Need Adjusted Journal Entries. Adjusted Trial Balance. Income Statement. Statement of Retained Earning. Balance Sheet Closing Entries. Post Closing Trail Balance. Thanks
ABC Corporation Unadjusted Trial Balance December 31, 2016 Credit Debit 759,444 442,120 247,000 6,750 88,000 37,500 1,150 21,600 9,000 50,000 6 Cash Accounts receivable Allowance for doubtful accounts Inventory 10 Allowance to Reduce Inventory to NRV 11 Purchases 12 Prepaid insurance 13 Land 14 Building 15 Accumulated depreciation building 16 Equipment 17 Accumulated depreciation equipment 18 Patent 19 Accounts payable 20 Notes payable 21 Income taxes payable 22 Uneamed rent revenue 23 Bonds Payable 24 Premium on Bonds Payable 25 Common stock 26 PIC In Excess of Par-Common Stock 27 Retained earnings 28 Treasury stock 29 Dividends 30 Sales Revenue 31 Advertising expense 32 Wages expense 88,851 40,000 99,000 13,500 700,000 56,774 125,000 40,000 20,000 28,000 790,000 9,240 62,150 13,500 700,000 56,774 125,000 40,000 21 Income taxes payable 22 Uneamed rent revenue 23 Bonds Payable 24 Premium on Bonds Payable 25 Common stock 26 PIC In Excess of Par-Common Stock 27 Retained eamings 28 Treasury stock 29 Dividends 30 Sales Revenue 31 Advertising expense 32 Wages expense 33 Office expense 34 Depreciation expense 35 Utilities expense 36 Insurance expense 37 Income taxes expense 20,000 28,000 790,000 9,240 62,150 28,500 10,150 33,571 20,250 99,000 1,963,275 $ $ 1,963,275 1 On March 1, 2016, ABC purchased a one-year liability insurance policy for $27,000 Upon purchase, the following joumal entry was made D: Prepaid insurance 27,000 C Cash 27,000 The expired portion of insurance must be recorded as of 12/31/16 Notice that the expired portion from March through Novembet has been recorded already Make sure that the Prepaid Insurance balance after the adjusting entey es correct 2 Depreciation expense must be recorded for the month of December. The building was purchased on February 1, 2016 for $37,500 with a remaining useful life of 25 years and a salvage value of $3,000. The method of depreciation for the building is straight-line. The equipment was purchased on February 1, 2016 for $21,600 with a remaining useful life of 4 years and a salvage value of $1,800 The method of depreciation for the equipment is double-declining balance. Depreciation has been recorded for the building and equipment for months February through November OSS 3 On December 1, 2016, XYZ Co agreed to rent space in ABC building for $4,500 per month, and XYZ paid ABC on December 1 in advance for the first three months rent The entry made on December 1 was as follows: DCash 13,500 CtUneamed rent revenue 13,500 The une amned revenue account must be adjusted to reflect the amount eamed as of 12/31/16. 4 Per timecatch, from the last paytoll date through December 31, 2016, ABC's employees have worked a total of 200 hours Including payroll taxes, ABC's wage expense avetages about $25 per hour. The next payroll date is January 5, 2017. The liability for wages payable must be recorded as of 12/31/16 C u rd 140.000 Ftomi Amecan National Bank by wouing an interest-beaung note payable multe of yo. 5 On November 30, 2016, ABC borrowed $40,000 from American National Bank by ssuing an interest-bearing note payable This loan is to be repaid in three months on February 28, 2017), along with interest computed at an annual tate of 9%. The entry made on November 30 to record the bottowing was D: Cash 40,000 C: Notes Payable 40,000 On February 28, 2017 ABC must pay the bank the amount borrowed plus interest Assume the beginning balance for Notes Payable is correct Interest through 12/31/16 must be accrued on the $40,000 note. 1 6 ABC uses a periodic inventory system, and the ending inventory for each year determined by talang a complete physical inventory at year-end. A physical count was taken on December 31, 2016, and the inventory on-hand at that time totaled $100,000, which reflects historical cost. Record the adjusting entry for properly tocognizing 2016 Cost of Good Sold Hint: This was the first year of operations, to beginning inventory balance is zero 14 Additionally, ABC achetes to GAAP by recording ending inventory at the lower of cost and net realizable value at a total inventory level A review of inventory data further indicated that the current retail sales value of the ending inventory = $90,000 and estimated costs of completion and shipping is 8% of retail. Be sure to make an additional adjustment, if necessary, to properly value ending inventory using the Loss and Allowance methodology For Income Statement presentation purposes, be sure to use the Los Method for accounting for adjustments of inventory to market value V.. . E Adjustments Needled -- Adjusting Journal Entries Adjusted Trial Balance Instructions Unadjusted Trial Balance - o e 0 x Type here to search F G H I 7 It would be unusual for a company to have an awet impairment in Yeat 1, but for the sake of this example, ABC determined that their intangible asset might be impaired on December 31, 2016. Record the impairment adjustment, if any. The expected future undiscounted net cash flows for this intangible asset totals $48,000, and