash down payment for orders that will be shipped next year. Issued 10 year, $75,000 face value, 4% bonds on July 1 at 102. The bonds were sold to yield an effective annual rate of 3.758218%, and they pay interest every January 1 and July 1. Collected $180.500 on account. 6. Paid general expenses of $70,250. Assume these were paid as incurred (debit expenses). 7. Paid $130,000 for amount due to supplier. 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1. Jamukha Corp, sold for S106,000 cash equipment which originally cost $200,000 Accumulated depreciation for this equipment as of December 31, 2017, was $75,000. This transaction is exempt from sales tax. 10. Issued 1,250 shares of S100 par, 7% preferred stock for $200,000 cash. 11. Purchased equipment on July 1, 2018, for $225,000 cash. 12. Purchased 800 shares of Jamukha Corp. common stock from a disgruntled shareholder for $44 per share. 13. Recorded salarics and payroll taxcs. Employce's gross salaries were $90,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of $7,000 were withheld, and state income taxes (SIT) of $4,500 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts. 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Journal Entries: 15. Straight-line depreciation with an 14 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on July 1, 2018 (#11) is depreciated using double-declining balance with a useful life of 25 years and a $30,000 salvage value. (Hint: The equipment was purchased midway through the year.) 16. Accrue bond interest payable and amortize bond discount premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17. The prepaid insurance relates to a policy purchased on December 31, 2017. This insurance expires at a rate of S225 per month. Record as a general expense. 18. Jamukha estimates that 5.5% of accounts receivable are uncollectible. 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REQUIRED: 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. a. Enter the transactions numbered 1-14 in the general journal provided on the following pages. b. Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it 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. c. Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare a 12-column worksheet similar to the worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete. To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. e. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements just complete them on the worksheet.) Name EXTRA CREDIT III SOLUTION Journal: Requirement (a) General Journal Debit Credit a. 10. all General Ledger: Requirement (b) DR CR CASH Beginning Item 3 18.250 45.000 BALANCE 18.250 DR 63.250 DR CR ACCOUNTS RECEIVABLE Beginning DR 39,175 BALANCE 39,175 DR DR ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning C R 3.000 BALANCE 3.000 CR CR INVENTORY Beginning DR 84.000 BALANCE 84.000 DR CR PREPAID INSURANCE Beginning DR 7.440 BALANCE 7.440 DR CR EQUIPMENT Beginning DR 375.000 BALANCE 375.000 DR DR ACCUM DEPRECIATION EQUIPMENT Beginning CR 120.000 BALANCE 120.000 CR General Ledger: Requirement (b) continued DR ACCOUNTS PAYABLE Beginning CR 66,750 BALANCE 66,750 CR SALARIES PAYABLE DR BALANCE SALES TAX PAYABLE BALANCE FICA PAYABLE BALANCE FIT PAYABLE BALANCE SIT PAYABLE DR CR BALANCE FUTA PAYABLE BALANCE SUTA PAYABLE DR BALANCE UNEARNED REVENUE DR BALANCE BONDS PAYABLE DR CR BALANCE PREMIUM ON BONDS PAYABLE DR BALANCE Jamukha Corporation Worksheet: Requirement (c), (d) For the Year Ended December 31, 2018 Unadjusted Adjusted Income Retained Balance Trial Balance Adjustments Trial Balance Statement arnings Statement Sheet DR CRDR CRI DR CRI DRCR DR CRDR CR Account Title Totals Net loss Totals Ending retained earnings Totals Jamukha Corporation Statement of Cash Flows: Requirement (e) For the Year Ended December 31, 2018 CASH FROM OPERATING ACTIVITIES: Increases Decreases Net Cash From Operating Activities CASH FROM INVESTNG ACTIVITIES: Net Cash From Investing Activities CASH FROM FINANCING ACTIVITIES: Net Cash From Financing Activities NET INCREASE IN CASH Cash at beginning of year Cash at end of year General Journal Inventory Accant. Royalele Debit Credit 1,500 237,600 1,500 Ina lopok palable ve 45.000 cash 1.5. Cash's Doyobie. 