Looking for Adjusting Journal Entries and Closing Entries

1.As of December 31^st, wages of $39,800 should be accrued; associated payroll taxes on these wages are $2,900. (Record in two separate adjusting entries.The payroll taxes are an expense to the company for unemployment benefits and recorded as a payable to the state & federal taxing authority.)

2.The Unearned Consulting Revenue account has a balance before adjustment of $326,220 as of December 31, 20x1.Of this balance, 65% of the work was completed by year end.

3.You discover that a sale of a product was made on account and CMC recorded the sale in December for $86,400.However, the product has not yet been shipped, therefore it is not considered to be "delivered to the customer." The cost of the product was 55% of its selling price.CMC uses the perpetual inventory method.

4.At year-end, the CFO asks you to review the Accounts Receivables to determine if there are any customer accounts that should be written off as uncollectible.Based on your review, you determine that the Account Receivable from Shift, Co. has been past due for over 18 months and Shift recently declared bankruptcy.The CFO instructs you to write off the account balance of $18,450.Directly following this action, you can now record bad debt expense which is estimated to be 5% of ending Accounts Receivable.(Round to the nearest whole dollar.)

5.CMC prepays for its property & casualty insurance.As of December 31, 20x1, 80% of the prepayments have now been consumed.(Round to the nearest whole dollar.)

6.CMC records depreciation and amortization expense annually.They do not use an accumulated amortization account. (i.e. Amortization Expense is recorded with a debit to Amort. Exp and a credit to the Patent.) Annual depreciation rates are 5% for Buildings/Equipment/Furniture, no salvage.(Round to the nearest whole dollar.) Annual Amortization rates are 10% of original cost, straight-line method, no salvage.CMC owns two patents:Patent #FJ101 has an original cost of $154,000 and Patent #CQ510 was acquired for $169,000. The last time depreciation & amortization were recorded was December 31, 20x0.

7.The long-term liabilities were outstanding for all of 20x1 and accrue interest at 6% APR.CMCrecords accrued interest quarterly (interest was last updated on Sept. 30.)The company is required to pay the interest annually each January 1^st.

8.CMC often allows customers to finance the purchase of their products through long-term lending agreements and therefore reports Long-term Notes Receivable on their Balance Sheet.These notes are interest bearing and earn CMC interest revenue.The notes accrue interest at 8% APR and were outstanding for all of 20x1.Interest is payable to CMC each January 1^st.

9.On December 15, CMCdeclareda dividend of $220,000, to be paid on January 20, 20x2.The dividend declaration had not yet been recorded.

10.At December 31, the Long-Term Investments (Available-for-sale securities or "AFS") had a fair value of $172,900. The AFS Investment was originally purchased on June 1, 20x1 for $160,500.CMCuses a "Fair Value Adjustment" account (an adjunct/contra account to the Investments) to mark-to-market the investment portfolio at year end. (e.g.If the fair value of the Investment has increased at year end, debit the Fair Value Adjustment account in order to increase the Carrying Value of the asset to equal its fair value on the balance sheet at Dec. 31^st.This is an "unrealized" (holding) gain, which would require a credit to record it.)

11.CMC's Income tax rate for 20x1 was determined to be 25%.

(Income before income tax is $867,952)

The debit and credit columns of your AJE's should total to: $ 1,033,227

The Trial Balance After Adjustment should both total to: $15,502,008

General Ledger Account Name Trial Balance Before Adj 12/31/x1 Debit Credit Cash and cash equivalents 95,563 Accounts Receivable 913,780 Allowance for doubtful accounts 29,468 Interest Receivable 0 Inventory 1,270, 160 Prepaid expenses 26,780 Other Current Assets 16,063 Investments 160,500 Fair Value Adjustment 0 0 Notes Receivable 285,000 Building 876,418 Equipment and furniture 332,983 Land 348,791 Accum Depr 656,465 Goodwill 493,951 Patents 217,000 Accounts Payable 1,169,343 Dividends payable Interest payable 31,572 Unearned Consulting Revenue 326,220 Wages payable 81,350 Payroll taxes payable 8,950 Income tax payable Long term liabilities 701,600 Common Stock 920,000 Paid-in capital common stock 105,000 Treasury Stock 400,000 Retained Earnings 539,069 Dividends Accum Other Comprehensive Income 0 0 Sales revenue 9,253,346 Service revenue 1, 169,385 Interest Revenue 0 Sales returns 162,400 Sales discounts 269,662 Product cost of goods sold 5,384,590 Service cost of goods sold 570,811 Advertising Expense 159,080 Bad debt expense 0 Depreciation and amortization 0 Professional Dues & subscriptions 21,470 Gain/loss on disposal 4,790 Income tax expense 0 Insurance Expense 80,144 Interest expense 31,572 Legal and accounting fees 106,650 Miscellaneous 9,048 Office expense 220,114 Payroll taxes 136,975 Property taxes 104,570 Repair and maintenance 42,028 Research and development 470,680 Telephone 20,085 Travel and entertainment 38,391 Utilities Expense 47,049 Wage Expense 964,670 Salaries - Officers 710,000 Income Summary 0 o O Unrealized Gain/Loss-AFS 0 14,991,768 14,991,768