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A G B D E F Before you begin, print out all the pages in this workbook. 2 3 Nm to 4 The unadjusted trial balance of Morgan Manufacturing Corp. at December 31, 2019 is shown on the "Trial Bal" page (see tab below). Refer also to the additional year-end information for the company shown on the "Adjusting Entries" page (see tab below). 5 6 7 8 9 Required: 1 Prepare year-end adjusting entries. General ledger account numbers are not necessary. Show your calculations below each adjusting entry. 10 11 12 2 Post the adjusting entries to the trial balance and prepare an adjusted trial balance. 13 14 15 3 Using the amounts from the adjusted trial balance, complete the financial statements for the year ended December 31, 2019. 16 17 18 19 20 21 22 23 24 25 Gen. Inl. Trial Bal. Fcl. Stmts. Copyright # Required Adjusting Entries Calculate Ready B C D E H 1 Morgan Manufacturing Corp. Adjusting Entries For the Year Ended December 31, 2019 2 3 4 5 The following additional information is available at the corporation's year-end. GST of 5% only applies when indicated. . 6 a. $5,000 8 9 A sale on account has not been recorded in the amount of: Applicable sales tax is: 10 11 12 b. Warranty expense for the year as a percentage of sales should be: 111 13 C. Unpaid gross salaries at year-end amount to: $10,000 14 15 16 17 Deductions from unpaid salaries are as follows: Employee Portion Employee income taxes 12% FICA Social Security taxes* 4% FICA Medicare taxes 2% Company health insurance 4% * these are not the actual required percentages Company Portion 0% 4% 2% 4% 18 19 20 d. The estimated year-end audit fees are: $90,000 e. Rent revenue consists of 13 equal monthly payments, including one paid in advance for January 2020. 21 22 23 24 25 26 27 28 29 30 31 32 33 f. A trade account payable was converted to a note payable during the year. No entry has been made to record this. The note payable is due at the end of 2020. . $40,000 3% The amount of the note payable is: The annual interest rate on the note payable is: The note payable was created at the end of this month: (January = 1; December = 12) 34 35 9 36 37 38 g. A lawsuit was commenced against the company in 2019. Damages claimed are: Lawyers for the company consider the likelihood of success to be: $30,000 Possible 39 40 41 8% 8 42 43 h. The interest rate on the mortgage is: Annual payments (blended principal and interest) are made on Dec. 31 and total: The 2019 payment has been recorded as Interest on Long-term Debt expense. $ 163,200 44 45 46 47 48 10% 49 50 i. The corporate income tax rate as a percentage of income before income taxes is: Corporate income tax installments during the year have been recorded as Income Tax expense in the records. Assume any 2019 loss before income taxes will result in the refund of income taxes at the current year's income tax rate. 51 52 53 54 Fcl. Stmts. Copyright + Required Adjusting Entries Gen. Jnl. Trial Bal. Ready Calculate A B C D E F G . 1 1 Morgan Manufacturing Corp. GENERAL JOURNAL 2 3 Dec. 4 2019 Adjusting entries Debit Credit 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Morgan Manufacturing Corp. GENERAL JOURNAL 42 43 Dec. 44 2019 Adjusting entries Debit Credit 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 3 & 8 8 8 9 8 8 63 64 65 66 Required Adjusting Entries Gen. Jnl. Trial Bal. . Fcl. St Ready Calculate A B C D E F G H 80 81 Morgan Manufacturing Corp. GENERAL JOURNAL 82 83 Dec. 84 2019 Adjusting entries Debit Credit 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 Morgan Manufacturing Corp. GENERAL JOURNAL 122 123 Dec. 124 2019 Adjusting entries Debit Credit 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 Adjusting Entries Gen. Jnl. Trial Bal. Fcl. Stm Required Ready Calculate A B KL M N Account C D Trial Balance At December 31, 2019 Unadjusted TB Adjustments Debit Credit