Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

INFORMATION GIVEN This project should be completed using Excel (with formulas and linked data).The parameters of the project are below: 1. Multi-step Income Statement for

INFORMATION GIVEN

This project should be completed using Excel (with formulas and linked data).The parameters of the project are below:

1.Multi-step Income Statement for the year ended 2020.This statement should be flexibly designed (formulas) with common-sized percentages (vertical analysis) to the right of the dollars.

2.Journal entries, adjusting entries and closing entries for the below additional information...none of the journal entries have been posted to the ledger (many journal entries have been booked to get you started, however none of the entries for 2020 have been posted).You can add a transaction analysis (not required), however you must complete the entries in the Excel template.

  1. Statement of Retained Earnings for the year ended 2020.
  2. Balance Sheet dated Dec. 31, 2020Again a flexible design is required so any changes will automatically update the balance sheet - use formulas.
  3. Statement of Cash Flows using the indirect method for the year ended 2020.The ending cash as shown on the statement of cash flows will be the same as the cash reported on the Balance Sheet.

Your Name, Inc.

Balance Sheet

12/31/2019

Current Assets

Cash$17,000

Marketable Securities (Short-term)2,000

Accounts Receivable14,000

Allowance for Bad Debt(2,000)

Inventory15,000

Prepaid Insurance5,000

Total Current Assets$51,000

Property, Plant, and Equipment

Land$30,000

Building 150,000

Accumulated Dep. - Building(45,000)

Equipment 100,000

Accumulated Dep. - Equipment(20,000)

Total PPE$215,000

Total Assets$266,000

Current Liabilities

Accounts Payable$9,000

Unearned Revenue2,000

Income Taxes Payable3,000

Total Current Liabilities$14,000

Long-term Liabilities

Bonds, 10%, due in 2024$100,000

Equity

Common Stock $ 50,000

(100,000 authorized, 50,000 issued)

Additional Pd.-in Capital80,000

Retained Earnings22,000

Total Equity$152,000

Total Liabilities & Equity$266,000

Additional Information (for all entries; please see the posted Excel spreadsheet):

  1. Sales for 2020 are $320,000.All sales are on credit.
  2. Gross Margin ratio is 40 percent
  3. Accounts Receivable:

i.$190,000 of the accounts receivable is paid by the end of the year (the remaining balance remains on the balance sheet).

ii.$4,000 of A/R is written off during the year.

iii.5% of A/R (after write-off and collections) is considered to be uncollectible.

  1. Inventory:

i.Inventory purchases are $180,000, all on credit.

ii.All accounts payable is from inventory purchases; all but $12,000 of inventory purchased is paid by the end of the year.

  1. Additional equipment is purchased on 4/1/20 for $20,000 cash.All equipment when new, including the new purchase, has/had a 5-year life, no salvage value, and is depreciated using the straight-line method.
  2. The building depreciates at $5,000 per year.
  3. Half of the marketable securities were sold for $1,200. The FMV and cost of the other half of the securities are the same, so no adjustment to FMV is required.
  4. Salaries are $2,200 per month (12 months of salaries expense must be booked).It is expected that one-half month will be owed on 12/31/20 because of when payday falls (therefore, 11.5 months of salaries have been paid and month is still owed to the employees at year end).
  5. $55,000 in cash is borrowed on 9/30/20 by issuing a Note Payable. Interest is 8% per year.
  6. The bonds were sold at face value last December and pay interest on Dec. 31, 2020.
  7. 10,000 additional shares of stock were sold for $3 a share.
  8. Insurance costing $18,000 was purchased on 6/1/20 (the same time in which the old policy expired.The new policy was for 12 months).
  9. On Dec. 31, 2020, 1000 shares of stock are repurchased from the market at $2.90/share (treasury stock).
  10. The tax rate is 20 percent.Income taxes for the current year are due and therefore paid during the first two months of the next year (you will have to make an entry to pay the 2019 taxes, however the 2020 taxes will not be paid until the end of January 2021).
  11. Dividends of $3,000 were paid during 2020.
  12. The unearned revenue has been earned during the year (classified as other revenue on the multi-step income stmt.).

