Intermediate Financial Reporting
Problem A-6 Income and Retained Earnings Statements Peanut Corporation is a private corporation using ASPE. At December 31, 2020, an analysis of the accounts and discussions with company officials included the following account balances and other information: Accounts receivable.......... .. $ 102,000I Accrued interest payable. 1,000 Dividend revenue.... 9,000 Sales" 600,000 Purchase discounts 9,000 Purchases..... 360,000 Accounts paya e... 30,000 Loss from fire (net of $?', 000 tax)- 21,000 Selling expenses\" 64,000 Common shares (20,000 Issued no change during 2020)... 200,000 Accumulated depreciation... 90,000 Long- term note payable (due... oil 1, 2024)" 100,000 Inventory, .Jan 1, 2020... .. 76,000 Inventory, Dec 31, 2020" 62,500 Supplies inventory......... 40,000 Unearned service revenue 3,000 Land 370,000 Cash.......... 60,000 Franch Be... 100,000 Retained earnings, Jan 1, 2020. 135,000 Interest expense ..... 8,500 Cumulative effect of c ange rom s raig depreciation [net of $6,000tax)............... General and administrative expenses. 80,000 Dividends declared and paid... 15,000 Allowance for doubtful accounts. 5,000 Machinery and equipment............. 225,000 Unless indicated otherwise, you may assumea 25% incometax rate. 7 V J \\_ General and admin istrative expenses include depreciation. There are no preferred shares issued. Instructions a. Prepare, in good form, a multiplevstep income statement. b. Prepare, in good form, a retained earnings statement. Problem A-T Journal EntriesPercentage-ot-Completion Walnut Corp. was awarded a contract to build a bridge in a suburb of Vancouver at a total contract price of $10,000,000. The estimated total costs to complete the project were $8,,.000000 Walnut uses the percentage-of-completion method for all such contracts. Instructions a. Prepare the entry to record construction costs of $4,800,000, on construction in process to date. b. Prepare the entry to record progress billings of $2,200,000. c. Prepare the entry to recognize the profit that can be recognized to date. Problem 8. Journal Entries for Perpetual and Periodic Inventory Systems Lime Corporation is a supplier of electronic components used in the manufacture of computers. The company uses the FIFO cost flow method. During the month of September 2020, Lime's inventory records for part LIM-0325, showed the following transactions: Date Transaction Units Unit Units Unit Purchased Cost Sold Selling Price Sep. 1 Balance 900 $1.65 Sep. 6 Purchase 400 $1.6? Sep. 1? Sale (800) $4.25 Sep. 23 Sale (2 50] $4.30 Sep. 30 Purchase 650 $1.75 Instructions a. Assuming Lime uses a perpetual inventory system; prepare thejournal entries for each of the above listed transactions. b. Assuming Lime uses a periodic inventory system; explain how the journal entries as compared to part a. would differ. Be specific. Do not prepare jou rnal entries. c. What would be the dilterence in total cost of goods sold between parts a. and b.? Explain your
