Need Adjusted Journal Entries, (Instructions, Unadjusted Trial Balance, And Adjustments Needed) Are Posted. Adjusted Trial Balance, Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flow, Closing Entries, Post Closing. Last Picture is Statement of Cash Flow Trial Balance

1. Make all 16 adjustments on the "Adjusting Journal Entries" tab. Remember to include a descnption under each journal entry. 2. Post the adjustments to the general ledger on the "12-31-14 T-Accounts" tab. You may have to add T-Accounts for new accounts. Link your T-Account entries to your Joumal Entries. PLEASE NOTE THAT THE "BB" (BEGINNING BALANCES) FOR THE T-ACCOUNTS REPRESENT THE UNADJUSTED BALANCES AS OF 12/31/14 3. Once the 12/31/14 T-Accounts are complete, prepare the Adjusted Trial Balance. There may be some accounts with zero dollars, and you T-Accounts have to insert lines for new accounts (some blank T-Accounts have already been provided for you). Link the Adjusted Trial Balance to your may 4. Use the Adjusted Trial Balance numbers to complete the Income Statement, Statement of Retaimed Earnings, Balance Sheet, and Statement of Cash Flows. For purposes of the Income Statement, prepare using the multiple step format and assume that Rent Rereme, any Unrealized Holding Gains/Losses, Interest Expense, Interest Revenue, and any other Gains/Losses are NOT part of the major central ongoing operations of the company. Link your financial statements to your Adjusted Trial Balance. Use the Income Statement and Balance Sheet to finish the partially completed Statement of Cash Flows. Since this is ABC's first year of operations, several line items on the Statement of Cash Flows have already been supplied to you IE necessary, review financial statement preparation in Chapters 4 and 5 of your textbook for a quick refreshet. Plan on using your knowledge gained in completing Chapter 21 to help with the preparation of the Statement of Cash Flows. Additionally, since this is ABC Corporation's first year of operations, the adjusted trial balance for all current assets and liabilities represents the change during the year for Statement of Cash Flows analysis purposes. 5. When the Financial Statements are complete, make the closing entries on the "Closing Entries" tab beung mindful of the two closing entries you've learned. 6. When closing entries have been made, post the entries to the general ledger on the "Post-Close T-Accounts" tab. Make sure you adjusting journal entries are also posted on your Post-Close T-Accounts. They will not automatically flow from tab-to-tab. Suggestion: As an alternative, after you've finished posting your adjusting journal entries to the accounts in the "12-31-14 T Accounts" tab, make a duplicate of this worksheet to use for posting your closing entries and then just relabel the tab as "Post-Close T-Accounts." Just be sure to delete the original "Post-Close T-Accounts" tab already in the workbook before you do this since you can't have two worksheets with the same name. 7. The final step is the Post-Closing Trial Balance, which will use the ending balances from the 12/31/14 T-Accounts after posting your closing entries. 8. Double-check your work. Here are a few things to check foc -Adjusted Trial Balance: Make sure debit cohimn and credit cohimn total to the same figure at the bottom -Net income from the income statement will flow through to the Statement of Retained Eamings -Ending Retained Eamings from the Statement of Retamed Earnings will flow through to the Balance Sheet -Ending Cash balance from the Balance Sheet should match your ending Cash balance on the Statement of Cash Flows. -The Post-Closing Trial Balance should not have any revenue, expense, gain, loss, or other temporary accounts. -Check figure 1: Income from operations = $594,336 -Check figure 2. Total Current Assets = $1,464,429. -Check figure 3: Total Liabilities & Stockholders' Equity = $1,983,951. -Check figure 4: Cash flow provided by operating activities = $515,785. -Check figure 5: Post close Trial Balance debit and credit colunas total $2,053,351. -Check figure 6: Cash flow provided by financing activities $1,200,268. -Remember: Neatness matters in Financial Statements. Print or Paint Preview before submitting to make sure your statements are neat Otherwise, management may send back