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ACCT 3350 - Winter 2016 Assignment #1 Due Date: Friday, Feb 5 by 11:30pm (This completed Excel file uploaded in Blackboard) Instructions: This is an individual assignment. While you may certainly discuss concepts from this assignment with your classmates, remember that the assignment must be completed and submitted on an individual basis. Late submissions will NOT be accepted. Include your full name and A# at the top of the first page of your submission. Your assignment must be submitted electronically through Blackboard as an Excel document (use this file and complete your answer on the tabs created). Hardcopy submissions will NOT be accepted. Show all calculations (for journal entries, show calculations below your entry (i.e.. not a formula)) and state any assumptions. Answer all THREE questions based on the information below from White Company The following Balance Sheet presents the financial position of White Company on Dec 31, 2014: White Company Balance Sheet 31-Dec-14 Current Assets Current Liabilities Cash $19,300 Accounts Payable $4,000 Accounts Receivable 18,000 Salary Payable 300 Less: Allowance for Doubtful Accounts 200 Total Current Liabilities 4,300 Computer 22,000 Bank Loan Payable 21,000 Office Supplies 800 Total Non-Current Liabilities 21,000 Prepaid Rent 1500 Total Liabilities 25,300 Total Current Assets 61,400 Non-current Assets Equity Office Furniture 35,400 Common Shares 26,200 Less: Accumulated Depreciation-Furniture 15,300 Retained Earnings 30,000 Total Non-current Assets 20,100 Total Equity 56,200 Total Assets $81,500 Total Liability and Equity $81,500 White company sells Mac computers in Halifax. The company prepares adjusting entries annually. Its year end is December 31. The following activities took place in 2015: 1 Sales from selling Mac computers for 2015 were $128,600. All sales were credit sales. 2 During 2015, White purchased $52,000 Mac computers. All purchases were credit purchases. At the end of 2015, the value of Mac computers on hand was $24,000. 3 At the end of 2015, the unadjusted ending balance of Accounts Receivable was $12,000. White Company then wrote off a $300 receivable at year end. 4 Salaries and Wages incurred during 2015 were $24,000, of which $500 was unpaid to staff at year end. (2014 wages owing was also paid.) 5 The owner of White Company received a parking ticket for $400, and the owner paid the ticket and included this $400 in the company's expense. 6 Accounts Payable was paid down in 2015 with a remaining balance of $3,000 (after considering all entries above). 7 Annual interest for the bank loan payable was paid on December 31. The interest rate is 3%. The note payable was outstanding the entire year and is are not due until 2018. Additional Data: a To increase the company's total revenue, White Company started to provide technical support to new Mac users. The service fee was $600 per year and three customers bought this new service on July 1, 2015. The fees were paid in cash. b To promote the company's technical support service, $1,000 was paid in Dec 2015 for advertising to be aired on the local radio station in Jan 2016. c White Company purchased an annual insurance policy and paid the annual fee of $5,000 on March 31, 2015 and the coverage period was April 1, 2015 to March 31, 2016. d There were no additions or disposals of office furniture during 2015. The regular rate of depreciation/amortization is 10% of cost per year. e Based upon past history, White estimates that 0.5 percent of the gross sales of computers will become uncollectible. f One of the three customers who purchased the technical support renewed next year's annual service in advance to get 5% early-renewal discount. This client paid $570 in December 2015 for the service from June 1 2016 to May 2017. g The Prepaid Rent account includes an opening balance of $1,500 for rent for the first month of 2015. Additionally, on Jan 31, 2015, White renewed its lease (Feb 1- Jan 31) for $1,500 per month, and paid $18,000 on the same day. h The company purchased $325 of office supplies in cash during 2015. At the end of the year $85 of supplies were on hand. QUESTION 1 - 6 marks Answer the following three questions using "Question 1" tab Part 1 Is it appropriate to include the owner's parking ticket in the company's expense (transaction 5)? Why? Use the fundamental principles from Chapter 2 to discuss this question. If you think this is not appropriate, do NOT include this expense in your answers to Question 2. (2 marks) Part 2 Is it appropriate to list computers under current assets on Balance Sheet? Why? Use the definition of current assets to discuss this question. Do whatever you think is correct to answer Question 2. (2 marks) Part 3 The owner wanted to record transaction (f) above as revenue. Is it appropriate to recognize the $570 as 2015 revenue (transaction f)? Why? Using the fundamental principles from Chapter 2 to discuss this question. (2 marks) QUESTION 2 - 90 marks Answer the following questions using the appropriate tab in this file Part 1 Record all necessary entries for 2015 activities using the numbers above as reference. If no entries are necessary, write \"no entry\". (21 marks) Part 2 Record all necessary entries for 2015 additional data using the letters above as reference. If no entries are necessary, write \"no entry\". (29 marks) Part 3 Prepare the adjusted trial balance for December 31, 2015. (5 marks) Part 4 Prepare the closing entries for 2015. (5 marks) Part 5 Prepare in good form (titles, totals, appropriate labels, etc. - text pg. reference provided as a guide below): - the Statement of Income (multi-step, operating expensed do not need to be separated (state any assumptions and ignore taxes)) (pg. 120 to "net income" line) - the Statement of Changes in Shareholders' Equity (pg. 120 - common shares, retained earnings, and total columns only (no issuance of shares and no dividends during the year during the year) for the year ended Dec 31, 2015 and - the Classified Statement of Financial Position at Dec 31, 2015 (pg. 121) Your assignment solution should be presented professionally in Excel using the tabs attached. Using Excel, you should ensure that all text is visible on the screen without needing to scroll horizontally (across). Formulas should be used for all adding and subtraction within your financial statements. Marks will be deducted for unprofessional work that is difficult to follow. In addition, your financial statements (Part 5) should: - Include at least 3 SUM functions in Excel in your statements- highlight 3 cells in yellow where this was done for the marker. - Double underline and format your net income presented on the income statement such that it is presented with a $ sign, comma separating the thousands, and rounded to the nearest dollar (i.e. $20,260) - Use formulas to take the ending retained earnings and ending common share values from your Stmt of Changes in Equity to the Statement of Financial Position. (30 marks - Part 5 and Excel) QUESTION 3 - 4 marks Answer the question using "Question 3" tab White company is planning an expansion and needs a bank loan in 2016, thus, the owner would like to maximize the net income of 2015 (White Company needs to submit the 2015 income statement to the bank). What might be two specific ways to achieve the income maximizing goal via changing accounting methods and/or estimates? (Note: your answer must address 2015 net income and must be relevant to accounting policies. The answers could be ethical or unethical. You could ignore the GAAP requirements for this question.) Question 1 Part 1 Part 2 Part 3 Add rows as needed 2.1 Journals - 2015 activities 2.2 Journals - 2015 additional data 2.4 Closing entries - December 31, 2015 2.3 Adjusted Trial Balance 2.5 Financial Statements Question 3 - 4 marks -- Include your response below ensuring that your text is "wrapped" and "merged" like this is so it is visible on this screen. Further, please adjust the formatting to ensure that all of the text would be printed on one page. Suggestion 1 Suggestion 2