Question
Prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018.
Prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018.
After reviewing details of sales, you note that the sales taxes collected on the last week of Decembers sales were included in sales revenue. Sales recorded the last week of December that included the sales tax of 7% (enter your birthday month) amounted to $350,000.
Accounting Creations uses the Dollar Value LIFO inventory method. For internal purposes, the Merchandise Inventory Account is maintained at FIFO (current costs). At the end of the year, the LIFO reserve account is adjusted so inventory on the balance sheet reflects Dollar Value LIFO. You need to calculate the proper inventory balance and adjust the LIFO reserve. The price index for this year is 1.24 (enter last digit of student number). Prior year inventory records show the following calculation for 2018:
175,000 X 1.0 = 175,000
100,000 X 1.05 = 105,000
All office equipment was purchased January 1, 2017. Accounting Creations uses the DDB method to depreciate office equipment. No office equipment has been added since the initial purchase. It is estimated that the office equipment has a useful life of 10 years with a salvage value of $12,000.
On JULY 1, 2018, (enter your birth month) Accounting Creations rented a portion of one store to Marketing Majors Inc. The contract was for 15 months and Accounting Creations required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company.
Accounting Creations Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December 31, 2018 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 330,000 | - | ||||
Accounts Receivable | 694,980 | - | ||||
Allowance for Doubtful Accounts | - | 17,000 | ||||
Interest Receivable | - | - | ||||
Merchandise Inventory | 425,000 | - | ||||
Prepaid Insurance | - | - | ||||
LIFO Reserve | - | 32,000 | ||||
Prepaid Advertising | - | - | ||||
Prepaid Rent | 17,000 | - | ||||
Office Supplies | 6,000 | - | ||||
Note Receivable | 25,000 | |||||
Available for Sale Securities | 375,000 | - | ||||
Office Building | 3,750,000 | - | ||||
Accumulated Depreciation - Office Building | - | 87,500 | ||||
Storage Building | 1,275,000 | - | ||||
Accumulated Depreciation - Storage Building | - | - | ||||
Land | 750,000 | - | ||||
Leasehold Improvements | 225,000 | - | ||||
Accumulated Depreciation - Leasehold Improvements | - | - | ||||
Office Equipment | 325,000 | - | ||||
Accumulated Depreciation - Office Equipment | - | 65,000 | ||||
Patent | 150,000 | - | ||||
Accounts Payable | - | 345,000 | ||||
Sales Tax Payable | - | - | ||||
Salaries Payable | - | 142,000 | ||||
Payroll Taxes Payable | - | 25,000 | ||||
Interest Payable | - | - | ||||
Income Tax Payable | - | - | ||||
Unearned Rent Revenue | - | - | ||||
Loan Payable - Onstar Bank | - | 650,000 | ||||
Loan Payable - Coldstar Bank | - | 2,000,000 | ||||
Common Stock | - | 650,000 | ||||
Additional Paid in Capital | - | 1,998,750 | ||||
Retained Earnings | - | 920,000 | ||||
Accumulated Other Comprehensive Income | - | 25,000 | ||||
Dividends | 84,750 | - | ||||
Sales | - | 4,528,200 | ||||
Sales Returns and Allowances | 42,250 | - | ||||
Sales Discounts | 19,250 | - | ||||
Cost of Goods Sold | 1,979,500 | - | ||||
Sales Salaries Expense | 436,400 | - | ||||
Office Salaries Expense | 274,000 | - | ||||
Advertising Expense | 16,000 | - | ||||
Depreciation Expense - Office Building | - | |||||
Depreciation Expense - Leasehold Improvements | - | - | ||||
Depreciation Expense - Office Equipment | - | - | ||||
Leasing Expense - Stores | 132,000 | - | ||||
Miscellaneous Selling Expense | 23,000 | - | ||||
Research & Development Expense | 15,000 | |||||
Rent Expense - Storage Facility | - | - | ||||
Insurance Expense | 15,000 | - | ||||
Office Supplies Expense | 35,000 | - | ||||
Miscellaneous Administrative Expense | 9,170 | - | ||||
Rent Revenue | - | 75,000 | ||||
Interest Revenue on Note Receivable | - | - | ||||
Dividend Revenue on AFS Securities | - | 25,000 | ||||
Interest Expense | - | - | ||||
Bad Debt Expense | 35,000 | - | ||||
Amortization Expense | - | - | ||||
Income Tax Expense | - | - | ||||
Payroll Taxes Expense | 121,150 | - | ||||
11,585,450 | 11,585,450 |
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