180,500 125.000 125.000 Sales here 12, 6oo cos 2250CO Unearned Revenue 45.000 76.500 Premium 75.000 Account hec 190,000 a.6. Gesycel Expense Account 70,250 cash 70X250 a.7. Account Dosyable 130,000 cos PDpoc 12.600 12,600 cash Toooo LACC Dep 175,000 F Gipment a. 10. Cos 200.0oo Drecierd Stock LPICE car a. 11. Equipment Cooh a.12. Thessac Soch 35200 225.000 Coen 35,200 90.000 EXCIE Dal 16885 Fit Day 7000 17 DAV 4500 Salac povable 7615 Payroll Tax EXD 10710_ FICA pay Funemplice Si unemployce a.14. FICA 13,170 TODO 200.00G 995,000 Q00_ 2925 17000 SIT ISAL Funam 4 Soo GI cre 100710 General Ledger: Requirement (b) CR CASH Beginning Item 3 Bem 14 DR 18.250 45,000 /C Soo BALANCE 18,250 DR 63.250 DR 75000 70.250 Lianco en 8 chem 9 Litem io Hem When 12 T ,000 boo.ooo 12.05.000 35200 100.710 CR ACCOUNTS RECEIVABLE Beginning DR 39,175 137.00 BALANCE 39,175 DR Item 5 DR ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning CR 3,000 BALANCE 3,000 CR CR INVENTORY Beginning 1 em Item 2 DR 84.000 .500 BALANCE 84.000 DR 1251001 CR PREPAID INSURANCE Beginning DR 7,440 BALANCE 7,440 DR CR DR 375.000 BALANCE 375.000 DR EQUIPMENT Beginning Hem a Lem 200.000 2500 ACCUM DEPRECIATION - EQUIPMENT Beginning Hem 9 CR 120,000 BALANCE 120.000 CR 75.0 GRADING: Worth up to 15 points. Carefully READ the requirements on page 2 first. Partially completed problems will carn no credit that means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will cam at least 7.5 points. The remaining points are dependent upon the accuracy of your answers. Round amounts to the nearest dollar, if applicable. You can work with 2 other people for a total of 3 people. Please put all your names on the top and turn it into one of your TA's mailbox Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below. Jamukha Corporation Balance Sheet December 31, 2017 Assets Cash Accounts receivable Allowance for doubtful accounts Inventory Prepaid insurance Equipment AD-Equipment Liabilities and Stockholders' Equity Accounts payable Common stock (S1 par) Paid-in capital in excess of par - Common stock Retained earnings 66.750 10,000 190,000 134.115 18,250 39,175 (3,000) 84,000 7,440 375.000 (120,000) 400,865 400,865 During 2018 the following transactions occurred: 1. Purchased $111.500 inventory on account. Jamukha Corp uses a perpetual inventory system. 2. Sales of $225.000, plus 5.6% sales tax, were made to customers on account Cost of goods sold was $125,000. The company uses a perpetual inventory system. 3. Received $45,000 cash down payment for orders that will be shipped next year. Issued 10 year, $75,000 face value, 4% bonds on July 1 at 102. The bonds were sold to yield an effective annual rate of 3.758218%, and they pay interest every January 1 and July 1. Collected $180.500 on account. 6. Paid general expenses of $70,250. Assume these were paid as incurred (debit expenses). 7. Paid $130,000 for amount due to supplier. 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1. Jamukha Corp, sold for S106,000 cash equipment which originally cost $200,000 Accumulated depreciation for this equipment as of December 31, 2017, was $75,000. This transaction is exempt from sales tax. 10. Issued 1,250 shares of S100 par, 7% preferred stock for $200,000 cash. 11. Purchased equipment on July 1, 2018, for $225,000 cash. 12. Purchased 800 shares of Jamukha Corp. common stock from a disgruntled shareholder for $44 per share. 13. Recorded salarics and payroll taxcs. Employce's gross salaries were $90,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of $7,000 were withheld, and state income taxes (SIT) of $4,500 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts. 