to you for revision -Include your work at the bottom of each tab as needed. -Ask questions prior to the dayight before the due date. The due date is clearly indicated on the course schedule, Utilize formulas and worksheet linkings in your financial statements to improve accuracy and save time in completing the assignment - Please take advantage of Excel by using formulas to calculate groups of numbers de "Total Liabilities and Stockholders' Equity"). + unnarted by 2 ABC Corporation Unadjusted Trial Balance December 31, 2014 8 Credit Debit $ 975,232 167,000 190,300 $ 350,000 24,600 177,824 75,000 150,000 4,000 60,000 20,000 37,500 5 6 Cash 7 Short term investments 8 Fair value adjustment (Trading) 9 Accounts receivable 10 Allowance for doubtful accounts 11 Inventory 12 Purchases 13 Prepaid insurance 14 LT (Debt) investments (HTM) 15 Land 16 Building 17 Accumulated depreciation building 18 Equipment 19 Accumulated depreciation equipment 20 Patent 21 Accounts payable 22 Notes payable 23 Income taxes payable 24 Unearned rent revenue 25 Bonds Payable 26 Premium on Bonds Payable 27 Common stock 28 PIC In Excess of Par-Common Stock 29 Retained earnings 30 Treasury stock 31 Dividends 32 Sales Revenue 33 Advertising expense 34 Wages expense 35 Office expense 36 Amortization expense 37 Depreciation expense 38 Utilities expense 39 Insurance expense 40 Income taxes expense 41 75,240 235,000 63,800 36,000 800,000 61,771 86,000 13,000 49,000 41,000 1,192,945 8,400 67,600 21,700 24,000 31,000 73,800 63,800 $ 2,587 756 $2,587756 42 Font Alignment Number Clipboard H91 fx 2 3 B C D F . 1 On March 1, ABC purchased a one-year liability insucance policy for $98,400. Upon purchase, the following journal entry was made: D: Prepaid insurance 98,400 Cr Cash 98,400 The expired portion of insurance must be recorded as of 12/31/14. Notice that the expired portion from March through November has been recorded already. Make sure that the Prepaid Insurance balance after the adjusting entry is correct. 4 5 6 7 8 9 10 11 12 13 2 Depreciation expense must be recorded for the month of December The building was purchased with cash on February 1, 2014 for $150,000 with a remaining useful life of 30 years and a salvage value of $6,000 The method of depreciation for the building is straight-line. The equipment was purchased with cash on February 1, 2014 for $60,000 with a remaining useful life of 5 years and a salvage value of $3,000 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 14 15 16 17 18 19 20 21 22 23 24 3 On December 1, XYZ Co. agreed to rent space in ABC's building for $12,000 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: Dc Cash 36,000 Cr Unearned rent revenue 36,000 The uneared reveme account must be adjusted to reflect the amount eamed as of 12/31/14. 25 26 27 28 4 Per timecards, from the last payroll date through December 31, 2014, ABC's emplovees have worked a total of 250 hours. Including payroll taxes, ABC's wage expense averages about $51 per hour. The next payroll date is January 5, 2015 The Liability for wages payable must be recorded as of 12/31/14 A D E F 4 Per timecards, from the last payroll date through December 31, 2014, ABC's employees have worked a total of 250 hours. Including payroll taxes, ABC's wage expense averages about $51 per hour. The next payroll date is January 5, 2015. The liability for wages payable must be recorded as of 12/31/14 1 2 3 4 5 On November 30, 2014, ABC borrowed $235,000 from American National Bank by issuing an interest-bearing note payable. This loan is to be repaid in three months (on February 28, 2015), along with interest computed at an annual rate of 6%. The entry made on November 30 to record the borrowing was: (for Statement of Cash Flow purposes, consider a financing item) Dr Cash 235,000 Cr Notes payable 235,000 On February 28, 2015 ABC must pay the bank the amount borrowed plus interest. Assume the beginning balance for Notes Payable is correct. Interest through 12/31/14 must be accrued on the $235,000 note. 5 36 37 38 39 An 6 ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete physical inventory at year-end. A physical count was taken on December 31, 2014, and the inventory on-hand at that time totaled $75,000, which reflects historical cost. Record the 2014 Cost of Goods Sold and the 12/31/14 Inventory adjustment. Additionally, ABC adheres 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 is $110,000 and estimated costs of completion and shipping is 15% 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 Loss Method for accountin for adjustments of inventory to market value. 