the fair value of the asset is $45,000 8 On 7/1/16, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock. The cost of the treasury stock was $5 per share, or $20,000 in total. The effects of this transaction are already shown in the unadjusted trial balance. On 12/31/16, ABC reissued 2,000 shares of the treasury stock at $8 per share. Record the joumal entry required for the reissuance of the treasury stock. To refresh your memory, treasury stock is usually accounted for at cost. When treasury stock is reissued for more than its cost, a separate Paid-in Capital-Treasury Stock account should be used to account for the excess proceeds over cost. (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 9 On 12/31/16, ABC issued 10,000 shares of $1 par value common stock at the closing matket price of $10 per share. Prepare ABC's journal entry to reflect the nuance of the stock on 12/31/16. To refresh your memory, a Paid-in Capital in Excess of Par account should be used to account for excess proceeds over par value in a stock suance transaction. (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 1 10 On 7/1/16, ABC sold 10% bonds having a maturity value of $700,000 for $756,773 50, resulting in an effective yaeld of 8%. The bonds are dated 7/1/16, and mature 7/1/21. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of amortization for bond premium or discount Record the adjusting entry for the accrual of interest and the related amortisation on 12/31/16. Hint Develop an abbreviated amortization schedule to accurately determine the interest expense 11 ABC Corporation prepare an aging schedule on 12/31/16 that estimates total uncollectible accounts at $75,000. Assuming that the allowance method is used, prepare the entry to record bad debt expense for the calendar year 81 82 85 Do this final adjusting entry after preparing the Income Statement through the line "Income Before Income Taxer 12 Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15, However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full on the setum's March 15, 2017 due date ABC income tax rates 39%. The entire year's income tax expense was estimated at the beginning of 2016 to be $108,000, .. . -.... ndna ...LL. Instructions Unadjusted Trial Balance Adjustments Needed Adjusting Journal Entries Adjusted Trial Balance income Stat 8 On 7/1/16, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock. The cost of the treasus stock was $5 per share, or $20,000 in total. The effects of this transaction are alreacly shown in the unadjusted trial balance. On 12/31/16, ABC issued 2,000 shares of the treasury stock at $8 per share. Record the joumal entry required for the reissuance of the treasury stock. To refresh your memory, treasury stock i wually accounted for at cost. When treasury stock is teinued for more than it cost, a separate Paid-in Capital Treasury Stock account should be used to account for the excess proceech over cost (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 9 On 12/31/16, ABC issued 10,000 shares of $1 par value common stock at the closing market price of $10 per share. Prepare ABC's joumal entry to reflect the issuance of the stock on 12/31/16. To refresh your memory, a Paid-in Capital in Excess of Par account should be used to account for excess proceeds over par value in a stock wuance transaction. (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 10 On 7/1/16, ABC sold 10% bonds having a maturity value of $700,000 for $756,773.50, resulting in an effective yield of 8%. The bonds are dated 7/1/16, and mature 7/1/21. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of amortization for bond premium or discount Record the adjusting entry for the accrual of interest and the related amortization on 12/31/16 Hint: Develop an abbreviated amortization schedule to accurately determine the interest expense 11 ABC Corporation prepares an aging schedule on 12/31/16 that estimates total uncollectible accounts at $75,000. Assuming that the allowance method is wed, prepare the entry to record bad debt expense for the calendar year. Do this final adjusting entry after preparing the Income Statement through the line "Income Before Income Taxes": 12 Corporate taxes are due in four estimated quarterly payments on Apal 15, June 15, September 15, and December 15. However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full on the return's March 15, 2017 due date. ABC's income tax rate is 35%. The entire year's income tax expense was estimated at the beginning of 2016 to be $108,000, $0 January through November income tax expense recognized amounts to $99,000 (11/12 machths) Since we ate asuming estimates are not made during the year, the balance in Income taxes payable represents income tax accrued for January through November. Assume no deferred tax assets or deferred tax liabilities Based on the income before income taxes figure from the income statement, calculate and record December's income tax expense adjustment so that the entire year's tax expense is correct (.e. the difference between total income tax expense and the amount already accrued through Novembe Instructions Unadjusted Trial Balance Adjustments