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BUS ADM 201 Introduction to Financial Accounting Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below Jamukha Corporation Balance Sheet December 31, 2017 Labilities and Stockholders 94,750 10,000 190,000 77,610 Cash Accounts recervable Allowance for doubtful accounts Inventory Prepaid insurance Equipment A/D- Equipment 27,850 Accounts payable 44,070 Common stock ($1 par) (2,000) Paid-in capital in excess of par-Common stock 75,000 Retained earnings 7,440 360,000 140,000) 372,360 372,360 During 2018 the following transactions occurred 1. Purchased $141,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. 2. Sales of $325,000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was 3. Received $36,000 cash down payment for orders that will be shipped next year 4, Issued 20 year, $65,000 face value, 4% bonds on July 1 at 103. The bonds were sold to yield an effective S175,000. The company uses a perpetual inventory system annual rate of 3.784784%, and they pay interest every January 1 and July 1 5. Collected $306,000 on account. 6. Paid general expenses of $55,750 7. Paid $210,000 for amount due to supplier 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1, Jamukha Corp. sold for $24,000 cash equipment which originally cost $103,000 Accumulated depreciation for this equipment as of December 31,2017, was $77,000. This transaction is exempt from sales tax. 10, issued 1.400 shares of $100 par, 7% preferred stockfor $215,000 cash. 11. Purchased equipment on July 1, 2018, for $180,000 cash 12. Purchased 750 sharesamukha Corp. common stock from a disgruntled shareholder for $37 per share 13. Recorded salaries and payroll taxes. Employee's gross salaries were $120,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of $8,000 were withheld, and state income taxes (SIT) of $4,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Journal Entries: 15. Straight-line depreciation with an 8 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on July 1, 2018 (#11 ) is depreciated using double-declining balance with a useful life of 20 years and a $30,000 salvage value. (Hint: The equipment was purchased midway through the year.) 16. Accrue bond interest payable and amortize bond discount/premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17The prepaid insurance relates to a policy purchased on December 31, 2017This insurance expires at a rate of $310 per month. Record as a general expense 18. Jamukha estimates that 6.5% of accounts receivable are uncollectible 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REQUIRED: Print out the solution pages for the general journal, ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil Enter the transactions numbered 1-14 in the general journal provided on the following pages. Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts. Prepare an unadjusted trial balance at December 31,2018 and enter on the worksheet. a. b. c. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare a 12-column worksheet similar to worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements- just complete them on the worksheet.) e. EXTRA CREDIT III SOLUTION Journal: Requirement (a) Name Credit Debit General Journal a.2 a.3 a. a.5 a.6 a. 7 a.8 a.9 a.10 a.11 a. 12 a. 13 a.14 General Ledger: Requirement (b) CASH DR CR BALANCE Beginnin 27,850 27,850 DR ACCOUNTS RECEIVABLE Beginnin DR CR BALANCE 44,070 44,070 DR DR BALANCE ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginnin CR 2,000 2,000 CR INVENTORY DR BALANCE CR Beginnin 75,000 75,000 DR DR PREPAID INSURANCE BALANCE CR 7,440 7,440 DR Beginnin DR 360,000 EQUIPMENT Beginnin BALANCE CR 360,000 DR DR ACCUM DEPRECIATION- EQUIPMENT Beginnin BALANCE CR 140,000140,000 CR 4 General Ledger: Requirement (b) continued DR BALANCE ACCOUNTS PAYABLE Beginnin CR 94,750 94,750 CR DR SALARIES PAYABLE BALANCE CR SALES TAX PAYABLE DR CR BALANCE FICA PAYABLE DR CR BALANCE FIT PAYABLE DR CR BALANCE DR SIT PAYABLE CR BALANCE DR BALANCE FUTA PAYABLE CR SUTA PAYABLE DR BALANCE CR DR UNEARNED REVENUE BALANCE CR DR BALANCE BONDS PAYABLE CR DR BALANCE PREMIUM ON BONDS PAYABLE CR General Ledger: Requirement (b) continued BALANCE COMMON STOCK (S1 PAR) Beginnin DR CR 10,000 10,000 CR DR PREFERRED STOCK (S100 PAR) CR BALANCE PAID-IN CAPITAL IN EXCESS OF PAR COMMON STOCK Beginnin DR CR BALANCE 90,000190,000 CR PAID-IN CAPITAL IN EXCESS OF PAR- PREFERRED STOCK DR CR BALANCE TREASURY STOCK DR CR BALANCE RETAINED EARNINGS Beginnin DR BALANCE CR 77,610 77.610 CR SALES REVENUE DR CR BALANCE COST OF GOODS SOLD DR BALANCE CR GENERAL EXPENSES DR BALANCE CR BALANCE SALARIES EXPENSE DR CR PAYROLL TAX EXPENSE DR BALANCE CR LOSS ON DISPOSAL CR BALANCE DR Jamukha Corporation Worksheet: Require me nt (c), (d) For the Year Ended De cember 31, 2018 Unadjusted Adjus ted Income Retained Balance Sheet Trial Balan Adjustme nts Trial Balance CR State me nt arnings State me DR DR DR DR DR DR CR Account Title CR CR CR CR Totals Net loss Totals Ending retained earnings Totals Jamukha Corporation Statement of Cash Flows: Requirement (e) For the Year Ended December 31, 2018 CASH FROM OPERATING ACTIVITIES: Increases Decreases Net Cash From Operating Activities CASH FROM INVESTNG ACTIVITIES: Net Cash From Investing Activities CASH FROM FINANCING ACTIVITIES: Net Cash From Financing Activities NET INCREASE IN CASH Cash at beginning of year Cash at end of year State me nt of Cash FlowS T-Account Worksheet Requireme nt (e) Use the formal statement to show activity within the cash account. On this statement, debits to cash correspond to increases and credits correspond to decreases A/D -E Common stock ($1 nt 140,000 10,000 Pref stock (S100 Accounts receivable Accounts payable 94,750 44,070 Allow. for doubtful accts 2,000 Inte rest payable PICEP -CS 190,000 PICEP- PS Unearned revenue Inventory 75,000 Pre paid insurance Bonds pavable Retained earnings 77,610 7,440 Treasury stock Pre mium on B/P 360,000 BUS ADM 201 Introduction to Financial Accounting Jamukha Corporation prepares annual financial statements. The balance sheet at December 31, 2017, is presented below Jamukha Corporation Balance Sheet December 31, 2017 Labilities and Stockholders 94,750 10,000 190,000 77,610 Cash Accounts recervable Allowance for doubtful accounts Inventory Prepaid insurance Equipment A/D- Equipment 27,850 Accounts payable 44,070 Common stock ($1 par) (2,000) Paid-in capital in excess of par-Common stock 75,000 Retained earnings 7,440 360,000 140,000) 372,360 372,360 During 2018 the following transactions occurred 1. Purchased $141,000 inventory on account. Jamukha Corp. uses a perpetual inventory system. 2. Sales of $325,000, plus 5.6% sales tax, were made to customers on account. Cost of goods sold was 3. Received $36,000 cash down payment for orders that will be shipped next year 4, Issued 20 year, $65,000 face value, 4% bonds on July 1 at 103. The bonds were sold to yield an effective S175,000. The company uses a perpetual inventory system annual rate of 3.784784%, and they pay interest every January 1 and July 1 5. Collected $306,000 on account. 6. Paid general expenses of $55,750 7. Paid $210,000 for amount due to supplier 8. Paid the sales tax collected from customers to the State of Wisconsin. 9. On January 1, Jamukha Corp. sold for $24,000 cash equipment which originally cost $103,000 Accumulated depreciation for this equipment as of December 31,2017, was $77,000. This transaction is exempt from sales tax. 10, issued 1.400 shares of $100 par, 7% preferred stockfor $215,000 cash. 11. Purchased equipment on July 1, 2018, for $180,000 cash 12. Purchased 750 sharesamukha Corp. common stock from a disgruntled shareholder for $37 per share 13. Recorded salaries and payroll taxes. Employee's gross salaries were $120,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes (FIT) of $8,000 were withheld, and state income taxes (SIT) of $4,000 were withheld. The federal unemployment tax (FUTA) rate was 1%, and the state unemployment tax (SUTA) rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts 14. The paychecks and payroll taxes from entry #13 were paid. Adjusting Journal Entries: 15. Straight-line depreciation with an 8 year useful life and no salvage value is used for equipment purchased in previous years. The equipment purchased on July 1, 2018 (#11 ) is depreciated using double-declining balance with a useful life of 20 years and a $30,000 