ID NUMBER G0042534 Computers R Us Inc. began their business in January 1, 2015 and recently lost their accountant. Thankfully, they have been able to hire a fine accounting/finance student from Oakland University. They have provided you with the unadjusted trial balance for Computers R Us Inc. as of 12/31/17. The previous accountant recorded all original entries involving cash, etc. during the year. However, at year-end the previous accountant would make all necessary adjusting/reclassification journal entries so that the principles of US GAAP were followed. Your task will be to create and record all necessary adjusting, correcting, and reclassification entries so that 2017 financial statements in accordance with US GAAP can be issued. The below information was discovered by reviewing contracts, agreements, correspondence and discussions with management. On the designated worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information (round all numbers to the nearest dollar). Letter entries to correspond to the below information and present them in alphabetical order. Add any new accounts as needed to the trial balance. Each entry must be entirely correct to receive allocated points. Before preparing entries, finish the story by filling in the blanks.

Computers R Us was authorized to issue 1,000,000 shares of $1 par Common Stock but has only issued 200,000 shares of common stock as of 12/31/2017. No new shares were issued during 2017.

1. On the Adjusting Journal Entries worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2017. (Round all numbers to the nearest dollar). Label journal entries a through r.

a. Computers R Us does banking at three different financial institutions. The details are as follows: Bank Account # Balance Sun Bank 123456 85,000 Sun Bank 123457 (12,000) 1st Federal Bank 345689 170,000 Piggy Bank 397567 (25,000) b. Based on your inquiries, you note that $25,000 of accounts receivable had been written off during the year. The clerk had debited bad debt expense for $25,000 and credited Accounts Receivable for $25,000. The company uses the allowance method based on the aging of accounts receivable at the end of the year. Based on this method, Computers R Us determines that uncollectible accounts are $16X,000 at the end of 2017. (Replace the X with the last digit of your student number). c. Per a physical count of office supplies, $3,XXX (enter the last three digits of your student number) of supplies remained at the end of 2017. The balance on the worksheet in the office supplies account represents last years ending balance. During the year, $18,000 of office supplies were purchased and immediately expensed. d. On October 1, 2017, Computers R Us loaned a key supplier, Hard Drives, $45,000. A promissory note was signed and issued. The note is due in full 9-months from October 1st. Hard Drives agrees to pay interest on the note at an annual rate of X%. (The interest rate should be your birth month plus 1). Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding. e. On _________(enter your birthday month) 1, 2017, Computers R Us purchased an 15 month insurance policy for $12,000. f. On September 1, 2017, Computers R Us paid Mega Rams $15,000 for 1X (enter the last digit of your student number) months of advertising services. Equal services are provided each month. All other advertising paid for during the year has been consumed. g. Office salaries for the last week of 2017 of $25,800 remained unpaid at 12/31/17, but the prior accountant did not accrue. h. Because of a new product line, Computers of Us needed some temporary additional storage space so on ________1 (Enter your birthday month), 2017 they rented a unit for an annual rate of $5,200 and they paid the entire amount up front. i. The office building was bought in January 1, 2015 and Computers R Us plans to use the building for 40 years and believes it will have a salvage value of $500,000 at the end of 40 years. Computers R Us depreciates the building on a straight line basis. Due to the location of the building and use potential, they are concerned about impairment. At 12/31/2017 it is determined that the future cash flows for the building are $1,350,000. The fair value of the building is $1,300,XXX (last three digits of your student number) at 12/31/2017. j. The office equipment was purchased 1/1/2015 and has not been depreciated for this year. The company uses double declining balance (DDB) depreciation for this item. The equipment has a useful life of 10 years with a salvage value of $5,000. k. On April 1, 2017, Computers R Us rented a portion of their store to Bytes and Bits on Bits. The contract was for 1X (enter the last digit of your student number) months and Computers R Us required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company. l. The storage building was self-constructed