Required Labeled Sheets (all statements should be for 2020):

  1. Data Sheet for Additional Data
  2. Entries: Basic and Adjusting (you do not have to show closing entries, however, keep in mind all temporary accounts are closed to retained earnings)
  3. Adjusted Trial Balance for 2020 (includes the posted amounts of all entries and adjusting entries)
  4. Multi-step Income Statement
  5. Retained Earnings Statement
  6. Classified Balance Sheet
  7. Cash Flow Statement
  8. Post-Close Trial Balance for 2020

2019 Ending Balances

DEBITS CREDITS

Cash 17,000

Marketable Securities 2,000

Accounts Rec. 14,000

Allowance for Bad Debt 2,000

Inventory 15,000

Prepaid Insurance 5,000

Land 30,000

Building 150,000

Accumulated Dep. - Building 45,000

Equipment 100,000

Accumulated Dep. - Equipment 20,000

Accounts Payable 9,000

Salaries Payable

Unearned Revenue 2,000

Interest Payable

Income Taxes Payable 3,000

Note Payable

Bonds 100,000

Common Stock 50,000

Additional Pd-in-Capital 80,000

Retained Earnings 22,000

Journal and Adjusting Entries

Debits Credits

  • Sales for 2020 are $320,000.All sales are on credit.

1. Accounts Rec. 310000

Sales 310000

  • Gross Margin ratio is 40 percent.

2. Cost of Goods Sold ???

Inventory ???

  • $190,000 of the accounts receivable is paid by the end of the year (the remaining balance remains on the balance sheet).

3. i. Cash 190000

Accounts Rec. 190000

  • $4,000 of A/R is written off during the year.

3.ii. Allowance for Bad Debts 4000

Accounts Rec. 4000

  • 5% of Accounts Receivable (after write-off and collections) is considered to be uncollectible.

AR

Debits Credit

1400

310000

4000

Total

130000

3.iii. Bad Debt Expense ???

Allowance for Bad Debts ???

  • Inventory purchases is $180,000, all on credit.190000

4.i. Inventory 180000

Accounts Payable 180000

  • All accounts payable is from inventory purchases;all but $12,000 of inventory purchased ispaid by the end of the year.

Accounts Payable

Debits Credit

9000

180000

???

Total

12000

4.ii. Accounts Payable ???

Cash ???

  • Additional equipment is purchased on 4/1/20 for $20,000 cash.All equipment when new, including the new purchase, has/had a five year life, no salvage value, and is depreciated using the straight-line method.

5. Equipment ???

Cash ???

Depreciation Expense ???

Accum. Deprec. ???

  • The building depreciates at $5,000 per year.

6. Depreciation Exp. - Build. ???

Accum. Deprec. ???

  • Half of the marketable securities were sold for $1,200. The FMV and cost of the other half are the same.

7. Cash 1200

Mkt. Securities 1000

Gain ???

  • Salaries are $2,200 per month.It is expected that one-half month will be owed on 12/31/20 because of when payday falls.

8. Salaries Expense ???

Cash ???

Salaries Payable ???

  • $55,000 in cash is borrowed on 9/30 by issuing a Note Payable. Interest is 8% per year.

9. Cash 55000

Note Payable 55000

Interest Expense ???

Interest Pay. ???

  • The bonds were sold at face value last December and pay interest on Dec. 31, 2020.

10. Bond Interest Expense ???

Cash ???

  • 10,000 additional shares of stock were sold for $3 a share.

11. Cash 30000

Common Stock ???

Paid in Capital ???

  • Insurance costing $18,000 was purchased on 6/1/20 (the same time in which the old policy;the new policy was for 12 months).

12. Prepaid Insurance 18000

Cash 18000

Insurance Expense ???

Prepaid Insurance ???

  • On Dec. 31, shares of stock are repurchased from the market at $2.90/share.

13. Treasury Stock ???

Cash ???

  • The tax rate is 20 percent.Income taxes for the current year are payable during the first two months of the next year.

14. Income Taxes Payable ???

Cash ???

Income Tax Expense ???

Income Taxes Payable ???

  • Dividends of $3,000 were paid.

15. Dividends ???

Cash ???

  • The unearned revenue has been earned during the year (classified as other revenue).

16. Unearned Revenue ???

Revenue ???

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management and Cost Accounting

Authors: Colin Drury

10th edition

1473748873, 9781473748910 , 1473748917, 978-1473748873

More Books

Students also viewed these Accounting questions

Question

What did Rogers mean by unconditional positive regard?

Answered: 1 week ago