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B x; *ADA Paragraph Styles Dictate Sensitivity order. 1) January 1: The company issues 15,000 shares of common stock (no par value) for $220,000 to pay off the $220,000 bonds payable that was issued at face value. 2) January 1: The company purchases an 8-month insurance policy for $22,800 that starts also on January 1. Assume the policy is used evenly each month. 3) January 1: The company sells all of its truck account for $21,700. The original cost was $46,900 and had accumulated depreciation of $32,300. 4) January 8: The company has a customer pay their full account balance from a December 27, 20X1, inventory sale on account. Assume that the company uses the gross method for cash discounts and that the customer purchased 3 computers for $490 each on account under terms 2/20, N/50. 5) January 11: The company purchases a $34,800 indefinite-life franchise agreement. 6) January 22: The company fulfills a large, $165,000 purchase order of various inventory items that was paid in advance on November 1, 20X1. Assume a cost of goods sold of $78,000 on the 7) February 1: The company pays $5,700 for January's utilities expense. 8) February 1: The company purchases new equipment for $30,200. The company also pays $200 for shipping the equipment and $500 for equipment installation. The equipment is assumed to have a $1,000 salvage value and 6 years of useful life. 9) February 14: The company writes off a customer's entire $3,600 account balance that is deemed to be uncollectible 10) February 23: The company declares cash dividends of $34,000 for common shareholders Assume that the dividend payment will occur on April 23. 11) March 3: The company sells a customer 21 desktop computers at $515 each. Assume that the company uses a LIFO cost flow assumption, and that the company's inventory before the sale had 15 desktop computers that cost $340 each from September 2001 and 18 computers that cost $350 each from November 20X1. 12) March 29: The company loans their supplier money in exchange for the supplier signing a 4- year, 8%, $44,000 note with interest payments due at each year-end. Assume a 9% market rate for similar risk notes (hint: time value of money is needed). 13) March 30: The company internally develops a copyright by spending $3,700 in research costs, $800 in filing fees, and $6,500 in consulting services. 4 of 5 10 of 2160 words Focus 12 1215 w Calibri (Bo... 11 ' ' A X ADAM B u 7 Paragraph Styles Dictate Sensitivity 14) March 31: The company records the depreciation adjusting entry on the equipment purchased on February 1 (see Journal entry #8). Assume a sum-of-years'-digits method of depreciation. 15) March 31: The company records the adjusting entry to record the insurance used (see Journal entry #2). 16) March 31: The company checks and records any impairment on its franchise (see Journal entry #5). Assume that the franchise has a $34,800 book value, a $41,000 fair value, and $27,400 in expected future net cash flows. 17) March 31: The company pays its employees every Friday at the end of the weekly pay period (Monday through Friday). The company uses separate salaries and wages expense accounts for its sales and office staff. Assume that the sales staff is paid $7,400 each week, the office staff is paid $19,300 each week, and that March 31 falls on a Thursday, Ignore any taxes or withholdings addressed in Chapter 13. 18) March 31: The company estimates that 4% of its outstanding accounts receivable will be uncollectible (hint: use the ending accounts receivable ledger balance and your current allowance balance for your calculation). 19) March 31: The company uses an LCM method (individual-item level) to check for obsolete inventory and records any adjustment needed with the cost method. Assume that there are 41 tablets in ending inventory costing $250 each, having a replacement cost of $280 each, having an NRV of $230 each, and having an NRV minus normal profit of $200 each 20) March 31 (do only after the income statement is completed): The company records the income tax expense for the quarter (hint: this number can be found in the income statement). Assume that the income tax will not be paid for another month. It is recommended to enter amounts manually into this entry to avoid a "circular reference error." 21) March 31 (do only after the income statement and retained earnings statement are completed): The company records the quarter's closing entries (all 4 steps). It is recommended to enter amounts manually into the closing entry to avoid a "circular reference error." Hint #1: The "income summary" account is not used in any of the statements nor ledgers; it is only a temporary account used during closing. Hint #2: Gains and adjunct-revenue accounts should be closed when revenues are, while losses and contra-revenue accounts should be closed when expenses are 10 0 2160 words Focus W Other information: a) Top Flight Computers rounds all amounts to the nearest dollar b) The company uses a perpetual inventory system. c) The company uses separate accumulated depreciation accounts for each property, plant, and equipment account (e.g, accumulated depreciation-trucks). d) The company uses an "accumulated amortization" account for applicable intangible assets. e) Assume the income tax rate is 25%. f) Including the stock issued in Journal entry #1, there are 40,000 common shares outstanding for the entire first quarter of 20X2. Assume that there are no preferred shares of stock 20X2 Journal entries: 1) January 1: The company issues 15,000 shares of common stock (no par value) for $220,000 to pay off the $220,000 bonds payable that was issued at face value. 2) January 1: The company purchases an 8-month insurance policy for $22,800 that starts also on January 1. Assume the policy is used evenly each month. 31 January 1. The company sells all of its trucksacruntfor $21.700. The original cost was $46.900 10 of 2160 WAR