Financial Accounting Instructor: Turck Review of the Accounting Cycles The December 31, 2017, balance sheet for Karl's Caddy-Shack is as follows: Karl's Caddy Shack Balance Sheet As of December 31, 2017 LIABILITIES & STOCKHOLDER EQUITY Accounts Payable $3,300 Salaries Payable. Interest Payable on Note. Notes Payable Total Liabilities ASSETS: Cash. Accounts Receivable, Gross... ... $12,000 Less: Allowance for Doubtful Accts. (2.400) Accounts Receivable, Net Realizable Value.. Interest Receivable on Loan Supplies . Merchandise Inventory, carried at LIFO cost Loan Receivable. Buildings & Equipment, at Cost..... $50,000 Less: Accumulated Depreciation . (15,000) Buildings & Equipment, Net Book Value... Total Assets.. $ 5,000 600 250 20,000 24.150 9,600 100 1,550 29,500 5,000 Capital Stock Retained Earnings. Total Stkholder Equity . 61,600 40,000 21,600 35,000 S85,750 Total Liabilities & Stockholder Equity.. 85,750 The following transactions and other economic events took place during the year ending December 31, 2018. THE REPORTING PERIOD FOR THIS EXERCISE IS 2018: DATE (in the accounting records, use the following numbers in place of specific dates) 1) Made a $350 interest only payment related to the note payable. Payment includes interest accrued as of 12/31/17 (i.e., payment includes the balance in #230 as shown in General Ledger). Purchased merchandise on account at a cost ofS17,500 (assume a periodic inventory system)'. 2) (Periodic, so do not journalize to Merchandise Inventory until the end of 2018) (review periodic system, see examples on pages [58] and (60] of our study-guide) Sales Revenue: on open accounts $13,500; for cash, $8,000. Paid salaries totaling $2,400, including accrued salaries at previous year end. Cash collections on open accounts, $11,600. Purchased merchandise for cash at a cost of $13,000. Wrote off a customer's account of $300 as uncollectible. (hint: debit Allowance for Doubtful Acceants) Sales Revenue: on open accounts, $6,500; for cash, $15,000. Made payment on accounts payable of $17,640. Purchased supplies on open account in the amount of $2,300. 3) 4) 5) 6) 7) 8) 10) One customer returned $150 of merchandise. Customer had not yet paid for these goods. Paid salaries totaling $3,600. Purchased merchandise on account at a cost of $5,400. Sales Revenue: on open accounts, $12,000; for cash, $5,400. ) 12) 13) 14) Received an interest-only cash payment of $300 related to the Loan Receivable. The $300 includes the $100 accrued as of 12/31/2017. 15) 16) Cash collections on open accounts, $8,000. Declared a cash dividend of $5,000 to be paid in January 2019, Since Karl's Chart of Accounts has not a Dividends account, then debit Retained'Earnings directly for this event. 17) ' The internet contains many illustrations comparing the accounting for Periodic versus Perpetual systems. instructot- Karl's Caddy Shack General Ledger Chart of Accounts: Account Name: Comment: Owner Equity Owner Equity Owner Equity Cemment Acct 311 Capital Stock Account Name: Acct 111 Cah Asset Retained Earning Accounts Receivable Allowance for Doubtful Accounts Interest Receivable 321 Asset 121 122 325 Income Summary* Contra Asset Sales Revenue Sales Returme and Allowances Revenue Contra Rev. Aset 411 125 412 421 511 S15 Asset 130 Supplies Interest Revenue Revenue Merchandise Inventory Asset Asset Asset Contra Aset Liability Liability Liability Liability Liability 140 Expense Suspense Expense Expense Expense Expense Expense Cost of Goods Sold Loan Receivable 150 Purchases 521 531 Buildings & Equipment 160 Salaries Expense Bad Debts Expense Supplies Expense Depreciation Expense Interest Expense Accumulated Depreciation Accounts Payahle 161 211 220 Salaries Payable 230 Interest Payable 240 Dividends Payable 260 Notes Payable 541 551 561 This account is not needed in this exercise. *** REQUIRED A. Open T-accounts and enter the beginning balance sheet information in the various T-accounts. (I did this for you, see the attached General Ledger) In the General Journal, journalize the 2018 transactions. For each transaction, include a short (parenthetic explanation) also leave a blank line between each completed journal entry. Use the Gen. Ledger and post each journal entry from part B to the appropriate T-accounts. Use your own paper, and prepare an unadjusted Trial Balance. In the general journal, prepare each end-of-year Adjusting Journal Entry (AJE). Information for AJES is presented below (each AJE should be dated 12/31/2018 and identified by letter): B. C. D. E. a) Supplies remaining (determined by physical count) at year end, $1,250. b) Depreciation Expense for the year, $5,000. o) Salaries Payable to accrue at end of year, S740. d) Records indicate Karl's owes its lender interest of $255 as of December 31, 2018. er Records indicate borrower owes Karl's interest $110 as of December 31, 2018. f) For purposes of calculating Cost of Goods Sold, the cost of ending Merchandise Inventory is $35,000 as determined by LIFO. (that LIFO was used is irrelevant to this exercise) g) Company uses a Balance Sheet focus in accounting for uncollectible accounts receivable. The estimated percent of uncollectable accounts is the same at the end of this year as at the end of last year. Post the AJES in part E from the general journal to the general ledger. Use your own paper, and prepare an adjusted Trial Balance. Use your own paper, prepare Karl's Caddy-Shack multiple-step income statement for the year ending December 31, 2018. (assume a world with no income taxes). (CkFig: NI = $13,375) Use your own paper, prepare Karl's Caddy-Shack Statement of Shareholder Equity for the year ending December 31, 2018. (CkFig: Total Shareholder Equity = $69,975) Use your own paper, prepare Karl's Caddy-Shack balance sheet at December 31, 2018. (CkFig: Assets = $106,830) F. G. . I. J. In the general journal, prepare the end-of-year Closing Entries for Karl's Caddy-Shack. K. Post the closing entries in part K to the gen. ledger. No Post-closing Trail Balance required L. Organize & submit your work in the following order: 1) Cover page; 2) Financial Statements: a) Income Statement, b) Statement of Owner Equity, c) Balance Sheet; 3) General Journal; 4) General Ledger; and 5) Trial Balances. M