this year by Computers R Us. The Company had their initial expenditure of $250,000 on January 1. They paid an additional $350,000 on March 1st and then the final payment of $150,000 on December 1st. when the building was completed and occupancy occurred. The company has decided to use S/L method for depreciation. The storage building is estimated to have a life of 40 years and a savage value of $1X,XXX. (Enter the last four digits of your student number.) The company depreciates using partial years. m. Computers R Us uses the Dollar Value LIFO inventory method. For internal purposes, the Merchandise Inventory Account is maintained at FIFO (current costs). At the end of the year, the LIFO reserve account is adjusted so inventory on the balance sheet reflects Dollar Value LIFO. You need to calculate the proper inventory balance and adjust the LIFO reserve. The price index for this year is 1.1X (enter last digit of student number). Prior year inventory records show the following calculation for 2016: 275,000 X 1.0 = 275,000 125,000 X 1.08 = 135,000 n. As of 12/31/2017 the Available for Sale Securities have a fair value of $1XX,XXX (enter the last five digits of your student number). Due to the market conditions, the company does not plan on selling the assets in 2018, but their intent is to sell at some point in time. (Ignore income taxes when recording this information.) o. Computers R Us has two loans outstanding. Interest is paid annually on January 1st.Interest is paid annually. The facts on each loan is as follows: Piggy Bank outstanding since January 1, 2017 with a 4.0% interest rate. This loan was taken out to finance the construction of the Storage Building. Interest for the year and 10% of the principle will be paid to the bank on January 1, 2018. Except for recording the initial cash received and loan, no additional entries have been made. Greedy Bank outstanding all of 2017 with a 3.X % (enter the last digit of your student number). This is a five year loan with interest due annually. Since interest will not be paid to the bank until 1/1/2018, Computers R Us did not accrue any interest. p. On ________1, 2017 (enter your birthday month), Computers R Us recorded a patent in the amount of $55,000. The company paid outside legal fees of $15,000 to have the patent registered. The other $40,000 represents internal costs in developing the patent. The patent is good for 20 years, but the company estimates that the patent will have a useful life of 4 years with no residual value. No one knows what to do with this information so no amortization has been recorded for 2017. Amortization is straight line and the company depreciates using partial years for intangible assets. q. After reviewing details of sales, you note that the sales taxes collected on the last week of Decembers sales were included in sales revenue. Sales recorded the last week of December that included the sales tax of X% (enter your birthday month plus 1) amounted to $30,000 r. Computers R Us has a straight tax rate of 28%. Income tax expense is Net Income before taxes times 28%. (Hint: Prepare the Income Statement up to Net Income before Taxes and then record this adjusting journal entry.) 2. After the above adjusting entries are entered on the adjustment worksheet, the cells should be linked to the adjustments column of the worksheet. Your adjustment amounts in the worksheet column should be linked to the adjustment sheet so if you change the debit/credit amount in the adjusting entry, the column amount will automatically change. All adjustments should be labeled a r and be in the order of the information provided.

3. Complete the adjusted columns by the use of the formula. Think about the best way to do this. Your last two columns should never contain constant numbers but will include formulas only. (Maximum points are given for using an if statement properly written).

4. Prepare a multiple-step income statement on the proper worksheet. Your Income Statement should be in good form (proper titles, etc., use examples from your book) and well formatted. You should use formulas in all cells, not constant numbers. (That means, your income statement should be linked to the adjusted numbers on your worksheet.)

5. Prepare a Comprehensive Income Statement on the proper worksheet. Computers R Us uses the Second Income Statement Approach. (Hint: Statement begins with net income.)

6. Prepare a Statement of Changes in Stockholders Equity. Your Statement should be formatted. You should use formulas in all cells, not constant numbers.

7. Prepare a Classified Balance Sheet on the proper worksheet as of 12/31/17. Your Statement should be formatted. You should use formulas in all cells, not constant numbers.

8. Prepare all closing entries on the proper tab. You may close directly to Retained Earnings (if you wish).