Question
NATTIE CORPORATION UNADJUSTED TRIAL BALANCE DECEMBER 31, 2020 ACCOUNTS DEBIT CREDIT CASH 96,868 FV-NI Short Term INVESTMENTS 30,300 ACCOUNTS RECEIVABLE 425,755 ALLOWANCE FOR DOUBTFUL ACCOUNTS
NATTIE CORPORATION
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2020
ACCOUNTS DEBIT CREDIT
CASH 96,868
FV-NI Short Term INVESTMENTS 30,300
ACCOUNTS RECEIVABLE 425,755
ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,400
INVENTORY 402,912
PREPAID INSURANCE 16,456
OFFICE BUILDING 500,000
ACCUMULATED DEPRECIATION (OFFICE BUILDING) 0
OFFICE EQUIPMENT 120,000
ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT) 0
ACCOUNTS PAYABLE 205,258
WAGES PAYABLE 27,328
NOTES PAYABLE 60,000
PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2020 100,000
COMMON STOCK, 160,000 ISSUED and OUTSTANDING ON DEC 31, 2020 185,000
RETAINED EARNINGS, January 1 280,623
SALES REVENUE 3,880,524
SALES DISCOUNTS 20,571
SALES RETURNS AND ALLOWANCES 51,259
PURCHASES 2,600,824
PURCHASES DISCOUNTS 35,678
TRANSPORTATION - IN 25,235
WAGES EXPENSE 320,523
RENT EXPENSE 40,955
INSURANCE EXPENSE 0
SUPPLIES EXPENSE 25,673
GAIN ON SALE OF ASSETS OF DISCONTINUED ACTIVITY 13,650
ADVERTISING EXPENSE 18,860
OPERATING LOSS ON DISCONTINUED OPERATIONS 21,998
TELEPHONE EXPENSE 28,540
CASH DIVIDENDS DECLARED -Preferred Dividends 29,732
CASH DIVIDENDS DECLARED -Common Dividends 20,000
TOTAL 4,796,461 4,796,461
NOTE: All revenue, expense, gain and loss figures above are before tax.
This company uses a Periodic Inventory system.
The company follows ASPE
ADDITIONAL INFORMATION
Information for Adjusting Entries:
1. NATTIE Corp. uses the allowance method to record Bad Debts based on an estimate of 5% of the Ending Accounts Receivable.
2. The Office Building is depreciated at 10% of cost per year
3. The Office Equipment is depreciated straight line and has a residual value of $6,000 . It was purchased on May 1, 2020
and it is estimated to have a useful life of 5 years.
4. FV- NI Short term investments have a fair market value of $32,300 on December 31, 2020. Investments need to
be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement.
5. The Prepaid insurance includes : Policy A, cost of $12,700, three year term, paid in advance on April 1, 2020
AND Policy B, cost of $3,756, two year term paid in advance on June 1, 2020.
6. The company performed a year end physical count of its inventory as at December 31, 2020.
The amount of inventory on hand at December 31, 2020 amounted to $415,700.
Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required.
7. A one year 6% note payable of $60,000 was signed on August 31, 2020.
Items affecting the Financial Statements (do not record any adjusting entries; make the adjustment on the affected Financial Statement)
A. There was an error that was discovered in prior years where last year's depreciation expense was overstated by $120,000.
B. The Number of common shares outstanding at January 1 was 110,000. On May 1, an additional 40,000 were issued.
On November 1, another 10,000 common share were issued.
C. The Cash balance includes a $18,000 bank overdraft from another bank and a 16 month investment of $35,000.
D. The Accounts Receivable balance includes a credit balance in a customer's account equal to $10,000.
E. The tax rate is 25%
REQUIRED:
1. Need to Prepare the Adjusting Journal Entries required for the 2020 fiscal year at December 31, 2020
2. Need to Prepare an adjusted Trial Balance (Update Trial Balance with new accounts and new balances after the adjusting entries)
3. Need to Prepare a multi-step Income Statement
4. Need to Calculate Earnings per share and show the presentation on the Income Statement
5. Need to Prepare a Statement of Retained Earnings
6. Need to Prepare a Classified Balance Sheet
NOTE:
Prepare the Financial Statements after considering the above "Other Information"
(ie must use adjusted Trial Balance AND items A to E)
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