7 It would be unusual for a company to have an asset impairment in Year 1, but for the sake of this example, ABC realized that their intangible asset might be impaired on December 31, 2014. Record the impairment if any. The expected future net cash flows for this intangible asset totals $30,000, and the fair value of the asset is $27,500. Clipboard Font Alignment Number H91 A B E G H 58 59 60 61 8 On 7/1/14, ABC purchased 7,000 shares of its own stock from existing stockholders as treasuy stock. The cost of the treasury stock was $7 per share, or $49,000 in total. The effects of this transaction are already shown in the unadjusted trial balance. On 12/31/14, ABC reissued these 7,000 shares of treasuey stock at $10 per share. Record the journal entry requured for the reissuance of the treasuy stock. 62 63 64 9 On 12/31/14, ABC issued 5,000 shares of $3 par valse common stock at the closing market price of $7 per share. Prepare ABC's journal entry to reflect the issuance of the stock on 12/31/14. 65 66 67 68 69 10 On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting in an effective field of 10%. The bonds are dated 7/1/14, and mature 7/1/19. Interest is payable semiannually on July 1 and Jamuary 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 12/31/14 Hint Develop an abbreviated amortization schedule to accurately determine the interest expense, 70 71 72 73 74 75 76 11 The following information is available for ABC Corporation at 12/31/14 regarding its investments in stocks of other companies. 77 78 Securities Cost Fair Value 2,200 shares of Toyota Corporation Common Stock $ 100,000 $ 125,000 $ 1,100 shares of GM Corporation Common Stock 67,000 $ 34,000 $ 167,000 $ 159,000 Prepare the adjusting entry (if any) for 2014, assuming the securities are classified as trading. 79 80 A B D E F G H K L M 12 On 1/1/14, ABC Corporation purchased, as a held-to-matusty investment, $200,000 of the 8%, 5-year bonds of Intuit Corporation for $177,824, which provides an 11% tetum. Prepare ABC's 12/31/14 journal entry to reflect the receipt of annual interest and discount amortization Assume the bond investment pays interest annually on 12/31 each year and that effective interest amortization is used. Note: Notice that a discount account is not used for this investment. Therefore, for purposes of this adjusting entry, amortize the discount directly to the investment account 0 1 13 ABC Corporation prepares an agung schedule on 12/31/14 that estimates total uncollectible accounts at $25,000. Assuming that the allowance method is used, prepare the entry to record bad debt expense. 2 13 14 35 96 37 98 99 100 101 14 On 1/1/14, ABC Corporation signed a 5-year noncancelable lease for a delivery vehicle. The terms of the lease called for ABC to Corporation to make annual payments of $10,503 at the beginning of each year, starting January 1, 2014. The delivery vehicle has an estimated useful life of 6 years and a $7,000 unguaranteed residual value. The delivery vehicle reverts back to the lessor at the end of the lease term ABC Corporation amortizes the delivery vehicle. ABC Corporation's incremental borrowing rate is 10%, and the Lessor's implicit rate is unknown. No entries have yet been made concerning this lease arrangement. After determining the type of lease arrangement financing or operating), prepare the necessary multiple-part journal enter for 2014 for ABC Corporation. (Hints: You will need to compute the present value of the minimam lease payments and 4 separate sub-entries for this lease transaction. Also, for Statement of Cash Flow purposes, the principal portion of lease payments are correctly categorized as a financing activity.) Format Painte! Merge Center 7 Mon - Comma Formatting Table Clipboard Font Alignment Number 85 B D K N F G H M 14 On 1/1/14, ABC Corporation signed a 5-year noncancelable lease for a delivery velicleThe terms of the lease called for ABC to Corporation to make annual payments of $10,503 at the beginning of each year, starting January 1, 