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Journal Entries: 15. Straight-line depreciation with an 14 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on July 1, 2018 (#11) is depreciated using double-declining balance with a useful life of 25 years and a $30,000 salvage value. (Hint: The equipment was purchased midway through the year.) 16. Accrue bond interest payable and amortize bond discount premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17. The prepaid insurance relates to a policy purchased on December 31, 2017. This insurance expires at a rate of S225 per month. Record as a general expense. 18. Jamukha estimates that 5.5% of accounts receivable are uncollectible. 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REQUIRED: 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. a. Enter the transactions numbered 1-14 in the general journal provided on the following pages. b. Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it 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. c. Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare a 12-column worksheet similar to the worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete. To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. e. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements just complete them on the worksheet.) Name EXTRA CREDIT III SOLUTION Journal: Requirement (a) General Journal Debit Credit a. 10. all General Ledger: Requirement (b) DR CR CASH Beginning Item 3 18.250 45.000 BALANCE 18.250 DR 63.250 DR CR ACCOUNTS RECEIVABLE Beginning DR 39,175 BALANCE 39,175 DR DR ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning C R 3.000 BALANCE 3.000 CR CR INVENTORY Beginning DR 84.000 BALANCE 84.000 DR CR PREPAID INSURANCE Beginning DR 7.440 BALANCE 7.440 DR CR EQUIPMENT Beginning DR 375.000 BALANCE 375.000 DR DR ACCUM DEPRECIATION EQUIPMENT Beginning CR 120.000 BALANCE 120.000 CR General Ledger: Requirement (b) continued DR ACCOUNTS PAYABLE Beginning CR 66,750 BALANCE 66,750 CR SALARIES PAYABLE DR BALANCE SALES TAX PAYABLE BALANCE FICA PAYABLE BALANCE FIT PAYABLE BALANCE SIT PAYABLE DR CR BALANCE FUTA PAYABLE BALANCE SUTA PAYABLE DR BALANCE UNEARNED REVENUE DR BALANCE BONDS PAYABLE DR CR BALANCE PREMIUM ON BONDS PAYABLE DR BALANCE Jamukha Corporation Worksheet: Requirement (c), (d) For the Year Ended December 31, 2018 Unadjusted Adjusted Income Retained Balance Trial Balance Adjustments Trial Balance Statement arnings Statement Sheet DR CRDR CRI DR CRI DRCR DR CRDR CR Account Title Totals Net loss Totals Ending retained earnings Totals Jamukha Corporation Statement of Cash Flows: Requirement (e) For the Year Ended December 31, 2018 CASH FROM OPERATING ACTIVITIES: Increases Decreases Net Cash From Operating Activities CASH FROM INVESTNG ACTIVITIES: Net Cash From Investing Activities CASH FROM FINANCING ACTIVITIES: Net Cash From Financing Activities NET INCREASE IN CASH Cash at beginning of year Cash at end of year General Journal Inventory Accant. Royalele Debit Credit 1,500 237,600 1,500 Ina lopok palable ve 45.000 cash 1.5. Cash's Doyobie. 180,500 125.000 125.000 Sales here 12, 6oo cos 2250CO Unearned Revenue 45.000 76.500 Premium 75.000 Account hec 190,000 a.6. Gesycel Expense Account 70,250 cash 70X250 a.7. Account Dosyable 130,000 cos PDpoc 12.600 12,600 cash Toooo LACC Dep 175,000 F Gipment a. 10. Cos 200.0oo Drecierd Stock LPICE car a. 11. Equipment Cooh a.12. Thessac Soch 35200 225.000 Coen 35,200 90.000 EXCIE Dal 16885 Fit Day 7000 17 DAV 4500 Salac povable 7615 Payroll Tax EXD 10710_ FICA pay Funemplice Si unemployce a.14. FICA 13,170 TODO 200.00G 995,000 Q00_ 2925 17000 SIT ISAL Funam 4 Soo GI cre 100710 General Ledger: Requirement (b) CR CASH Beginning Item 3 Bem 14 DR 18.250 45,000 /C Soo BALANCE 18,250 DR 63.250 DR 75000 70.250 Lianco en 8 chem 9 Litem io Hem When 12 T ,000 boo.ooo 12.05.000 35200 100.710 CR ACCOUNTS RECEIVABLE Beginning DR 39,175 137.00 BALANCE 39,175 DR Item 5 DR ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning CR 3,000 BALANCE 3,000 CR CR INVENTORY Beginning 1 em Item 2 DR 84.000 .500 BALANCE 84.000 DR 1251001 CR PREPAID INSURANCE Beginning DR 7,440 BALANCE 7,440 DR CR DR 375.000 BALANCE 375.000 DR EQUIPMENT Beginning Hem a Lem 200.000 2500 ACCUM DEPRECIATION - EQUIPMENT Beginning Hem 9 CR 120,000 BALANCE 120.000 CR 75.0