Pane in the Glass Company (Pane) is a glass manufacturer based out of California. They produce a number of glass products including car windows and windshields, windows for houses, stained glass windows, and a number of other specialty products. The following information pertains to the fiscal year ending December 31, 2018:
Instructions Pane in the Glass Company (Pane) is a glass manufacturer based out of California. They produce a number of glass products including car windows and windshields, windows for houses, stained glass windows, and a number of other specialty products. The following information pertains to the fiscal year ending December 31, 2018: At the beginning of the 2018, the company's 1/1/2018 trial balance was as follows: Debit S $ 1,240,000 S 72,422,000 $ Number Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 200 Accounts Payable 300 Common Stock 310 Additional Paid In Capital 340 Retained Earnngs Credit 450,000,000 33,000,000 $ 12,345,000 $ 105,000,000 1,000,000 2,567,000 80,000 S $ $ $ S 603,992,000 $ S 50,000 70,050,000 120,000,000 267,000,000 73,230,000 603,992,000 $ Other assumptions for the year a. Depreciation and amortization are computed using the straight line method. b. Pane uses a perpetual system to track their inventory. c. Pane uses the percentage of receivables method to estimate their bad debt expense d. Pane has a year end of December 31, 2018 As the accountant for Pane in the Glass company, you have been asked to do the following: 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 3. Prepare the adjusting journal entries in the "Journal Entries" tab 4. Post the adjusting journal entries to the appropriate t-accounts in the "T-Accounts" tab 5. Prepare the income statement using the "Adjusted Trial Balance" tab 6. Prepare your closing journal entries in the "Journal Entries- Closing" tab 7. Post the closing entries into the appropriate accounts on the "T-Accounts-Closing" tab 8. Use the Post Closing trial balance to prepare the Balance Sheet Chart of Accounts Account Number Account Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 130 Notes Receivable 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 190 Interest Receivable 195 Prepaid Insurance Expense 200 Accounts Payable 205 Unearned Rent Revenue 210 Salaries Payable 230 Dividends Payable 300 Common Stock 310 Additional Paid in Capital 340 Retained Earnings 400 Sales Revenue 405 Rent Revenue 410 Interest Revenue 415 Loss on Sale of Equipment 500 Cost of Goods Sold 510 Depreciation Expense 518 Amortization Expense 520 Bad Debt Expense 540 Salaries Expense 560 Insurance Expense 570 Interest Expense 599 Income Tax Expense 600 Dividends Instructions: 1. Prepare the journal entries for transactions A-T below and record them on the "Journal Entries" tab. 2. Once you have created the journal entries, post them to the "T-Accounts" tab. 3. Prepare journal entries for adjusting journal entries 1-6. 4. Post the adjusting entries to the correct T-Accounts in the "T-Accounts" tab. Chapter Transaction No. Transaction A January 1: Pane purchases inventory on account to make stained glass windows. The contract has terms of 2/10, n/30. The goods were purchased under the shipping terms of FOB destination. 6 Inventory Purchased Shipping Cost $9,750,000 $5,050 B January 3: Pane receives rent for the 2 years from a tenant who rents one of their empty warehouses. Total Rent Paid $63,000 January 5: Pane pays for the inventory purchased in transaction A. 6 D February 12: Pane purchased a one year insurance policy on account with coverage beginning on March 1. 4 Insurance Policy $20,000 E 6 March 1: Pane purchases additional inventory on account to make stained glass windows. The goods were purchased under the shipping terms of FOB shipping point. Inventory Purchased Shipping Cost 512,325,000 $9,000 F 6 May 31: Pane sells window panes to customers. Some customers paid in cash, others purchased their goods on account. Pane uses the perpetual method to track their inventory. Cash Sales Sales on account Cost of Goods Sold 5,367,000 40,054,000 13,250,000 G June 1: Pane pays for the inventory purchased in transaction E. 6 H July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and 9 H 9 July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and other marine vehicles called "T-Panes". Cost of Patent Remaining legal life of patent (in years) $90,000 9 July 28: Pane issued shares of common stock 11 Number of shares Par Value Price Per Share 5,230 $2 $124 August 6: Pane purchases land with cash. At the time of purchase, Pane also had to pay for survey fees related to the land. 9 Cost of Land Survey Fees $124,000 5600 8 November 1: Pane lends one of their employees $200,000 in exchange for a note receivable. The employee is required to pay Pane back for the principal and interest on September 1, 2019. $200,000 Principal Interest Rate Maturity Date 9% 9/1/2019 L November 15: Pane sales additional goods to customers on account. 