2014. The delivery vehicle has an estimated useful Efe of 6 years and a $7,000 unguaranteed residual value. The delivery vehicle reverts back to the lessor at the end of the lease term. ABC Corporation amortizer the delivery vehicle. ABC Corporation's incremental borrowing rate is 10%, and the Lensor's implicit rate is unknown. No entries have yet been made concerning this lease arrangement. After determining the type of lease atrangement financing or operating prepare the necessary multiple-part joumal entry for 2014 for ABC Corporation. (Hunts: You will need to compute the present value of the minimum lease payments and 4 separate sub-entries for this lease transaction. Also, for Statement of Cash Flow purposes, the principal portion of lease payments are correctly categorized as a financing activity) 1 3 14 15 06 07 15 ABC Corporation provides a defined benefit pension plan for its employees. A combination adjusting entry should be made to correctly account for this type of pension plan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contabution to the pension plan in 2014. Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting enter: 09 10 Pension asset/Liability (January 1) $0 Actual return on plan assets $40,000 Expected return on plan assets $20,000 Contributions (funding) in 2014 $37,000 Fair value of plan asets (December 31) $75,000 Settlement rate 10% Projected benefit obligation January 1) $0 Service cost $60,000 Benefits paid in 2014 $0 *For purposes of financial statement presentation, consader Pension Expense as an operating item and any cemiltag Peation Asset/Liability as long-term in nature 12 13 14 15 16 Settlementate 10% Projected benefit obligation (Jamars 1) $0 Service cost $60,000 Benefits pada 2014 $0 For purposes of financial statement presentation, consider Pension Expense as an operating item and any resulting Pension Asset/Liability as long-term in nate. c The 125 118 16 O. December 31, 2014, ABC Corporation asued 1,000 shares of restricted stock to its Chief Financial Officer ABC stock had a fair vabe (doning market poce) of $10 per share on December 31, 2014. Additional information is as follows: 2. The service period related to the restricted stock is 2 years. 121 b. Vesting occues if the CFO stays with the company for a two-year period par sale of the common stock is $3 per share. 123 Make the appropriate accounting entry as of the grant date, 12/31/14. Note: use the alternative method as described in your textbook for deferred compensation 124 De thier step after preparing the Income Statemente apt for the Incar taxas low: You need to calculate Income Before Income Tax in order to sakalte total Income Tax Expense) 126 17 Corporate taxes are due in font 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 return's March 15, 2015 doe date. 129 ABC's income tax rate is 40%. The entire year's income tax expense was estimated at the beginning of 2014 to be $69,600, 130 30 January though November income tax expense recognized amounts to $63,800 (11/12 months). Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents 132 tas accred 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, record December's income tax expense so that the entire year's total tax expense is correct. 131 139 184 135 126 137 138 139 143 145 146 147 148 8 s Cash flows from operating activities Net income 7 Add: Depreciation expense Add: Amortization expense 9 Add: Bad debt expense 10 Add: Pension Underfunding 11 Deduct: Amortization of bond premium (Issued bonds) 12 Add: Unrealized holding G/L 13 Add: loss on impairment 14 Deduct: Amortization of HTM discount Bond investment) 15 CHANGES IN WORKING CAPITAL 16 ACCOUNTS SHOULD BE LISTED HERE 17 IN THE S ROWS HILITED IN YELLOW 18 AFTER YOU HAVE COMPLETED THIS 19 SECTION, REMOVE THE YELLOW 20 HILITING AND ITALICS FONT 21 22 23 Cash flow provided by operating activities 24 25 Cash flows from investing activities 26 Purchase of property, plant, & equipment 27 Investment in short term investments 28 Purchase of Patent 29 Investment in L-T bonds 30 Cash flow used by investing activities 31 32 Cash flows from financing activities 33 Issuance of bonds 34 Leased delivery vehicle payment principal only 35 Proceeds from bank note 36 Payment of dividends 37 Issuance of common stock for cash 38 PIC-Treasury stock 39 Cash flow provided by financing activities 40 41 Net change in cash 42 Beginning cash balance 1/1/14 43 Ending cash balance 12/31/14 1. Make all 16 adjustments on the "Adjusting Journal Entries" tab. Remember to include a descnption under each journal entry. 