Question #1. (20 marks) Credite The following accounts appeared in the December 31 trial balance: Debite Equipment $960,000 Acc. Depreciation-equipment Notes payable Sales revenue Advertising expense 62,000 Salaries and wages expense 80,000 Interest expense 9,000 $120,000 186,000 750,000 1. 1. 1. 1. Consider the following transactions: a. The equipment has a useful life of 16 years and a salvage value of $40,000. ST-line depreciation applies.' b. The note payable is a 90-day note given to the bank on October 20 and bearing interest at 10%. ck In December, 2,000 coupons were sold at $25 each; they can be used for admission any time after January 1. de Of the advertising expense balance, $1,100 is paid in advance. e. Salaries accrued but unpaid are $11,800.- Required: Part a. (10 marks) Prepare the adjusting entries necessary on December 31. Part b. (10 marks) What amounts should be shown for each of the following on the income statement for the year? Interest expense Sales revenue Advertising expense Salaries and wages expense Question #2. (30 marks) The following information relates to Fugitive Electronics on December 31, 2016. The company, which uses the calendar year as its fiscal period, initially records prepaid and unearned items in B/S accounts (assets and liabilities, respectively).' C. a. The company's weekly payroll is $8,750, paid each Friday for a five-day workweek. Assume December 31, 2016, falls on a Monday, but the employees will not be paid their wages until Friday, January 4, 2017. b. Eighteen months earlier, on July 1, 2015, Fugitive purchased equipment that cost $20,000. Useful life is 5 years, with no salvage value. ST-Line depreciation applies.' On October 1, 2016, Fugitive agreed to work on a new housing development. The company is paid $120,000 on October 1 in advance of future installation of similar alarm systems in 24 new homes. That amount was credited to the Unearned Revenue account. Between October 1 and December 31, work on 20 homes was completed. d. On September 1, 2016, Fugitive purchased a 12-month insurance policy for $1,800. The amount was debited to the Prepaid Insurance account. + e. On December 29, 2016, Fugitive completed a $7,000 service that has not been billed or recorded as of December 31, 2016. Required: 1. Prepare any necessary adjusting entries on December 31, 2016, in relation to transactions and events a through e. 10 marks Transaction (a) is done for you as an illustration. (a) Dec 31 Wages Expense 1,7504 Wages Payable 1,750 Accrue wages for last day of the year: ($8,750 * 1/5 = $1,750) 2. Complete the following table and determine the amounts and effects of your adjusting entries on the year 2016 1/5 and the December 31, 2016, B/S. Use U for up and D for down to indicate increase and decrease, respectively in the Effects column. 20 marks NI = net income; TA = total assets; TL = total liability; TE = total equity Entry ae Amounte $ 1,750 Effect on Ne $ 1,750 De Effect on TA No effecte Effect on te $ 1,750 ve Effect on Tee $ 1,750 De tttt Transaction (a) is done for you as an illustration." Question #3 (35 marks) This question is based on an example in Lesson notes # 2.4 RTS began business on December 1, 2015. Its December transactions are: Dec. 1 Invested $40,000 in the business in exchange for common stock. 2 Paid $2,400 cash for December rent. 2 Purchased $2,160 of supplies on account. 3 Purchased $19,000 of office equipment; paying $4,700 cash with the balance due in 30 days. 14 Paid $3,600 cash for assistant's wages for two weeks' work. 20 Performed consulting services for $6,000 cash 30 Billed clients $14,400 for December consulting services 31 Paid $2,800 cash for dividends Required: a. Record these transactions in journal entry form and prepare the unadjusted trial balance. 10 marks b. Journalize the following adjusting entries at December 31: 5 marks 1 Supplies available at December 31 are $1,440.- 2 Accrued wages payable at December 31 are $5404 3 Depreciation for December is $240. 4 RTS has spent 30 hours on a tax fraud case during December. When completed in January, his work will be billed at $150 per hour. (Use Fees Receivable) Prepare the adjusted trial balance 8 marks c. Prepare the underlying financial statements of I/S (4 marks) and B/S (8 marks). Question #4. (15 marks) Total equity (Beginning) Total equity (Ending) NI C/S issued Dividends Preferred dividends C/S repurchased Retirement of P/stock $5615 5884 848 434 383 50 302 47 (Note: all the numbers are dollar amounts) Required: Let D be the net payments to shareholders. Calculate D (4 marks) Let Cl be comprehensive income and oci be other comprehensive income. Calculate OCI. Note that CI=NI + OCI. OCI (5 marks) CI (2 marks) Let ABV be the change in Total equity. Show that the data satisfy the clean surplus restriction: ABV = CI-D (4 marks)