7,8 Sales on account Cost of Goods Sold $20,000,000 $6,350,000 L November 15: Pane sales additional goods to customers on account. 7,8 Sales on account Cost of Goods Sold $20,000,000 $6,350,000 M M December 1: Pane puchases a piece of machinery with cash that will assist in making "T-Panes" 8 Cost of Machinery Installation Fees Transportation Costs $890,000 $4,250 $1,030 N December 10: Pane collects a portion of their accounts receivable 8 Amount collected $43,758,000 o December 18: Pane sold a piece of their equipment for $10,000 in exchange for cash. 9 Sale Price Equipment Historical Cost Accumulated Depreciation for this equipment $10,000 $55,000 $38,000 P December 31: Pane paid the IRS their 2018 income tax. 4 Income Tax Paid $2,000,000 Q The payroll information for the year is shown below. All salaries and wages were previously paid for in cash, however this activity has not been recorded on Pane's books. 9 Number of Employees Employee payment (daily) Days worked in the current year 200 $175 250 S On December 31, Pane was notified that their one of their customers filed bankruptcy and would not be able to pay off their $3,000 i T On December 31, Pane paid cash dividends of $8,000 to its shareholders. 11 STOP: Post each of the preceding journal entries to the appropriate T-Accounts before preparing the adjusting journal entries. Year-End Adjusting Entries: 1 Recognize the revenue earned from the rent paid in transaction A. 4 2 Recognize the expiration of the prepaid insurance policy, purchased in transaction D. 4 3 Recognize the interest earned on the note receivable issued in transaction K 4,8 4 Record the bad debt expense for the year, assuming uses 3% of accounts receivable to estimate their uncollectible accounts. 8 5 Depreciation Expense for the year is 2,556,000 9 6 Amortization Expense for the year is 3,000 9 Post each of the adjusting journal entries to the appropriate T-Accounts- DO NOT prepare closing journal entries yet Instructions Pane in the Glass Company (Pane) is a glass manufacturer based out of California. They produce a number of glass products including car windows and windshields, windows for houses, stained glass windows, and a number of other specialty products. The following information pertains to the fiscal year ending December 31, 2018: At the beginning of the 2018, the company's 1/1/2018 trial balance was as follows: Debit S $ 1,240,000 S 72,422,000 $ Number Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 200 Accounts Payable 300 Common Stock 310 Additional Paid In Capital 340 Retained Earnngs Credit 450,000,000 33,000,000 $ 12,345,000 $ 105,000,000 1,000,000 2,567,000 80,000 S $ $ $ S 603,992,000 $ S 50,000 70,050,000 120,000,000 267,000,000 73,230,000 603,992,000 $ Other assumptions for the year a. Depreciation and amortization are computed using the straight line method. b. Pane uses a perpetual system to track their inventory. c. Pane uses the percentage of receivables method to estimate their bad debt expense d. Pane has a year end of December 31, 2018 As the accountant for Pane in the Glass company, you have been asked to do the following: 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 3. Prepare the adjusting journal entries in the "Journal Entries" tab 4. Post the adjusting journal entries to the appropriate t-accounts in the "T-Accounts" tab 5. Prepare the income statement using the "Adjusted Trial Balance" tab 6. Prepare your closing journal entries in the "Journal Entries- Closing" tab 7. Post the closing entries into the appropriate accounts on the "T-Accounts-Closing" tab 8. Use the Post Closing trial balance to prepare the Balance Sheet Chart of Accounts Account Number Account Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 130 Notes Receivable 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 190 Interest Receivable 195 Prepaid Insurance Expense 200 Accounts Payable 205 Unearned Rent Revenue 210 Salaries Payable 230 Dividends Payable 300 Common Stock 310 Additional Paid in Capital 340 Retained Earnings 400 Sales Revenue 405 Rent Revenue 410 Interest Revenue 415 Loss on Sale of Equipment 500 Cost of Goods Sold 510 Depreciation Expense 518 Amortization Expense 520 Bad Debt Expense 540 Salaries Expense 560 Insurance Expense 570 Interest Expense 599 Income Tax Expense 600 Dividends Instructions: 1. Prepare the journal entries for transactions A-T below and record them on the "Journal Entries" tab. 2. Once you have created the journal entries, post them to the "T-Accounts" tab. 3. Prepare journal entries for adjusting journal entries 1-6. 