2. Post the adjustments to the general ledger on the "12-31-14 T-Accounts" tab. You may have to add T-Accounts for new accounts. Link your T-Account entries to your Joumal Entries. PLEASE NOTE THAT THE "BB" (BEGINNING BALANCES) FOR THE T-ACCOUNTS REPRESENT THE UNADJUSTED BALANCES AS OF 12/31/14 3. Once the 12/31/14 T-Accounts are complete, prepare the Adjusted Trial Balance. There may be some accounts with zero dollars, and you T-Accounts have to insert lines for new accounts (some blank T-Accounts have already been provided for you). Link the Adjusted Trial Balance to your may 4. Use the Adjusted Trial Balance numbers to complete the Income Statement, Statement of Retaimed Earnings, Balance Sheet, and Statement of Cash Flows. For purposes of the Income Statement, prepare using the multiple step format and assume that Rent Rereme, any Unrealized Holding Gains/Losses, Interest Expense, Interest Revenue, and any other Gains/Losses are NOT part of the major central ongoing operations of the company. Link your financial statements to your Adjusted Trial Balance. Use the Income Statement and Balance Sheet to finish the partially completed Statement of Cash Flows. Since this is ABC's first year of operations, several line items on the Statement of Cash Flows have already been supplied to you IE necessary, review financial statement preparation in Chapters 4 and 5 of your textbook for a quick refreshet. Plan on using your knowledge gained in completing Chapter 21 to help with the preparation of the Statement of Cash Flows. Additionally, since this is ABC Corporation's first year of operations, the adjusted trial balance for all current assets and liabilities represents the change during the year for Statement of Cash Flows analysis purposes. 5. When the Financial Statements are complete, make the closing entries on the "Closing Entries" tab beung mindful of the two closing entries you've learned. 6. When closing entries have been made, post the entries to the general ledger on the "Post-Close T-Accounts" tab. Make sure you adjusting journal entries are also posted on your Post-Close T-Accounts. They will not automatically flow from tab-to-tab. Suggestion: As an alternative, after you've finished posting your adjusting journal entries to the accounts in the "12-31-14 T Accounts" tab, make a duplicate of this worksheet to use for posting your closing entries and then just relabel the tab as "Post-Close T-Accounts." Just be sure to delete the original "Post-Close T-Accounts" tab already in the workbook before you do this since you can't have two worksheets with the same name. 7. The final step is the Post-Closing Trial Balance, which will use the ending balances from the 12/31/14 T-Accounts after posting your closing entries. 8. Double-check your work. Here are a few things to check foc -Adjusted Trial Balance: Make sure debit cohimn and credit cohimn total to the same figure at the bottom -Net income from the income statement will flow through to the Statement of Retained Eamings -Ending Retained Eamings from the Statement of Retamed Earnings will flow through to the Balance Sheet -Ending Cash balance from the Balance Sheet should match your ending Cash balance on the Statement of Cash Flows. -The Post-Closing Trial Balance should not have any revenue, expense, gain, loss, or other temporary accounts. -Check figure 1: Income from operations = $594,336 -Check figure 2. Total Current Assets = $1,464,429. -Check figure 3: Total Liabilities & Stockholders' Equity = $1,983,951. -Check figure 4: Cash flow provided by operating activities = $515,785. -Check figure 5: Post close Trial Balance debit and credit colunas total $2,053,351. -Check figure 6: Cash flow provided by financing activities $1,200,268. -Remember: Neatness matters in Financial Statements. Print or Paint Preview before submitting to make sure your statements are neat Otherwise, management may send back to you for revision -Include your work at the bottom of each tab as needed. -Ask questions prior to the dayight before the due date. The