Needed Adjusting Journal Entries Adjusted Trial Balance in ABC Corporation Unadjusted Trial Balance December 31, 2016 Credit Debit 759,444 442,120 247,000 6,750 88,000 37,500 1,150 21,600 9,000 50,000 6 Cash Accounts receivable Allowance for doubtful accounts Inventory 10 Allowance to Reduce Inventory to NRV 11 Purchases 12 Prepaid insurance 13 Land 14 Building 15 Accumulated depreciation building 16 Equipment 17 Accumulated depreciation equipment 18 Patent 19 Accounts payable 20 Notes payable 21 Income taxes payable 22 Uneamed rent revenue 23 Bonds Payable 24 Premium on Bonds Payable 25 Common stock 26 PIC In Excess of Par-Common Stock 27 Retained earnings 28 Treasury stock 29 Dividends 30 Sales Revenue 31 Advertising expense 32 Wages expense 88,851 40,000 99,000 13,500 700,000 56,774 125,000 40,000 20,000 28,000 790,000 9,240 62,150 13,500 700,000 56,774 125,000 40,000 21 Income taxes payable 22 Uneamed rent revenue 23 Bonds Payable 24 Premium on Bonds Payable 25 Common stock 26 PIC In Excess of Par-Common Stock 27 Retained eamings 28 Treasury stock 29 Dividends 30 Sales Revenue 31 Advertising expense 32 Wages expense 33 Office expense 34 Depreciation expense 35 Utilities expense 36 Insurance expense 37 Income taxes expense 20,000 28,000 790,000 9,240 62,150 28,500 10,150 33,571 20,250 99,000 1,963,275 $ $ 1,963,275 1 On March 1, 2016, ABC purchased a one-year liability insurance policy for $27,000 Upon purchase, the following joumal entry was made D: Prepaid insurance 27,000 C Cash 27,000 The expired portion of insurance must be recorded as of 12/31/16 Notice that the expired portion from March through Novembet has been recorded already Make sure that the Prepaid Insurance balance after the adjusting entey es correct 2 Depreciation expense must be recorded for the month of December. The building was purchased on February 1, 2016 for $37,500 with a remaining useful life of 25 years and a salvage value of $3,000. The method of depreciation for the building is straight-line. The equipment was purchased on February 1, 2016 for $21,600 with a remaining useful life of 4 years and a salvage value of $1,800 The method of depreciation for the equipment is double-declining balance. Depreciation has been recorded for the building and equipment for months February through November OSS 3 On December 1, 2016, XYZ Co agreed to rent space in ABC building for $4,500 per month, and XYZ paid ABC on December 1 in advance for the first three months rent The entry made on December 1 was as follows: DCash 13,500 CtUneamed rent revenue 13,500 The une amned revenue account must be adjusted to reflect the amount eamed as of 12/31/16. 4 Per timecatch, from the last paytoll date through December 31, 2016, ABC's employees have worked a total of 200 hours Including payroll taxes, ABC's wage expense avetages about $25 per hour. The next payroll date is January 5, 2017. The liability for wages payable must be recorded as of 12/31/16 C u rd 140.000 Ftomi Amecan National Bank by wouing an interest-beaung note payable multe of yo. 5 On November 30, 2016, ABC borrowed $40,000 from American National Bank by ssuing an interest-bearing note payable This loan is to be repaid in three months on February 28, 2017), along with interest computed at an annual tate of 9%. The entry made on November 30 to record the bottowing was D: Cash 40,000 C: Notes Payable 40,000 On February 28, 2017 ABC must pay the bank the amount borrowed plus interest Assume the beginning balance for Notes Payable is correct Interest through 12/31/16 must be accrued on the $40,000 note. 1 6 ABC uses a periodic inventory system, and the ending inventory for each year determined by talang a complete physical inventory at year-end. A physical count was taken on December 31, 2016, and the inventory on-hand at that time totaled $100,000, which reflects historical cost. Record the adjusting entry for properly tocognizing 2016 Cost of Good Sold Hint: This was the first year of operations, to beginning inventory balance is zero 14 Additionally, ABC achetes to GAAP by recording ending inventory at the lower of cost and net realizable value at a total inventory level A review of inventory data further indicated that the current retail sales value of the ending inventory = $90,000 and estimated costs of completion and shipping is 8% of retail. Be sure to make an additional adjustment, if necessary, to properly value ending inventory using the Loss and Allowance methodology For Income Statement presentation purposes, be sure to use the Los Method for accounting for adjustments of inventory to market value V.. . E Adjustments Needled -- Adjusting Journal Entries Adjusted Trial Balance Instructions Unadjusted Trial Balance - o e 0 x Type here to search F G H I 7 It would be unusual for a company to have an awet impairment in Yeat 1, but for the sake of this example, ABC determined that their intangible asset might be impaired on December 31, 2016. Record the impairment adjustment, if any. The expected future undiscounted net cash flows for this intangible asset totals $48,000, and the fair value of the asset is $45,000 8 On 7/1/16, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock. The