salvage value. (Hint: The equipment was purchased midway through the year.) 16. Accrue bond interest payable and amortize bond discount/premium. Jamukha Corp. uses effective-interest amortization. (Hint: The bond was issued midway through the year.) 17The prepaid insurance relates to a policy purchased on December 31, 2017This insurance expires at a rate of $310 per month. Record as a general expense 18. Jamukha estimates that 6.5% of accounts receivable are uncollectible 19. Jamukha Corp. is an S-corporation and is not subject to income tax. REQUIRED: Print out the solution pages for the general journal, ledger, and worksheet that follow and enter the following transactions. I suggest that you use a pencil Enter the transactions numbered 1-14 in the general journal provided on the following pages. Post the journal entries to the ledger accounts for items 1-14. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts. Prepare an unadjusted trial balance at December 31,2018 and enter on the worksheet. a. b. c. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#15-19), prepare a 12-column worksheet similar to worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. Prepare a formal statement of cash flows using the T-account approach. Templates for the statement and the T-account worksheet are attached. (You are not required to formally present the other statements- just complete them on the worksheet.) e. EXTRA CREDIT III SOLUTION Journal: Requirement (a) Name Credit Debit General Journal a.2 a.3 a. a.5 a.6 a. 7 a.8 a.9 a.10 a.11 a. 12 a. 13 a.14 General Ledger: Requirement (b) CASH DR CR BALANCE Beginnin 27,850 27,850 DR ACCOUNTS RECEIVABLE Beginnin DR CR BALANCE 44,070 44,070 DR DR BALANCE ALLOWANCE FOR DOUBTFUL ACCOUNTS Beginnin CR 2,000 2,000 CR INVENTORY DR BALANCE CR Beginnin 75,000 75,000 DR DR PREPAID INSURANCE BALANCE CR 7,440 7,440 DR Beginnin DR 360,000 EQUIPMENT Beginnin BALANCE CR 360,000 DR DR ACCUM DEPRECIATION- EQUIPMENT Beginnin BALANCE CR 140,000140,000 CR 4 General Ledger: Requirement (b) continued DR BALANCE ACCOUNTS PAYABLE Beginnin CR 94,750 94,750 CR DR SALARIES PAYABLE BALANCE CR SALES TAX PAYABLE DR CR BALANCE FICA PAYABLE DR CR BALANCE FIT PAYABLE DR CR BALANCE DR SIT PAYABLE CR BALANCE DR BALANCE FUTA PAYABLE CR SUTA PAYABLE DR BALANCE CR DR UNEARNED REVENUE BALANCE CR DR BALANCE BONDS PAYABLE CR DR BALANCE PREMIUM ON BONDS PAYABLE CR General Ledger: Requirement (b) continued BALANCE COMMON STOCK (S1 PAR) Beginnin DR CR 10,000 10,000 CR DR PREFERRED STOCK (S100 PAR) CR BALANCE PAID-IN CAPITAL IN EXCESS OF PAR COMMON STOCK Beginnin DR CR BALANCE 90,000190,000 CR PAID-IN CAPITAL IN EXCESS OF PAR- PREFERRED STOCK DR CR BALANCE TREASURY STOCK DR CR BALANCE RETAINED EARNINGS Beginnin DR BALANCE CR 77,610 77.610 CR SALES REVENUE DR CR BALANCE COST OF GOODS SOLD DR BALANCE CR GENERAL EXPENSES DR BALANCE CR BALANCE SALARIES EXPENSE DR CR PAYROLL TAX EXPENSE DR BALANCE CR LOSS ON DISPOSAL CR BALANCE DR Jamukha Corporation Worksheet: Require me nt (c), (d) For the Year Ended De cember 31, 2018 Unadjusted Adjus ted Income Retained Balance Sheet Trial Balan Adjustme nts Trial Balance CR State me nt arnings State me DR DR DR DR DR DR CR Account Title CR CR CR CR Totals Net loss Totals Ending retained earnings Totals Jamukha Corporation Statement of Cash Flows: Requirement (e) For the Year Ended December 31, 2018 CASH FROM OPERATING ACTIVITIES: Increases Decreases Net Cash From Operating Activities CASH FROM INVESTNG ACTIVITIES: Net Cash From Investing Activities CASH FROM FINANCING ACTIVITIES: Net Cash From Financing Activities NET INCREASE IN CASH Cash at beginning of year Cash at end of year State me nt of Cash FlowS T-Account Worksheet Requireme nt (e) Use the formal statement to show activity within the cash account. On this statement, debits to cash correspond to increases and credits correspond to decreases A/D -E Common stock ($1 nt 140,000 10,000 Pref stock (S100 Accounts receivable Accounts payable 94,750 44,070 Allow. for doubtful accts 2,000 Inte rest payable PICEP -CS 190,000 PICEP- PS Unearned revenue Inventory 75,000 Pre paid insurance Bonds pavable Retained earnings 77,610 7,440 Treasury stock Pre mium on B/P 360,000