i More Info AAA is a manufacturer of kitchen appliances. AAA markets its products via retail stores that are operated as franchises. As a AAA franchisee, All Around Appliance Manele Bay will receive many benefits, including having the exclusive right to sell AAA brand appliances in Manele Bay. AAA appliances have an excellent reputation and the AAA name and logo are readily recognized by consumers. AAA also manages national television advertising campaigns that benefit the franchisees. In exchange for these benefits, All Around Appliance Manele Bay will pay an annual franchise fee to AAA based on a percentage of sales. The annual franchise fee is a separate cost and in addition to the purchase of the franchise. In addition to purchasing the franchise, All Around ApplianceManele Bay will also purchase land with an existing building to use for its retail store, store fixtures, and office equipment. The business will purchase appliances from AAA and resell them in its store, primarily to local building contractors for installation in new homes All Around Appliance_Manele Bay Chart of Accounts Cash Bain Capital Petty Cash Bain Withdrawals Accounts Receivable Sales Revenue Allowance for Bad Debts Interest Revenue Merchandise Inventory Cost of Goods Sold Office Supplies Franchise Fee Expense Prepaid Insurance Salaries Expense Interest Receivable Utilities Expense Notes Receivable Insurance Expense Land Supplies Expense Building Bad Debt Expense Accumulated Depreciation-Building Bank Expense Store Fixtures Credit Card Expense Accumulated Depreciation Store Fixtures Depreciation Expense-Building Office Equipment Depreciation Expense-Store Fixtures Accumulated Depreciation--Office Equipment Depreciation Expense-Office Equipment Franchise Amortization Expense-Franchise Accounts Payable Interest Expense Interest Payable Cash Short and Over Notes Payable Print Done a. C. e. Received $600,000 cash from owner, F. Bain, in exchange for capital. Opened a new checking account at Manele Bay National Bank and deposited the cash received from the owner b. Paid $54,000 cash for a AAA franchise, Paid $430,000 cash and issued a $200.000, 10-year, 12% notes payable for land with an existing building. The assets had the following market values: Land, 580.000 Building, $550,000 d. Paid $60,000 for store foctures. Paid $50,000 for office equipment 1. Paid $1,500 for office supplies. g. Paid $3,000 for a two-year insurance policy. h. Purchased appliances from AAA (merchandise inventory) on account for $430,000. i. Established a petty cash fund for $220. i Sold appliances on account to QRS Contractors for $200,000, terms n/30 (cost $80,000) k. Sold appliances to Ferris Contracting for $110,000 (cost, $49.000). receiving a 6-month. 14% note. 1. Recorded credit card sales of $65,000 (cost. $29.000), net of processor fee of 2% Received payment in full from QRS Contractors Purchased appliances from AAA on account for 5690.000 Made payment on account to AAA, $290,000. P. Sold appliances for cash to GB Home Builders for $380,000 (cost $187.000). 9. Received payment in full on the maturity date from Ferris Contracting for the note Sold appliances to Neard Contracting for $210.000 (cost $108.000), receiving a 9 month, 14% note. Made payment on account to AAA $520,000 t. Sold appliances on account to various businesses for $970,000 terms n/30 (cost $388,000) Collected $740,000 cash on account. Paid cash for expenses: Salaries, $150,000: Utilities $12,500 W. Replenished the petty cash fund when the fund had 584 in cash and petty cash tickets for $134 for office supplies. Bain withdrew $15,000 y. Paid the franchise fee to AAA of 7% of total sales of $1,935,000 m. n. 0. S. u. V. Print Done o Requirements wing ng 1. Record the transactions in the general journal. Omit explanations 2. Post to the general ledger. 3. It is a common business practice to reconcile the bank accounts on a monthly basis. However, in this problem, the reconciliation of the company's checking account will be done at the end of the year, based on an annual summary Reconcile the bank account by comparing the following annual summary statement from Manele Bay National Bank to the Cash account in the general ledger. Record journal entries as needed and post to the general ledger. Use transaction z as the posting reference er Hlude posited $ 0 Beginning Balance, January 1, 2018 Deposits and other credits: $ 600,000 63.700 200,000 380.000 740,000 1,450 1.995.150 1.985,150 Interest Revenue Checks and other debits: EFT to Bank Checks Checks: $ 90 54,000 430,000 50,000 60,000 220 3,000 1,500 290,000 520,000 162,500 Bank service charge 1,700 (1,573,010) Ending balance, December 31, 2018 $ 412,140 "Bank Checks is a company that prints business checks (considered a bank expense) for All Around Appliance-Manele Bay 4. In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2018 Building, straight-line, 30 years, $70,000 residual value C. e. depreciable plant assets, assuming the assets were purchased January 2, 2018 a. Building, straight-line, 30 years, $70,000 residual value. b. Store Fixtures, straight-line, 15 years, no residual value. C. Office Equipment, double-declining-balance, 5 years. $3,000 residual value 5. Record adjusting entries for the year ended December 31, 2018 a. One year of the prepaid insurance has expired. b. Management estimates that 7% of Accounts Receivable will be uncollectible, An inventory of office supplies indicates $1.414 of supplies have been used d. Calculate the interest earned on the outstanding Neard Contracting note receivable Assume the note was received on October 31. Round to the nearest dollar Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which has a 10-year life g. Calculate the interest owed on the note payable. Assume the note was issued on January 1 6. Post adjusting entries and prepare an adjusted trial balance 7. Prepare a multi-step income statement and statement of owner's equity for the year ended December 31, 2018. Prepare a classified balance sheet as of December 31, 2018 Assume Interest Receivable is a current asset and Interest Payable is a current liability 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results a. Liquidity i. Current ratio ii. Acid-test ratio iii. Cash ratio Efficiency: i. Accounts receivable turnover ii. Day's sales in receivables iii. Asset turnover iv. Rate of return on total assets b. All Around Appliance Manele Blay completed the following transactions during 2018, its first year of operations (Click the icon to view the transactions) Il Around Appliance Mare Bay has purchased a tranchise from Al Nound Appliance w Click the icon to view the additional Information) Following is the chart of accounts for All Around Appliance Manalalay Asaw business, all beginning balances are $0 Click the icon to view the chart of accounts Read the came Requirement 1. Record the transactions in the general joumal mit explanations (Record debits first the credits Exclude explanation from any jumal entries) a. Received $600.000 cash from owner, F. Bain Opened a new checking account at Manila Bay National Bank and deposited the cash received from the owner Date Accounts Debit Credit () ITO Accounts Payable is Accounts Receivable 3b Accumulated DepreciationBuilding kth Accumulated DepreciationOffice Equipment Accumulated DepreciationStore Fixtures Allowance for Bad Debts tions Amortization Expense Franchise Bad Debt Expense ived Bain, Capital Bain, Withdrawals Bank Expense Mel h red Appliance Manele Bay has just purchased a Building # Cash S Cash Short and Over Cost of Goods Sold ong Credit Card Expense Depreciation Expense Building Depreciation Expense_Office Equipment nel Depreciation Expense-Store Fixtures Franchise ved Franchise Fee Expense Insurance Expense Interest Expense Interact Danablo b: Appliance Manele Bay has just purch To Interest Receivable th Interest Revenue is Land Merchandise Inventory Notes Payable Notes Receivable Office Equipment Office Supplies tong Petty Cash ved Prepaid Insurance Salaries Expense Sales Revenue nel 1 rec O Prepaid Insurance Salaries Expense ng Sales Revenue ed Store Fixtures ed Supplies Expense Utilities Expense i More Info AAA is a manufacturer of kitchen appliances. AAA markets its products via retail stores that are operated as franchises. As a AAA franchisee, All Around Appliance Manele Bay will receive many benefits, including having the exclusive right to sell AAA brand appliances in Manele Bay. AAA appliances have an excellent reputation and the AAA name and logo are readily recognized by consumers. AAA also manages national television advertising campaigns that benefit the franchisees. In exchange for these benefits, All Around Appliance Manele Bay will pay an annual franchise fee to AAA based on a percentage of sales. The annual franchise fee is a separate cost and in addition to the purchase of the franchise. In addition to purchasing the franchise, All Around ApplianceManele Bay will also purchase land with an existing building to use for its retail store, store fixtures, and office equipment. The business will purchase appliances from AAA and resell them in its store, primarily to local building contractors for installation in new homes All Around Appliance_Manele Bay Chart of Accounts Cash Bain Capital Petty Cash Bain Withdrawals Accounts Receivable Sales Revenue Allowance for Bad Debts Interest Revenue Merchandise Inventory Cost of Goods Sold Office Supplies Franchise Fee Expense Prepaid Insurance Salaries Expense Interest Receivable Utilities Expense Notes Receivable Insurance Expense Land Supplies Expense Building Bad Debt Expense Accumulated Depreciation-Building Bank Expense Store Fixtures Credit Card Expense Accumulated Depreciation Store Fixtures Depreciation Expense-Building Office Equipment Depreciation Expense-Store Fixtures Accumulated Depreciation--Office Equipment Depreciation Expense-Office Equipment Franchise Amortization Expense-Franchise Accounts Payable Interest Expense Interest Payable Cash Short and Over Notes Payable Print Done a. C. e. Received $600,000 cash from owner, F. Bain, in exchange for capital. Opened a new checking account at Manele Bay National Bank and deposited the cash received from the owner b. Paid $54,000 cash for a AAA franchise, Paid $430,000 cash and issued a $200.000, 10-year, 12% notes payable for land with an existing building. The assets had the following market values: Land, 580.000 Building, $550,000 d. Paid $60,000 for store foctures. Paid $50,000 for office equipment 1. Paid $1,500 for office supplies. g. Paid $3,000 for a two-year insurance policy. h. Purchased appliances from AAA (merchandise inventory) on account for $430,000. i. Established a petty cash fund for $220. i Sold appliances on account to QRS Contractors for $200,000, terms n/30 (cost $80,000) k. Sold appliances to Ferris Contracting for $110,000 (cost, $49.000). receiving a 6-month. 