Misc Information: Mr. Burns sold off all of his fixed assets from the nuclear power plant. Also, there was an adjustment to the allowance for uncollectible account during your brief respite. Mr. Smithers performed the necessary entries to get the books up to date; this included the reduction of the mortgage payable. However, you will calculate interest expense, bad debt expense, and depreciation expense. These amounts will not be given to you. Good luck and time manage appropriately. ***For any note/mortgage payable, you find interest expense the same way you find interest revenue.***

Check Figures:

Unadjusted Net Income: $654,350

Adjusted Net Income: $150,388

Journal Entries:

1. January 2: Mr. Burns opened up his new company and dissolved the old one. The balances of the accounts (with the exception of fixed assets and uncollectible) were transferred over from the old business. Mr. Burns decided that he needed to invest more money into the business in order to get operational. Mr. Burns invested $1,120,000 to create stock. Mr. Burns found additional $1,000,000 in his front coat pocket. This was invested directly into the capital of the business.

2. January 3: Mr. Burns bought a cookie making machine for $500,000 from Cookie Makers on account. The machine has a life of 10 years and a salvage value of $100,000. The machine will use the straight-line depreciation method.

3. January 4: Mr. Burns bought an oven from the Try-N-Save. He took out a note for five months at an interest rate of 10%. The amount of the note was $400,000. The oven has a useful life of 4 years and will use the straight line method of depreciation. The expected salvage value of the oven at the end of its useful life is $50,000.

4. January 15: Mr. Burns bought cookie dough to make his cookies. Mr. Burns paid $250,000 for the cookie dough.

5. January 17: Mr. Burns earned the rest of his unearned rent revenue of $300,000 from last year from his nuclear power plant.

6. February 6: After promising to change his evil ways, Lisa Simpson agrees to help Mr. Burns sell his cookies. Lisa sells some cookies to Old Folks Home for $130,000 on account. The cost of selling the cookies was $70,000. For prompt payment, Mr. Burns offered the discount of 1/10, n30. Interest will be included on payments over 40 days

7. February 20: Mr. Burns sold his delicious cookies to candy store on account $200,000. Mr. Burns offered terms 2/20, n30. The cost of merchandise sold was $100,000.

8. February 28: Mr. Burns bought a new truck so he could sell more cookies. Mr. Burns paid $30,000 dollars for the truck. The truck was not expected to have salvage value. Mr. Burns decided to depreciate the truck by straight line. The truck has an expected life of three years.

9. February 28: Mr. Burns collected cash from Homer Simpson of $22,000. The note receivable was signed last December 15. He collected the face value of the note, $15,000 plus the interest receivable recorded last year. Since Homer allowed Lisa to work for him, he decided only to collect the interest accrued last year and not the interest for January and February.

10. March 5: Mr. Burns bought more cookie dough (inventory) to continue to make his cookies. He bought $600,000 worth of inventory. There was also a $20,000 freight charge. The terms of the shipping agreement was FOB shipping. Mr. Burns paid for the whole amount.

11. March 6: Since many families of the city of Springfield did not pay the Old Folks Home last month, Mr. Burns could only collect some of what he was owed on account from February 6. He was only able to collect $80,000 of what was owed. After consulting with Mr. Smithers, Mr. Burns agreed that he no choice to write off the rest of the amount as uncollectible.

12. March 7: The Candy Store paid Mr. Burns what they owed him on account.

13. March 15: Mr. Burns paid $70,000 of income tax payable owed from last year.

14. April 1: Mr. Burns sold cookies to the Grocery Store on account $400,000. This amount included $15,000 of prepaid freight costs by Mr. Burns. The terms were FOB shipping point. The discount terms were 2/30, n/45. The cost of merchandise sold was $200,000.

15. April 4: Because of cockroaches in some of the cookie dough, the store returned $90,000 worth of the cookie dough. The cost of the merchandise returned was $40,000.

16. April 10: Mr. Burns paid for the following expenses: Advertising $120,000, Office Salaries $55,000, Wages $20,000, and Utility Expense $10,000.

17. May 01: The Grocery Store paid Mr. Burns for the rest of the cookie dough it bought on account.

18. June 1: After threatening revenge against all those who owed him money on account from when he owed the nuclear power plant, he was paid the full amount of what he was owed prior to going into the cookie business. This amounted to $360,000.

19. June 2: After coming into some extra money, The Old Folks Home decided to pay $40,000 that they owed to Mr. Burns even though there account has been written off. Record the reinstatement of the account and the payment.

20. June 3: Mr. Burns paid for the note he issued to the Try-N-Save on January 3. The payment included the full amount for the oven and the interest.