due date is clearly indicated on the course schedule, Utilize formulas and worksheet linkings in your financial statements to improve accuracy and save time in completing the assignment - Please take advantage of Excel by using formulas to calculate groups of numbers de "Total Liabilities and Stockholders' Equity"). + unnarted by 2 ABC Corporation Unadjusted Trial Balance December 31, 2014 8 Credit Debit $ 975,232 167,000 190,300 $ 350,000 24,600 177,824 75,000 150,000 4,000 60,000 20,000 37,500 5 6 Cash 7 Short term investments 8 Fair value adjustment (Trading) 9 Accounts receivable 10 Allowance for doubtful accounts 11 Inventory 12 Purchases 13 Prepaid insurance 14 LT (Debt) investments (HTM) 15 Land 16 Building 17 Accumulated depreciation building 18 Equipment 19 Accumulated depreciation equipment 20 Patent 21 Accounts payable 22 Notes payable 23 Income taxes payable 24 Unearned rent revenue 25 Bonds Payable 26 Premium on Bonds Payable 27 Common stock 28 PIC In Excess of Par-Common Stock 29 Retained earnings 30 Treasury stock 31 Dividends 32 Sales Revenue 33 Advertising expense 34 Wages expense 35 Office expense 36 Amortization expense 37 Depreciation expense 38 Utilities expense 39 Insurance expense 40 Income taxes expense 41 75,240 235,000 63,800 36,000 800,000 61,771 86,000 13,000 49,000 41,000 1,192,945 8,400 67,600 21,700 24,000 31,000 73,800 63,800 $ 2,587 756 $2,587756 42 Font Alignment Number Clipboard H91 fx 2 3 B C D F . 1 On March 1, ABC purchased a one-year liability insucance policy for $98,400. Upon purchase, the following journal entry was made: D: Prepaid insurance 98,400 Cr Cash 98,400 The expired portion of insurance must be recorded as of 12/31/14. Notice that the expired portion from March through November has been recorded already. Make sure that the Prepaid Insurance balance after the adjusting entry is correct. 4 5 6 7 8 9 10 11 12 13 2 Depreciation expense must be recorded for the month of December The building was purchased with cash on February 1, 2014 for $150,000 with a remaining useful life of 30 years and a salvage value of $6,000 The method of depreciation for the building is straight-line. The equipment was purchased with cash on February 1, 2014 for $60,000 with a remaining useful life of 5 years and a salvage value of $3,000 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 14 15 16 17 18 19 20 21 22 23 24 3 On December 1, XYZ Co. agreed to rent space in ABC's building for $12,000 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: Dc Cash 36,000 Cr Unearned rent revenue 36,000 The uneared reveme account must be adjusted to reflect the amount eamed as of 12/31/14. 25 26 27 28 4 Per timecards, from the last payroll date through December 31, 2014, ABC's emplovees have worked a total of 250 hours. Including payroll taxes, ABC's wage expense averages about $51 per hour. The next payroll date is January 5, 2015 The Liability for wages payable must be recorded as of 12/31/14 A D E F 4 Per timecards, from the last payroll date through December 31, 2014, ABC's employees have worked a total of 250 hours. Including payroll taxes, ABC's wage expense averages about $51 per hour. The next payroll date is January 5, 2015. The liability for wages payable must be recorded as of 12/31/14 1 2 3 4 5 On November 30, 2014, ABC borrowed $235,000 from American National Bank by issuing an interest-bearing note payable. This loan is to be repaid in three months (on February 28, 2015), along with interest computed at an annual rate of 6%. The entry made on November 30 to record the borrowing was: (for Statement of Cash Flow purposes, consider a financing item) Dr Cash 235,000 Cr Notes payable 235,000 On February 28, 2015 ABC must pay the bank the amount borrowed plus interest. Assume the beginning balance for Notes Payable is correct. Interest through 12/31/14 must be accrued on the $235,000 note. 5 36 37 38 39 An 6 ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete physical inventory at year-end. A physical count was taken on December 31, 2014, and the inventory on-hand at that time totaled $75,000, which reflects historical cost. Record the 2014 Cost of Goods Sold and the 12/31/14 Inventory adjustment. Additionally, ABC adheres 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 is $110,000 and estimated costs of completion and shipping is 15% 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 Loss Method for accountin for adjustments of inventory to market value. 