Name: TA: Disc #: BUS ADM 201 Introduction to Financial Accounting Spring 2019 EXTRA CREDIT III Due at 11:59pm on Saturday, May 11'h GRADING: Worth up to 15 points. Carefully READ the requirements on page 2 first. Partially completed problems will earn no credit-that means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will earn at least 7.5 points. The remaining points are dependent upon the accuracy of your answers. Round amounts to the nearest dollar, if applicable Jamukha Corporation prepares annual financial statements. The balance sheet at December 31. 2017, is presented below Jamkha Corporation Balance Sheet December 31, 2017 Liabilities and Stockholders Assets 94.750 10,000 190,000 77,610 Cash Accounts receivable Allowance for doubtfiul acconts Inventory Prepaid insurance Equipment AD -Equipment 27,850 Accounts payable 44.070 Common stock (S1 par) (2.000) Paid-in capital in excess ofpar - Comon stock 75,000 Retaned eamings 7.440 360,000 (140,000) 372.360 372,360 During 2018 the following transactions occurred: 1. Purchased $141,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. 2. Sales of $325.000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was 3. Received $36,000 cash down payment for orders that will be shipped next year 4. Issued 20 year. $65,000 face value. 4% bonds on July 1 at 103 . The bonds were sold to yield an effective $175,000. The company uses a perpetual inventory system. annual rate of 3.784784%, and they pay interest every January 1 and July 1 5. Collected $306,000 on account. 6. Paid general expenses of S55.750 7. Paid $210.000 for amount due to supplier 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1, Jamukha Corp. sold for $24,000 cash equipment which originally cost $103.000 Accumulated depreciation for this equipment as of December 31, 2017, was $77,000. This transaction is exempt from sales tax. 10. 11. 12. 13. Issued 1.400 shares of $100 par, 7% preferred stock for $215.000 cash. Purchased equipment on July 1, 2018, for $180,000 cash. Purchased 750 shares of Jamukha Corp. common stock from a disgruntled shareholder for $37 per share Recorded salaries and payroll taxes. Employee's gross salaries were $120,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of $8,000 were withheld, and state income taxes (SIT) of $4,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Joumal Entries 15. Straight-line depreciation with an 8 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on July 1, 2018 (#11) is depreciated using double-declining balance with a useful life of 20 years and a $30,000 salvage value. (Hint: The equipment was purchased midway through the year.) 16. Accrue bond interest payable and amortize bond discount/premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17. The prepaid insurance relates to a policy purchased on December 31, 2017. This insurance expires at a rate of $310 per month. Record as a general expense 18. Jamukha estimates that 6.5% of accounts receivable are uncollectible 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REUIRED: Print out the solution pages for the general ournal. ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil. Enter the transactions numbered 1-14 in the general journal provided on the following pages Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet. a. b. c. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare a 12-column worksheet similar to worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements- just complete them on the worksheet.) e. Journal: Requirement (a) Debit General Journal Credit a.2 n3 a.4 a.5. an. a.7 a.10 a.11 a.12 anl. a.13 a.14 General Ledger: Requirement (b) DR CASH Beginning CR BALANCE 27,850 DR 27.850 ACCOUNTS RECEIVABLE Be DR CR BALANCE 44,070|DR 44,070 DR ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning CR BALANCE 2,000 2,000 CR INVENTORY Beginning DR BALANCE CR 75,000 DR 75,000 DR PREPAID INSURANCE Beginning CR BALANCE 7.440 DR 7,440 EUIPMENT Beginning DR CR BALANCE 360,000 360,000 