21. July 5: The following expenses accrued and are to be paid in a later month: Pension Expense $60,000, Health Insurance Expense $50,000, and Professional Fees $10,000.

22. July 25: Mr. Burns paid $100,000 on account he owed from the cookie machine he bought in January. Mr. Burns agreed to issue a note for the rest of the money he owed on account in transaction 2. The note is to be paid next year and has an interest rate of 12%.

23. August 10: Mr. Burns sold cookies on account to Mayor Quimby for has nephews 18^th birthday party. Mr. Burns sold $150,000 worth of cookies. The terms were n30 and the cost of merchandise sold was $50,000.

24. September 8: Mr. Burns paid the expenses that accrued on account in transaction 21 (use Cash only once).

25. October 5: Mr. Burns paid off his note from July 25.

26 October 15: Mayor Quimby issued a note to Mr. Burns for transaction 23 due to the fact he had no money because he gave it to Fat Tony and the mob to fix the polls of Springfield so he could get reelected. Mayor Quimby promised to pay Mr. Burns cookies on December 1. The interest rate is 20%.

27. November 1: After being advised by legal council and Mr. Smithers that killing off competition was considered murder, Mr. Burns decided to get a patent to keep from his secrets from being used by his rivals. He paid $40,000 for his patent which will be amortized for 15 years.

28. December 1: After holding his nephew hostage, Mayor Quimby agreed to pay the note and interest he owed to Mr. Burns. Mayor Quimby raised taxes to get the funds.

29. December 8: Mr. Burns bought office supplies on account from Staples for $30,000.

30. December 16: Mr. Burns sold $450,000 of cookies on account to Shelbyville. The cost of sales was $250,000

31. December 30: Mr. Burns withdrew (dividends to himself) $60,000 dollars to bribe judges and win the Miss Springfield contest.

32. December 31: Mr. Burns funded Side Show Bobs run for Mayor of Springfield from an offshore account. The amount withdrawn from the account was $100,000

Adjusting Entries:

At December 31, 2019, Mr. Burns Good Old Fashion Cookies made the following adjusting entries.

A1. Mr. Burns recorded the depreciation for the fixed assets that he had bought through the year. The truck had 40,000 miles at December 31. Round to the nearest dollar.

A2. All of Mr. Burns prepaid rent expired.

A3. After Physical Inventory Conducted: Balance in plant supplies at year end: $500. Balance in office supplies at year end: $7000

A4. Income Taxes accrued $120,000. This is to be paid March 15, 2020

A5. Office Salaries accrued $20,000. Wages accrued $15,000

A6. Mr. Burns uses the balance sheet approach to estimate how money he will lose in uncollectible accounts. Since the city of Springfield is in a serve recession, Mr. Smithers estimated for Mr. Burns that 5% of this year ending accounts receivable will be uncollectible.

A7. Two months of the patent have expired.

A8. Mr. Smithers discovered a sale on account earned by not yet recorded, $50,000. Since this amount was discovered after the estimate for uncollectible account, this amount WILL not be included in adjusting entry A6. There were no discount terms

A9. Mr. Smithers performed an analysis of the value of the business to see if there was any goodwill impairment. Based on his analysis, there was no impairment.

A10. Mr. Burns stands the possibility of getting sued from the owner of the Shellbyville plant due to him using ringers in the softball game where a $1,000,000 was betted. Mr. Smithers estimated that the range could be between $1,000,000 to $10,000,000. The high priced lawyers could not estimate the likely outcome of the lawsuit and had no idea of the time table.

Closing Entries:

C1. Close Revenues & Expenses to Retained Earnings

C2. Close Dividends to Retained Earnings

C D E F G H I K L M N O P Q R T U V W X Y AA AB AC 1 Mr Burn's Good Old Fashion Cookies 2 Worksheet 3 December 31, 2019 Beginning Balance Debit Credit 1,669,750 Journal Entries Debit Credit 5 Unad usted Trial Balance Debit Credit Adjusting Entries Debit Credit Adjusted Trial Balance Debit Credit Closing Entries Debit Credit Post Closing Trial Balance Debit Credit Current Assets Cash 18 Notes Receivable 16.000 20 Accounts Receivable 435,000 30.000 28 Allowance for Doubtful Accounts 29 Interest Receivable 30 Inventory 6,000 34 500 1.000 35 Estimated Inventory Returns 36 Office Supplies 37 Plant Supplies 38 Prepaid Insurance 39 Prepaid Rent 40 Total Current Assets 230,000 2,328,250 42 Plant/Equip/Intangible Assets 43 Land 44 Cookie Machine 45 Accumulated Depreciation Cookie Machine 46 Oven 47 Accumulated Depreciation Oven 48 Truck 49 Accumulated Depreciation Truck 50 Natural Resources 51 Accumulated Depletion 52 Patent (Net) 53 Goodwill 54 Total Plant/Equip/Intangleables 55 Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations + C D E F G H I J K L M N O P Q R TU V W X Y Z AA AB AC 56 Total Assets 2,328,250 58 Liabilities 59 Current Liabilities 60 Notes Payable-Old 61 Notes Payable-New 15.000 64 Accounts Payable 65 66 67 300,000 20.000 68 Unearned Rent Revenue 69 Salary Payable 70 Wages Payable 71 Fica Payable 72 Federal Withholding Payable 73 State Withholding Payable 74 FUTA Payable 75 SUTA Payable 76 Health Insurance Payable 77 Pension Payable 78 Professional Fees Payable 79 Customer Refund Payable 80 Income Tax Payable 81 Interest Payable 82 Total Current Liabilities 70,000 10.000 415,000 305,500 150,000 84 Long-Term Liabilities 85 Mortgage Payable 86 Notes-Payable-Old 87 Bonds Payable 88 Total Long-Term Liabilities 89 Total Liabilities 455,500 870,500 90 1.457,750 91 Owner's Equity 92 Mr. Burns Capital (Retained Earnings) 93 Captial (Stock) 94 Mr. Burns Drawing (Dividends) 96 Income Summary 2.328.250 98 Total Liabilities and Owner's Equity 99 100 Revenue 101 Sales Revenue (Fees Earned) 102 103 104 105 106 107 108 109 Total Revenue Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations +. C D E F G H I J I K L M N O P Q R S TU V W X Y Z AA AB AC AD 110 111 Cost of Merchandise(Goods) Sold 112 113 114 115 116 Expenses 117 Selling Expenses 118 Sales Salary Expense 119 Advertising Expense 120 Freight Out 121 Warranties Expense 122 Misc Selling Expense 123 124 Administration Expenses 125 Office Salaries Expense 126 Wages Expense 127 Rent Expense 128 Utility Expense 129 Professional Fees 130 Depreciation Expense 131 132 133 Insurance Expense 134 Office Supplies Expense 135 Plant Supplies Expense 136 Income Tax Expense 137 Pension Expense 138 Bad Debt Expense 139 Health Insurance Expense 140 Amortzation Expense 141 Depletion Expense 142 Misc. Admin Expense 143 144 Other Revenues 145 Interest Revenue 146 Rent Revenue 147 Other Expenses 148 Interest Expense 149 Loss of Discount 150 151 152 Total Expenses 153 Net Income (Net Loss) 154 155 Total Debits 156 Total Credits 157 Difference 158 159 160 161 162 163 164 Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations + @ - C D E F G H I J Mr Burn's Good Old Fashion Cookies Income Statement For The Year Ended Decemeber 31, 2019 Revenue from sales: 9 Gross Profit 10 Operating Expenses: 11 Selling Expenses: 13 Total Selling Expense 14 Administrative Expenses: 27 28 Total Adminstrative Expenses 29 Total Operating Expenses: 30 Income From Operations 31 Other income and expenses: 32 Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations E F G Mr Burn's Good Old Fashion Cookies Statement of Retained Earnings For The Year Ended Decemeber 31, 2019 1/1/19 5 Retained Earnings 6 Add: 7 Investment 8 Net Income 9 Less: 10 Dividends 12 Retained Earnings 12/31/19 C D E F G 1 Mr Burn's Good Old Fashion Cookies 2 Balance Sheet 3 December 31, 2019 Assets 7 Current Assets 14 15 Total Current Assets 16 Property, Plant, and Equipment 17 25 Total Assets Liabilities 28 Current Liabilities 36 Total Current Liabilities 37 Long-Term Liabilities 38 39 40 Total Liabilities Owner's Equity 42 Captial (Stock) 43 Mr. Burns Capital (Retained Eamings) 46 45 Total Liabilities and Owner's Equity 46 48 49 50 Worksheet Income Statement Statement of