Adj. # Debit Credit 74,000 760,000 210,000 Adjusted TB Debit Credit Adj. # 10,000,000 7,900,000 1,580,000 140,000 136,000 1,000 4 Cash in bank 5 Accounts receivable 6 Parts inventory 7 Corp. income tax receivable 8 Land 9 Building 10 Accumulated depin - bldg. 11 Trade accounts payable 12 Interest payable 13 Estimated current liabilities 14 15 Estimated warranty liability 16 Salaries payable 17 Employee inc. taxes pay. 18 FICA Soc. Sec. pay. 19 20 FICA Medicare payable 21 22 Co. health insurance payable 23 24 Corp. income tax payable 25 Sales tax payable 26 Note payable 27 Unearned rent revenue 28 Mortgage payable 29 Common stock, $1 per sh. 30 Retained earnings 31 Rent revenue 32 Sales, net 33 Cost of goods sold 34 Bad debts expense 35 Co. health ins. expense 36 Delivery expense 37 Dep'n. expense - building 38 FICA Soc. Sec. exp. 39 FICA Medicare exp. 40 Interest and bank charges 41 Interest on long-term debt 42 Lawsuit damages expense 43 Office supplies expense 44 Professional fees 45 Salaries expense 46 Warranty expense 47 Corp. income tax exp. 48 49 1,632,000 9,000,000 2,963,800 520,000 13,600,000 8,704,000 3,000 18.400 300,000 1,000 18,400 9,200 50,000 163,200 0 99,000 40,000 460,000 1,000 489,600 29,436,800 29,436,800 50 51 Gen. Jnl. Trial Bal. Fcl. Stmts. Copyright # Required Adjusting Entries Ready Calculate ABC D K L M 1 E F G E Morgan Manufacturing Corp. Income Statement For the Year Ended December 31, 2019 2 3 4 2019 2018 $12,756,800 9,017,344 3,739,456 532,510 282,000 99,000 247,520 1,161,030 5 Sales, net 6 Less: Cost of goods sold 7 Gross profit 8 Operating expenses 9 Selling 10 Salaries and benefits 11 Delivery 12 Office supplies 13 Warranty 14 Total selling 15 General and administrative 16 Bad debts 17 Depreciation 18 Lawsuit damages 19 Professional fees 20 Total general and adminstrative 21 Total operating expenses 22 Income from operations 23 Other income 24 Rent revenue 25 Income before interest and income taxes 26 Interest expense 27 Income before income taxes 28 Income taxes 29 Net income 2,790 940 143,000 146,730 1,307,760 2,431,696 499,200 2,930,896 177,243 2,753,653 275,365 $2,478,288 30 31 32 33 34 Morgan Manufacturing Corp. Statement of Changes in Equity For the Year Ended December 31, 2019 2019 Common Retained stock earnings Total equity $9,000,000 $2,963,800 $11,963,800 2018 35 36 37 Balance at Jan. 1 38 Net income 39 Balance at Dec. 31 Total equity $9,485,512 2,478,288 $11,963,800 $9,000,000 40 41 42 Morgan Manufacturing Corp. Balance Sheet At December 31, 2019 43 44 45 46 2019 47 Assets Current Cash Accounts receivable, net Corporate income taxes receivable Inventories 2018 $41,970 640,000 48 49 50 168,012 Required Adjusting Entries Gen. Jnl. Trial Bal. Fcl. Stmts. Co Ready Calculate E L M 2,478,288 $11,963,800 2018 $41,970 640,000 168,012 849,982 23,166,245 6,321,000 29,487,245 $30,337,227 A B C D E F G 38 Net income 39 Balance at Dec. 31 $9,000,000 40 41 Morgan Manufacturing Corp. 42 Balance Sheet 43 At December 31, 2019 44 45 Assets 46 Current 2019 47 Cash 48 Accounts receivable, net 49 Corporate income taxes receivable 50 Inventories 51 52 Non-current 53 Land 54 Building, net 55 56 57 58 Liabilities 59 Current 60 Trade accounts payable 61 Estimated current liabilities 62 Estimated warranty liabilities 63 Note payable 64 Interest payable 65 Salaries and benefits payable 66 Sales tax payable 67 Unearned rent 68 Current portion of mortgage payable 69 Corporate income taxes payable 70 71 Non-current 72 Mortgage payable 73 Less: Current portion 74 75 Total liabilities 76 77 Stockholders' Equity 78 Common stock 79 Retained earnings 80 81 Total liabilities and S/H equity 82 92 Required Adjusting Entries Gen. Jnl. Ready Calculate $108,150 84,600 126,900 0 297 10,340 1,540 41,600 180,000 553,427 18,000,000 (180,000) 17,820,000 18,373,427 9,000,000 2,963,800 11,963,800 $30,337,227 Trial Bal. Fel. Stmts. Copyright
