II. Adjusting entries (21 points) REQUIRED: For each situation (questions 1-5), prepare the necessary adinin entry as of December 31, 2013. Assume that each firm adjusts and closes its books only on an annual basis ir no adjusting journal entry is necessary, then write "no adjusting entry in the space provided 1. On September 1, 2013, Carlisle Inc. paid $10,200 for a two-year fire insurance policy and debited the entire amount to insurance expense Account name Debit Credit 2. On January 1, 2013, Darline Trucking Corp. purchased equipment for $160,000. The equipment has an 8-year useful life and no estimated residual value Straight-line depreciation is used Account name Debit Credit 3. On March 1, 2013, the Star Printing Company received a $45,000 payment for annual magazine subscriptions (the subscriptions run from the March, 2013 edition through the February 2014 edition). Upon receipt of the payment, Star Printing credited the amount to sales revenue Account name Debit Credit 4. On October 1, 2013, S&P Company borrowed $100,000 from the bank. The note requires principal and interest at 11% to be paid on April 30, 2014 Account name Debit Credit Aventine Corporation made sales on credit in 2013 totaling $80,000 Management estimates a bad debt rate of a percent of credit sales At January 1, 2013, the balance in allowance for doubtful accounts was a credit balance of $1,000. There were no actual bad debt write-off's in 2013 Account name Debit Credit IV. The Balance Sheet (20 points) The post-closing trial balance for ABC Corp at December 31, 2013 is as follows: MO Cash $ 21.00 Accounts receivable DOWN Inventory 5100 Prepaid it (for months sining 10.000 CAMI Accumulated depreciation 250.000 Allowance for uncollectible accounts 20.000 Accounts payable Unced revenue Noles payable 60.000 Salaries payable NOK) Interest payable 1.700 Common stock 100,000 Retained eaming 201,000 Totals 5984 500 $984,500 Additional information: The $60,000 note payable is an installment loan $10,000 of the principal, plus 9% interest is due each July 1 until maturity. Unearned revenue relates to products that will ship in early 2014 REQUIRED: Questions 1-5 below relate to the information presented on the balance sheet of ABC as of December 31, 2013. Fill in the blank with the appropriate amount 1. What is the amount that would be reported as total current assets on the 2013 balance sheet? Total Current Assets 2. What is the amount that would be reported as total current liabilities on the 2013 balance sheet? Total Current Liabilities 3. What is the amount that would be reported as Net Accounts Receivable on the 2013 balance sheet? Net Accounts Receivable 4. What is the amount that would be reported as total shareholders' equity on the 2013 balance sheet? Total Shareholders' Equity 5. The balance in interest payable on the 2013 balance sheet is $2,700. What amount of interest payable would be reported on the 2014 balance sheet? Interest Payable 2014 Balance Sheet V. Presentation of the Income Statement (16 points) The Rayburn Company had income from continuing operations before tax of S1,575,000 in 2014. Additional pre-tax transactions not included in the computation of the $1,575,000 are as follows: 1. In 2014, Rayburn decided to sell one of its manufacturing divisions, which qualifies as a discontinued operation for financial reporting purposes. On Nov. 1, 2014, the division assets were sold for $3,250,000. On the date of the sale, the division assets had a book value of $3,750,000. The discontinued division had a loss from operations from Jan 1, 2014 through Nov. 1, 2014 of $200,000 2. The sale of operational equipment resulted in a loss of $57,000 3. Rayburn acquired 70% of the outstanding stock of Koch Co. and as such, consolidates Koch Co.'s financial results with its own. Koch Co. had net income of $300,000 in 2014 REQUIRED: Use all of the information above to prepare a 2014 income statement for the Rayburn Company beginning with income from continuing operations before tax Assume an income tax rate of 40%. Provide full disclosure on the Income Statement, but ignore EPS disclosures. Income from Continuing Operations, pre-tax VI. Statement of Cash Flows (20 points) 1 The Bolera Company had the following cash transactions during 2014. The Bolera Company uses the direct method of presenting the Statement of Cash Flows REQUIRED: Fill in the following table by classifying the following transactions of the Bolera Company as cash flows from operating activities, investing activities or financing activities and identifying the cash flow as an inflow or outflow. Transaction Activity Inflow or classification? Outflow? Bolera made a cash payment to reduce accounts payable Bolera received the repayment of principal on a note Bolera received a cash interest payment Bolera paid dividends to its shareholders Bolera paid salaries Bolera sold investments in equity securities of IBM Corp. 2. The Rightway Company uses the indirect method of presenting the Statement of Cash Flows. At 12/31/2014, an investigation of their 2013 and 2014 Balance Sheets reveals that the balance in Net Accounts Receivable has decreased by $100,000 from 2013 to 2014 and the balance in Accounts Payable has decreased by $75,000 from 2013 to 2014. The balance in Net Property, Plant and Equipment has decreased by $15,000 and they noted that no property, plant or equipment was purchased or sold during 2014. REQUIRED: In the space provided, prepare the Operating Cash Flow Section of the 2014 Statement of Cash Flows for the Rightway Company by providing the adjustments to reconcile net income of $850,000 to net cash flows provided by operating activities. Statement of Cash Flows Rightway Company for the Year Ended December 31, 2014 Cash Flows From Operations: Net Income Adjustments to reconcile net income to net cash provided by operating activities: $850,000