cost of the treasury stock was $5 per share, or $20,000 in total. The effects of this transaction are already shown in the unadjusted trial balance. On 12/31/16, ABC reissued 2,000 shares of the treasury stock at $8 per share. Record the joumal entry required for the reissuance of the treasury stock. To refresh your memory, treasury stock is usually accounted for at cost. When treasury stock is reissued for more than its cost, a separate Paid-in Capital-Treasury Stock account should be used to account for the excess proceeds over cost. (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 9 On 12/31/16, ABC issued 10,000 shares of $1 par value common stock at the closing matket price of $10 per share. Prepare ABC's journal entry to reflect the nuance of the stock on 12/31/16. To refresh your memory, a Paid-in Capital in Excess of Par account should be used to account for excess proceeds over par value in a stock suance transaction. (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 1 10 On 7/1/16, ABC sold 10% bonds having a maturity value of $700,000 for $756,773 50, resulting in an effective yaeld of 8%. The bonds are dated 7/1/16, and mature 7/1/21. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of amortization for bond premium or discount Record the adjusting entry for the accrual of interest and the related amortisation on 12/31/16. Hint Develop an abbreviated amortization schedule to accurately determine the interest expense 11 ABC Corporation prepare an aging schedule on 12/31/16 that estimates total uncollectible accounts at $75,000. Assuming that the allowance method is used, prepare the entry to record bad debt expense for the calendar year 81 82 85 Do this final adjusting entry after preparing the Income Statement through the line "Income Before Income Taxer 12 Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15, However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full on the setum's March 15, 2017 due date ABC income tax rates 39%. The entire year's income tax expense was estimated at the beginning of 2016 to be $108,000, .. . -.... ndna ...LL. Instructions Unadjusted Trial Balance Adjustments Needed Adjusting Journal Entries Adjusted Trial Balance income Stat 8 On 7/1/16, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock. The cost of the treasus stock was $5 per share, or $20,000 in total. The effects of this transaction are alreacly shown in the unadjusted trial balance. On 12/31/16, ABC issued 2,000 shares of the treasury stock at $8 per share. Record the joumal entry required for the reissuance of the treasury stock. To refresh your memory, treasury stock i wually accounted for at cost. When treasury stock is teinued for more than it cost, a separate Paid-in Capital Treasury Stock account should be used to account for the excess proceech over cost (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 9 On 12/31/16, ABC issued 10,000 shares of $1 par value common stock at the closing market price of $10 per share. Prepare ABC's joumal entry to reflect the issuance of the stock on 12/31/16. To refresh your memory, a Paid-in Capital in Excess of Par account should be used to account for excess proceeds over par value in a stock wuance transaction. (See your Principles of Accounting textbook or Chapter 18 of your Intermediate Accounting textbook for a review) 10 On 7/1/16, ABC sold 10% bonds having a maturity value of $700,000 for $756,773.50, resulting in an effective yield of 8%. The bonds are dated 7/1/16, and mature 7/1/21. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of amortization for bond premium or discount Record the adjusting entry for the accrual of interest and the related amortization on 12/31/16 Hint: Develop an abbreviated amortization schedule to accurately determine the interest expense 11 ABC Corporation prepares an aging schedule on 12/31/16 that estimates total uncollectible accounts at $75,000. Assuming that the allowance method is wed, prepare the entry to record bad debt expense for the calendar year. Do this final adjusting entry after preparing the Income Statement through the line "Income Before Income Taxes": 12 Corporate taxes are due in four estimated quarterly payments on Apal 15, June 15, September 15, and December 15. However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full on the return's March 15, 2017 due date. ABC's income tax rate is 35%. The entire year's income tax expense was estimated at the beginning of 2016 to be $108,000, $0 January through November income tax expense recognized amounts to $99,000 (11/12 machths) Since we ate asuming estimates are not made during the year, the balance in Income taxes payable represents income tax accrued for January through November. Assume no deferred tax assets or deferred tax liabilities Based on the income before income taxes figure from the income statement, calculate and record December's income tax expense adjustment so that the entire year's tax expense is correct (.e. the difference between total income tax expense and the amount already accrued through Novembe Instructions Unadjusted Trial Balance Adjustments Needed Adjusting Journal Entries Adjusted Trial Balance in