DR DR ACCUM DEPRECIATION - EQUIPMENT Beginning CR 140,000 140,000 CR BALANCE General Ledger: Requirement (b) continued ACCOUNTS PAYABLE Beginning DR BALANCE CR 94,750 94,750 CR SALARIES PAYABLE DR CR BALANCE SALES TAX PAYABLE DR CR BALANCE FICA PAYABLE DR BALANCE DR FIT PAYABLE CR BALANCE SIT PAYABLE DR CR BALANCE FUTA PAYABLE DR CR BALANCE SUTA PAYABLE DR BALANCE UNEARNED REVENUE DR BALANCE CR DR BONDS PAYABLE CR BALANCE PREMIUM ON BONDS PAYABLE DR CR BALANCE General Ledger: Requirement (b) continued DR COMMON STOCK (S1 PAR) Beginning BALANCE CR 10,000 10,000 CFR PREFERRED STOCK (S100 PAR DR CR BALANCE PAID-IN CAPITAL IN EXCESS OF PAR COMMON STOCK Beginning DR BALANCE CR 190,000 190.000 CR PAID-IN CAPITAL IN EXCESS OF PAR PREFERRED STOCK DR BALANCE CR TREASURY STOCK DR CR BALANCE DR RETAINED EARNINGS CR BALANCE 77,610 CR 77.610 SALES REVENUE DR CR BALANCE DR COST OF GOODS SOLD BALANCE CR DR GENERAL EXPENSES BALANCE CR DR SALARIES EXPENSE BALANCE CR PAYROLL TAX EXPENSE DR BALANCE CR LOSS ON DISPOSAL DR CR BALANCE Jamukha Corporation Works heet: Re quire me nt (c), (d) For the Year Ended December 31. 2018 Unadjuste d Adjus ted Income Re tained Balance Sheet Trial BalanceAdjus tments CR Tiial Balance CR State me nt arnings State me DR DR DR DR DR DR Account Title CR CR CR CR Totals Net loss Totals Ending retained earnings Totals State ment of Cash Flows T-Account Worksheet Requirement (e) Use the formal statement to show activity within the cash account. On this statement, debits to cash correspond to increases and credits correspond to decreases Common stock (S1 par) 10,000 A/D - Equipment 140,000 Pref. stock (S100 par) Accounts receivable Accounts pavable 94,750 0 44,070 Allow. for doubtful acct 2,000 PICEP -CS Interest pavable 0 190,000 InventoIv 75,000 Une ained revenue PICEP - PS 0 0 Retained eamings Prepaid insurance Bonds payable 7,440 0 77,610 Premium on B/P quipment Treasuv stock 360,000 0 Name: TA: Disc #: BUS ADM 201 Introduction to Financial Accounting Spring 2019 EXTRA CREDIT III Due at 11:59pm on Saturday, May 11'h GRADING: Worth up to 15 points. Carefully READ the requirements on page 2 first. Partially completed problems will earn no credit-that means all requirements must be FULLY completed. All work must be completed by hand. If you complete all items as requested, you will earn at least 7.5 points. The remaining points are dependent upon the accuracy of your answers. Round amounts to the nearest dollar, if applicable Jamukha Corporation prepares annual financial statements. The balance sheet at December 31. 2017, is presented below Jamkha Corporation Balance Sheet December 31, 2017 Liabilities and Stockholders Assets 94.750 10,000 190,000 77,610 Cash Accounts receivable Allowance for doubtfiul acconts Inventory Prepaid insurance Equipment AD -Equipment 27,850 Accounts payable 44.070 Common stock (S1 par) (2.000) Paid-in capital in excess ofpar - Comon stock 75,000 Retaned eamings 7.440 360,000 (140,000) 372.360 372,360 During 2018 the following transactions occurred: 1. Purchased $141,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. 2. Sales of $325.000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was 3. Received $36,000 cash down payment for orders that will be shipped next year 4. Issued 20 year. $65,000 face value. 4% bonds on July 1 at 103 . The bonds were sold to yield an effective $175,000. The company uses a perpetual inventory system. annual rate of 3.784784%, and they pay interest every January 1 and July 1 5. Collected $306,000 on account. 6. Paid general expenses of S55.750 7. Paid $210.000 for amount due to supplier 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1, Jamukha Corp. sold for $24,000 cash equipment which originally cost $103.000 Accumulated depreciation for this equipment as of December 31, 2017, was $77,000. This transaction is exempt from sales tax. 10. 11. 12. 