14% note. 1. Recorded credit card sales of $65,000 (cost. $29.000), net of processor fee of 2% Received payment in full from QRS Contractors Purchased appliances from AAA on account for 5690.000 Made payment on account to AAA, $290,000. P. Sold appliances for cash to GB Home Builders for $380,000 (cost $187.000). 9. Received payment in full on the maturity date from Ferris Contracting for the note Sold appliances to Neard Contracting for $210.000 (cost $108.000), receiving a 9 month, 14% note. Made payment on account to AAA $520,000 t. Sold appliances on account to various businesses for $970,000 terms n/30 (cost $388,000) Collected $740,000 cash on account. Paid cash for expenses: Salaries, $150,000: Utilities $12,500 W. Replenished the petty cash fund when the fund had 584 in cash and petty cash tickets for $134 for office supplies. Bain withdrew $15,000 y. Paid the franchise fee to AAA of 7% of total sales of $1,935,000 m. n. 0. S. u. V. Print Done o Requirements wing ng 1. Record the transactions in the general journal. Omit explanations 2. Post to the general ledger. 3. It is a common business practice to reconcile the bank accounts on a monthly basis. However, in this problem, the reconciliation of the company's checking account will be done at the end of the year, based on an annual summary Reconcile the bank account by comparing the following annual summary statement from Manele Bay National Bank to the Cash account in the general ledger. Record journal entries as needed and post to the general ledger. Use transaction z as the posting reference er Hlude posited $ 0 Beginning Balance, January 1, 2018 Deposits and other credits: $ 600,000 63.700 200,000 380.000 740,000 1,450 1.995.150 1.985,150 Interest Revenue Checks and other debits: EFT to Bank Checks Checks: $ 90 54,000 430,000 50,000 60,000 220 3,000 1,500 290,000 520,000 162,500 Bank service charge 1,700 (1,573,010) Ending balance, December 31, 2018 $ 412,140 "Bank Checks is a company that prints business checks (considered a bank expense) for All Around Appliance-Manele Bay 4. In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2018 Building, straight-line, 30 years, $70,000 residual value C. e. depreciable plant assets, assuming the assets were purchased January 2, 2018 a. Building, straight-line, 30 years, $70,000 residual value. b. Store Fixtures, straight-line, 15 years, no residual value. C. Office Equipment, double-declining-balance, 5 years. $3,000 residual value 5. Record adjusting entries for the year ended December 31, 2018 a. One year of the prepaid insurance has expired. b. Management estimates that 7% of Accounts Receivable will be uncollectible, An inventory of office supplies indicates $1.414 of supplies have been used d. Calculate the interest earned on the outstanding Neard Contracting note receivable Assume the note was received on October 31. Round to the nearest dollar Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which has a 10-year life g. Calculate the interest owed on the note payable. Assume the note was issued on January 1 6. Post adjusting entries and prepare an adjusted trial balance 7. Prepare a multi-step income statement and statement of owner's equity for the year ended December 31, 2018. Prepare a classified balance sheet as of December 31, 2018 Assume Interest Receivable is a current asset and Interest Payable is a current liability 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results a. Liquidity i. Current ratio ii. Acid-test ratio iii. Cash ratio Efficiency: i. Accounts receivable turnover ii. Day's sales in receivables iii. Asset turnover iv. Rate of return on total assets b. All Around Appliance Manele Blay completed the following transactions during 2018, its first year of operations (Click the icon to view the transactions) Il Around Appliance Mare Bay has purchased a tranchise from Al Nound Appliance w Click the icon to view the additional Information) Following is the chart of accounts for All Around Appliance Manalalay Asaw business, all beginning balances are $0 Click the icon to view the chart of accounts Read the came Requirement 1. Record the transactions in the general joumal mit explanations (Record debits first the credits Exclude explanation from any jumal entries) a. Received $600.000 cash from owner, F. Bain Opened a new checking account at Manila Bay National Bank and deposited the cash received from the owner Date Accounts Debit Credit () ITO Accounts Payable is Accounts Receivable 3b Accumulated DepreciationBuilding kth Accumulated DepreciationOffice Equipment Accumulated DepreciationStore Fixtures Allowance for Bad Debts tions Amortization Expense Franchise Bad Debt Expense ived Bain, Capital Bain, Withdrawals Bank Expense Mel h red Appliance Manele Bay has just purchased a Building # Cash S Cash Short and Over Cost of Goods Sold ong Credit Card Expense Depreciation Expense Building Depreciation Expense_Office Equipment nel Depreciation Expense-Store Fixtures Franchise ved Franchise Fee Expense Insurance Expense Interest Expense Interact Danablo b: Appliance Manele Bay has just purch To Interest Receivable th Interest Revenue is Land Merchandise Inventory Notes Payable Notes Receivable Office Equipment Office Supplies tong Petty Cash ved Prepaid Insurance Salaries Expense Sales Revenue nel 1 rec O Prepaid Insurance Salaries Expense ng Sales Revenue ed Store Fixtures ed Supplies Expense Utilities Expense