Retained Earnings Balance Sheet C D E F G H I K L M N O P Q R T U V W X Y AA AB AC 1 Mr Burn's Good Old Fashion Cookies 2 Worksheet 3 December 31, 2019 Beginning Balance Debit Credit 1,669,750 Journal Entries Debit Credit 5 Unad usted Trial Balance Debit Credit Adjusting Entries Debit Credit Adjusted Trial Balance Debit Credit Closing Entries Debit Credit Post Closing Trial Balance Debit Credit Current Assets Cash 18 Notes Receivable 16.000 20 Accounts Receivable 435,000 30.000 28 Allowance for Doubtful Accounts 29 Interest Receivable 30 Inventory 6,000 34 500 1.000 35 Estimated Inventory Returns 36 Office Supplies 37 Plant Supplies 38 Prepaid Insurance 39 Prepaid Rent 40 Total Current Assets 230,000 2,328,250 42 Plant/Equip/Intangible Assets 43 Land 44 Cookie Machine 45 Accumulated Depreciation Cookie Machine 46 Oven 47 Accumulated Depreciation Oven 48 Truck 49 Accumulated Depreciation Truck 50 Natural Resources 51 Accumulated Depletion 52 Patent (Net) 53 Goodwill 54 Total Plant/Equip/Intangleables 55 Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations + C D E F G H I J K L M N O P Q R TU V W X Y Z AA AB AC 56 Total Assets 2,328,250 58 Liabilities 59 Current Liabilities 60 Notes Payable-Old 61 Notes Payable-New 15.000 64 Accounts Payable 65 66 67 300,000 20.000 68 Unearned Rent Revenue 69 Salary Payable 70 Wages Payable 71 Fica Payable 72 Federal Withholding Payable 73 State Withholding Payable 74 FUTA Payable 75 SUTA Payable 76 Health Insurance Payable 77 Pension Payable 78 Professional Fees Payable 79 Customer Refund Payable 80 Income Tax Payable 81 Interest Payable 82 Total Current Liabilities 70,000 10.000 415,000 305,500 150,000 84 Long-Term Liabilities 85 Mortgage Payable 86 Notes-Payable-Old 87 Bonds Payable 88 Total Long-Term Liabilities 89 Total Liabilities 455,500 870,500 90 1.457,750 91 Owner's Equity 92 Mr. Burns Capital (Retained Earnings) 93 Captial (Stock) 94 Mr. Burns Drawing (Dividends) 96 Income Summary 2.328.250 98 Total Liabilities and Owner's Equity 99 100 Revenue 101 Sales Revenue (Fees Earned) 102 103 104 105 106 107 108 109 Total Revenue Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations +. C D E F G H I J I K L M N O P Q R S TU V W X Y Z AA AB AC AD 110 111 Cost of Merchandise(Goods) Sold 112 113 114 115 116 Expenses 117 Selling Expenses 118 Sales Salary Expense 119 Advertising Expense 120 Freight Out 121 Warranties Expense 122 Misc Selling Expense 123 124 Administration Expenses 125 Office Salaries Expense 126 Wages Expense 127 Rent Expense 128 Utility Expense 129 Professional Fees 130 Depreciation Expense 131 132 133 Insurance Expense 134 Office Supplies Expense 135 Plant Supplies Expense 136 Income Tax Expense 137 Pension Expense 138 Bad Debt Expense 139 Health Insurance Expense 140 Amortzation Expense 141 Depletion Expense 142 Misc. Admin Expense 143 144 Other Revenues 145 Interest Revenue 146 Rent Revenue 147 Other Expenses 148 Interest Expense 149 Loss of Discount 150 151 152 Total Expenses 153 Net Income (Net Loss) 154 155 Total Debits 156 Total Credits 157 Difference 158 159 160 161 162 163 164 Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations + @ - C D E F G H I J Mr Burn's Good Old Fashion Cookies Income Statement For The Year Ended Decemeber 31, 2019 Revenue from sales: 9 Gross Profit 10 Operating Expenses: 11 Selling Expenses: 13 Total Selling Expense 14 Administrative Expenses: 27 28 Total Adminstrative Expenses 29 Total Operating Expenses: 30 Income From Operations 31 Other income and expenses: 32 Worksheet Income Statement Statement of Retained Earnings Balance Sheet Adjusting Calculations E F G Mr Burn's Good Old Fashion Cookies Statement of Retained Earnings For The Year Ended Decemeber 31, 2019 1/1/19 5 Retained Earnings 6 Add: 7 Investment 8 Net Income 9 Less: 10 Dividends 12 Retained Earnings 12/31/19 C D E F G 1 Mr Burn's Good Old Fashion Cookies 2 Balance Sheet 3 December 31, 2019 Assets 7 Current Assets 14 15 Total Current Assets 16 Property, Plant, and Equipment 17 25 Total Assets Liabilities 28 Current Liabilities 36 Total Current Liabilities 37 Long-Term Liabilities 38 39 40 Total Liabilities Owner's Equity 42 Captial (Stock) 43 Mr. Burns Capital (Retained Eamings) 46 45 Total Liabilities and Owner's Equity 46 48 49 50 Worksheet Income Statement Statement of Retained Earnings Balance Sheet