7 It would be unusual for a company to have an asset impairment in Year 1, but for the sake of this example, ABC realized that their intangible asset might be impaired on December 31, 2014. Record the impairment if any. The expected future net cash flows for this intangible asset totals $30,000, and the fair value of the asset is $27,500. Clipboard Font Alignment Number H91 A B E G H 58 59 60 61 8 On 7/1/14, ABC purchased 7,000 shares of its own stock from existing stockholders as treasuy stock. The cost of the treasury stock was $7 per share, or $49,000 in total. The effects of this transaction are already shown in the unadjusted trial balance. On 12/31/14, ABC reissued these 7,000 shares of treasuey stock at $10 per share. Record the journal entry requured for the reissuance of the treasuy stock. 62 63 64 9 On 12/31/14, ABC issued 5,000 shares of $3 par valse common stock at the closing market price of $7 per share. Prepare ABC's journal entry to reflect the issuance of the stock on 12/31/14. 65 66 67 68 69 10 On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting in an effective field of 10%. The bonds are dated 7/1/14, and mature 7/1/19. Interest is payable semiannually on July 1 and Jamuary 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 12/31/14 Hint Develop an abbreviated amortization schedule to accurately determine the interest expense, 70 71 72 73 74 75 76 11 The following information is available for ABC Corporation at 12/31/14 regarding its investments in stocks of other companies. 77 78 Securities Cost Fair Value 2,200 shares of Toyota Corporation Common Stock $ 100,000 $ 125,000 $ 1,100 shares of GM Corporation Common Stock 67,000 $ 34,000 $ 167,000 $ 159,000 Prepare the adjusting entry (if any) for 2014, assuming the securities are classified as trading. 79 80 A B D E F G H K L M 12 On 1/1/14, ABC Corporation purchased, as a held-to-matusty investment, $200,000 of the 8%, 5-year bonds of Intuit Corporation for $177,824, which provides an 11% tetum. Prepare ABC's 12/31/14 journal entry to reflect the receipt of annual interest and discount amortization Assume the bond investment pays interest annually on 12/31 each year and that effective interest amortization is used. Note: Notice that a discount account is not used for this investment. Therefore, for purposes of this adjusting entry, amortize the discount directly to the investment account 0 1 13 ABC Corporation prepares an agung schedule on 12/31/14 that estimates total uncollectible accounts at $25,000. Assuming that the allowance method is used, prepare the entry to record bad debt expense. 2 13 14 35 96 37 98 99 100 101 14 On 1/1/14, ABC Corporation signed a 5-year noncancelable lease for a delivery vehicle. The terms of the lease called for ABC to Corporation to make annual payments of $10,503 at the beginning of each year, starting January 1, 2014. The delivery vehicle has an estimated useful life of 6 years and a $7,000 unguaranteed residual value. The delivery vehicle reverts back to the lessor at the end of the lease term ABC Corporation amortizes the delivery vehicle. ABC Corporation's incremental borrowing rate is 10%, and the Lessor's implicit rate is unknown. No entries have yet been made concerning this lease arrangement. After determining the type of lease arrangement financing or operating), prepare the necessary multiple-part journal enter for 2014 for ABC Corporation. (Hints: You will need to compute the present value of the minimam lease payments and 4 separate sub-entries for this lease transaction. Also, for Statement of Cash Flow purposes, the principal portion of lease payments are correctly categorized as a financing activity.) Format Painte! Merge Center 7 Mon - Comma Formatting Table Clipboard Font Alignment Number 85 B D K N F G H M 14 On 1/1/14, ABC Corporation signed a 5-year noncancelable lease for a delivery velicleThe terms of the lease called for ABC to Corporation to make annual payments of $10,503 at the beginning of each year, starting January 1, 2014. The delivery vehicle has an estimated useful Efe of 6 years and a $7,000 unguaranteed residual value. The delivery vehicle reverts back