JackJoe, Inc. sells toy mice to high end pet stores. It was formed on Jan 1, 20x4 with a sale of $1 par value common stock and the issuance of a Bond. Following is JackJoe's trial balance after the first year of operation, through December 1 20x4. This trial balance does not reflect the transactions that occurred during the last month of the year or adjustments that are necessary, as described by the additional information. The Bond payable was sold on Jan 1 20X4 and is due in 4 years, interest of X% (select a rate between 3 and 7%) is payable annually on Dec. 31. JackJoe, Inc. Trial Balance As of December 1, 20X4 Debits Credits Cash $ 19,000 $ Accounts receivable 12,000 Supplies 5,000 Inventory 25,000 Equipment 30,000 Accumulated depreciation Accounts payable 10,000 Bond payable 32,000 Premium on bond 400 Interest payable Capital stock ($1 par) 25,000 Additional paid in capital Dividend Sales 64,000 Sales - Discounts Cost of goods sold Rent expense 16,400 Salaries expense 24,000 Depreciation expense Supplies expense Interest expense $ 131,400 $ 131,400 $ 131,400 $ 131,400 1. JackJoe's president, Elizabeth, decided the company needed more capital, so she sold 15,000 shares of stock on December 22th for $19,000 2. JackJoe received payment to settle a $12,000 Account receivable on December 21. The terms of the receivable were 2/10, N 30 and the payment reflected that it was within the discount period. 3. JackJoe sold $25,000 of toy mice, on December 22. The terms of the sale were 2/10, N 30. JackJoe uses a periodic inventory system. 4. JackJoe performed a physical inventory at yearend and no inventory remained. JackJoe's accounting policy is ? (select your accounting policy LIFO, FIFO or Weighted average). 5. The equipment was purchased near the beginning of the year. It has a X (select a useful life between 4 and 7 years) year life with no salvage value 6. Record the first interest payment on the bond. 7. Supplies on hand at year end were counted, and amount to $X (select an amount between $101 and $149). 8. The board of directors declared a dividend of 50 cents per share on Dec. 31. The date of record is Jan 15, 20x5 and the payment date is Feb 1, 20x5. (a) Set up a chart of accounts (5 points) (b) Set up a General Ledger and drop in the Dec. 1 account balances (5 points) (c) Set up a General Journal (d) Prepare the necessary entries through December 31, 20X4. (40 points) (e) Post journal entries and determine the adjusted balances of the accounts. (f) Prepare the adjusted trial balance. (5 points) (g) Prepare the multi-step income statement, statement of retained earnings and classified balance sheet with a detailed stockholders' equity section (25 points) (h) Calculate the current ratio and gross profit percentage, explain what these ratios tell you about JackJoe's business. (10 points) (i) Tell me the impact of journal entry #2, #5 and #6 on direct cash flows (inflow, outflow, no impact) and the appropriate section (Operating, Investing or Financing). JackJoe, Inc. sells toy mice to high end pet stores. It was formed on Jan 1, 20x4 with a sale of $1 par value common stock and the issuance of a Bond. Following is JackJoe's trial balance after the first year of operation, through December 1 20x4. This trial balance does not reflect the transactions that occurred during the last month of the year or adjustments that are necessary, as described by the additional information. The Bond payable was sold on Jan 1 20X4 and is due in 4 years, interest of X% (select a rate between 3 and 7%) is payable annually on Dec. 31. JackJoe, Inc. Trial Balance As of December 1, 20X4 Debits Credits Cash $ 19,000 $ Accounts receivable 12,000 Supplies 5,000 Inventory 25,000 Equipment 30,000 Accumulated depreciation Accounts payable 10,000 Bond payable 32,000 Premium on bond 400 Interest payable Capital stock ($1 par) 25,000 Additional paid in capital Dividend Sales 64,000 Sales - Discounts Cost of goods sold Rent expense 16,400 Salaries expense 24,000 Depreciation expense Supplies expense Interest expense $ 131,400 $ 131,400 $ 131,400 $ 131,400 1. JackJoe's president, Elizabeth, decided the company needed more capital, so she sold 15,000 shares of stock on December 22th for $19,000 2. JackJoe received payment to settle a $12,000 Account receivable on December 21. The terms of the receivable were 2/10, N 30 and the payment reflected that it was within the discount period. 3. JackJoe sold $25,000 of toy mice, on December 22. The terms of the sale were 2/10, N 30. JackJoe uses a periodic inventory system. 4. JackJoe performed a physical inventory at yearend and no inventory remained. JackJoe's accounting policy is ? (select your accounting policy LIFO, FIFO or Weighted average). 5. The equipment was purchased near the beginning of the year. It has a X (select a useful life between 4 and 7 years) year life with no salvage value 6. Record the first interest payment on the bond. 7. Supplies on hand at year end were counted, and amount to $X (select an amount between $101 and $149). 8. The board of directors declared a dividend of 50 cents per share on Dec. 31. The date of record is Jan 15, 20x5 and the payment date is Feb 1, 20x5. (a) Set up a chart of accounts (5 points) (b) Set up a General Ledger and drop in the Dec. 1 account balances (5 points) (c) Set up a General Journal (d) Prepare the necessary entries through December 31, 20X4. (40 points) (e) Post journal entries and determine the adjusted balances of the accounts. (f) Prepare the adjusted trial balance. (5 points) (g) Prepare the multi-step income statement, statement of retained earnings and classified balance sheet with a detailed stockholders' equity section (25 points) (h) Calculate the current ratio and gross profit percentage, explain what these ratios tell you about JackJoe's business. (10 points) (i) Tell me the impact of journal entry #2, #5 and #6 on direct cash flows (inflow, outflow, no impact) and the appropriate section (Operating, Investing or Financing)