4. Post the adjusting entries to the correct T-Accounts in the "T-Accounts" tab. Chapter Transaction No. Transaction A January 1: Pane purchases inventory on account to make stained glass windows. The contract has terms of 2/10, n/30. The goods were purchased under the shipping terms of FOB destination. 6 Inventory Purchased Shipping Cost $9,750,000 $5,050 B January 3: Pane receives rent for the 2 years from a tenant who rents one of their empty warehouses. Total Rent Paid $63,000 January 5: Pane pays for the inventory purchased in transaction A. 6 D February 12: Pane purchased a one year insurance policy on account with coverage beginning on March 1. 4 Insurance Policy $20,000 E 6 March 1: Pane purchases additional inventory on account to make stained glass windows. The goods were purchased under the shipping terms of FOB shipping point. Inventory Purchased Shipping Cost 512,325,000 $9,000 F 6 May 31: Pane sells window panes to customers. Some customers paid in cash, others purchased their goods on account. Pane uses the perpetual method to track their inventory. Cash Sales Sales on account Cost of Goods Sold 5,367,000 40,054,000 13,250,000 G June 1: Pane pays for the inventory purchased in transaction E. 6 H July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and 9 H 9 July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and other marine vehicles called "T-Panes". Cost of Patent Remaining legal life of patent (in years) $90,000 9 July 28: Pane issued shares of common stock 11 Number of shares Par Value Price Per Share 5,230 $2 $124 August 6: Pane purchases land with cash. At the time of purchase, Pane also had to pay for survey fees related to the land. 9 Cost of Land Survey Fees $124,000 5600 8 November 1: Pane lends one of their employees $200,000 in exchange for a note receivable. The employee is required to pay Pane back for the principal and interest on September 1, 2019. $200,000 Principal Interest Rate Maturity Date 9% 9/1/2019 L November 15: Pane sales additional goods to customers on account. 7,8 Sales on account Cost of Goods Sold $20,000,000 $6,350,000 L November 15: Pane sales additional goods to customers on account. 7,8 Sales on account Cost of Goods Sold $20,000,000 $6,350,000 M M December 1: Pane puchases a piece of machinery with cash that will assist in making "T-Panes" 8 Cost of Machinery Installation Fees Transportation Costs $890,000 $4,250 $1,030 N December 10: Pane collects a portion of their accounts receivable 8 Amount collected $43,758,000 o December 18: Pane sold a piece of their equipment for $10,000 in exchange for cash. 9 Sale Price Equipment Historical Cost Accumulated Depreciation for this equipment $10,000 $55,000 $38,000 P December 31: Pane paid the IRS their 2018 income tax. 4 Income Tax Paid $2,000,000 Q The payroll information for the year is shown below. All salaries and wages were previously paid for in cash, however this activity has not been recorded on Pane's books. 9 Number of Employees Employee payment (daily) Days worked in the current year 200 $175 250 S On December 31, Pane was notified that their one of their customers filed bankruptcy and would not be able to pay off their $3,000 i T On December 31, Pane paid cash dividends of $8,000 to its shareholders. 11 STOP: Post each of the preceding journal entries to the appropriate T-Accounts before preparing the adjusting journal entries. Year-End Adjusting Entries: 1 Recognize the revenue earned from the rent paid in transaction A. 4 2 Recognize the expiration of the prepaid insurance policy, purchased in transaction D. 4 3 Recognize the interest earned on the note receivable issued in transaction K 4,8 4 Record the bad debt expense for the year, assuming uses 3% of accounts receivable to estimate their uncollectible accounts. 8 5 Depreciation Expense for the year is 2,556,000 9 6 Amortization Expense for the year is 3,000 9 Post each of the adjusting journal entries to the appropriate T-Accounts- DO NOT prepare closing journal entries yet