to the lessor at the end of the lease term. ABC Corporation amortizer the delivery vehicle. ABC Corporation's incremental borrowing rate is 10%, and the Lensor's implicit rate is unknown. No entries have yet been made concerning this lease arrangement. After determining the type of lease atrangement financing or operating prepare the necessary multiple-part joumal entry for 2014 for ABC Corporation. (Hunts: You will need to compute the present value of the minimum lease payments and 4 separate sub-entries for this lease transaction. Also, for Statement of Cash Flow purposes, the principal portion of lease payments are correctly categorized as a financing activity) 1 3 14 15 06 07 15 ABC Corporation provides a defined benefit pension plan for its employees. A combination adjusting entry should be made to correctly account for this type of pension plan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contabution to the pension plan in 2014. Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting enter: 09 10 Pension asset/Liability (January 1) $0 Actual return on plan assets $40,000 Expected return on plan assets $20,000 Contributions (funding) in 2014 $37,000 Fair value of plan asets (December 31) $75,000 Settlement rate 10% Projected benefit obligation January 1) $0 Service cost $60,000 Benefits paid in 2014 $0 *For purposes of financial statement presentation, consader Pension Expense as an operating item and any cemiltag Peation Asset/Liability as long-term in nature 12 13 14 15 16 Settlementate 10% Projected benefit obligation (Jamars 1) $0 Service cost $60,000 Benefits pada 2014 $0 For purposes of financial statement presentation, consider Pension Expense as an operating item and any resulting Pension Asset/Liability as long-term in nate. c The 125 118 16 O. December 31, 2014, ABC Corporation asued 1,000 shares of restricted stock to its Chief Financial Officer ABC stock had a fair vabe (doning market poce) of $10 per share on December 31, 2014. Additional information is as follows: 2. The service period related to the restricted stock is 2 years. 121 b. Vesting occues if the CFO stays with the company for a two-year period par sale of the common stock is $3 per share. 123 Make the appropriate accounting entry as of the grant date, 12/31/14. Note: use the alternative method as described in your textbook for deferred compensation 124 De thier step after preparing the Income Statemente apt for the Incar taxas low: You need to calculate Income Before Income Tax in order to sakalte total Income Tax Expense) 126 17 Corporate taxes are due in font 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 return's March 15, 2015 doe date. 129 ABC's income tax rate is 40%. The entire year's income tax expense was estimated at the beginning of 2014 to be $69,600, 130 30 January though November income tax expense recognized amounts to $63,800 (11/12 months). Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents 132 tas accred 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, record December's income tax expense so that the entire year's total tax expense is correct. 131 139 184 135 126 137 138 139 143 145 146 147 148 8 s Cash flows from operating activities Net income 7 Add: Depreciation expense Add: Amortization expense 9 Add: Bad debt expense 10 Add: Pension Underfunding 11 Deduct: Amortization of bond premium (Issued bonds) 12 Add: Unrealized holding G/L 13 Add: loss on impairment 14 Deduct: Amortization of HTM discount Bond investment) 15 CHANGES IN WORKING CAPITAL 16 ACCOUNTS SHOULD BE LISTED HERE 17 IN THE S ROWS HILITED IN YELLOW 18 AFTER YOU HAVE COMPLETED THIS 19 SECTION, REMOVE THE YELLOW 20 HILITING AND ITALICS FONT 21 22 23 Cash flow provided by operating activities 24 25 Cash flows from investing activities 26 Purchase of property, plant, & equipment 27 Investment in short term investments 28 Purchase of Patent 29 Investment in L-T bonds 30 Cash flow used by investing activities 31 32 Cash flows from financing activities 33 Issuance of bonds 34 Leased delivery vehicle payment principal only 35 Proceeds from bank note 36 Payment of dividends 37 Issuance of common stock for cash 38 PIC-Treasury stock 39 Cash flow provided by financing activities 40 41 Net change in cash 42 Beginning cash balance 1/1/14 43 Ending cash balance 12/31/14