13. Issued 1.400 shares of $100 par, 7% preferred stock for $215.000 cash. Purchased equipment on July 1, 2018, for $180,000 cash. Purchased 750 shares of Jamukha Corp. common stock from a disgruntled shareholder for $37 per share Recorded salaries and payroll taxes. Employee's gross salaries were $120,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of $8,000 were withheld, and state income taxes (SIT) of $4,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Joumal Entries 15. Straight-line depreciation with an 8 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on July 1, 2018 (#11) is depreciated using double-declining balance with a useful life of 20 years and a $30,000 salvage value. (Hint: The equipment was purchased midway through the year.) 16. Accrue bond interest payable and amortize bond discount/premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17. The prepaid insurance relates to a policy purchased on December 31, 2017. This insurance expires at a rate of $310 per month. Record as a general expense 18. Jamukha estimates that 6.5% of accounts receivable are uncollectible 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REUIRED: Print out the solution pages for the general ournal. ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil. Enter the transactions numbered 1-14 in the general journal provided on the following pages Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts Prepare an unadjusted trial balance at December 31, 2018 and enter on the worksheet. a. b. c. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare a 12-column worksheet similar to worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements- just complete them on the worksheet.) e. Journal: Requirement (a) Debit General Journal Credit a.2 n3 a.4 a.5. an. a.7 a.10 a.11 a.12 anl. a.13 a.14 General Ledger: Requirement (b) DR CASH Beginning CR BALANCE 27,850 DR 27.850 ACCOUNTS RECEIVABLE Be DR CR BALANCE 44,070|DR 44,070 DR ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginning CR BALANCE 2,000 2,000 CR INVENTORY Beginning DR BALANCE CR 75,000 DR 75,000 DR PREPAID INSURANCE Beginning CR BALANCE 7.440 DR 7,440 EUIPMENT Beginning DR CR BALANCE 360,000 360,000 DR DR ACCUM DEPRECIATION - EQUIPMENT Beginning CR 140,000 140,000 CR BALANCE General Ledger: Requirement (b) continued ACCOUNTS PAYABLE Beginning DR BALANCE CR 94,750 94,750 CR SALARIES PAYABLE DR CR BALANCE SALES TAX PAYABLE DR CR BALANCE FICA PAYABLE DR BALANCE DR FIT PAYABLE CR BALANCE SIT PAYABLE DR CR BALANCE FUTA PAYABLE DR CR BALANCE SUTA PAYABLE DR BALANCE UNEARNED REVENUE DR BALANCE CR DR BONDS PAYABLE CR BALANCE PREMIUM ON BONDS PAYABLE DR CR BALANCE General Ledger: Requirement (b) continued DR COMMON STOCK (S1 PAR) Beginning BALANCE CR 10,000 10,000 CFR PREFERRED STOCK (S100 PAR DR CR BALANCE PAID-IN CAPITAL IN EXCESS OF PAR COMMON STOCK Beginning DR BALANCE CR 190,000 190.000 CR PAID-IN CAPITAL IN EXCESS OF PAR PREFERRED STOCK DR BALANCE CR TREASURY STOCK DR CR BALANCE DR RETAINED EARNINGS CR BALANCE 77,610 CR 77.610 SALES REVENUE DR CR BALANCE DR COST OF GOODS SOLD BALANCE CR DR GENERAL EXPENSES BALANCE CR DR SALARIES EXPENSE BALANCE CR PAYROLL TAX EXPENSE DR BALANCE CR LOSS ON DISPOSAL DR CR BALANCE Jamukha Corporation Works heet: Re quire me nt (c), (d) For the Year Ended December 31. 2018 Unadjuste d Adjus ted Income Re tained Balance Sheet Trial BalanceAdjus tments CR Tiial Balance CR State me nt arnings State me DR DR DR DR DR DR Account Title CR CR CR CR Totals Net loss Totals Ending retained earnings Totals State ment of Cash Flows T-Account Worksheet Requirement (e) Use the formal statement to show activity within the cash account. On this statement, debits to cash correspond to increases and credits correspond to decreases Common stock (S1 par) 10,000 A/D - Equipment 140,000 Pref. stock (S100 par) Accounts receivable Accounts pavable 94,750 0 44,070 Allow. for doubtful acct 2,000 PICEP -CS Interest pavable 0 190,000 InventoIv 75,000 Une ained revenue PICEP - PS 0 0 Retained eamings Prepaid insurance Bonds payable 7,440 0 77,610 Premium on B/P quipment Treasuv stock 360,000 0