Question
Required information Exercise 7-21B Complete the accounting cycle using long-term asset transactions (LO7-4, 7-7) Skip to question [The following information applies to the questions displayed
Required information
Exercise 7-21B Complete the accounting cycle using long-term asset transactions (LO7-4, 7-7)
Skip to question
[The following information applies to the questions displayed below.] On January 1, Year 1, the general ledger of a company includes the following account balances:
| Accounts | Debit | Credit | |||||
| Cash | $ | 60,500 | |||||
| Accounts Receivable | 28,600 | ||||||
| Allowance for Uncollectible Accounts | $ | 4,000 | |||||
| Inventory | 38,100 | ||||||
| Notes Receivable (5%, due in 2 years) | 33,600 | ||||||
| Land | 173,000 | ||||||
| Accounts Payable | 16,600 | ||||||
| Common Stock | 238,000 | ||||||
| Retained Earnings | 75,200 | ||||||
| Totals | $ | 333,800 | $ | 333,800 | |||
During January Year 1, the following transactions occur:
| January | 1 | Purchase equipment for $21,300. The company estimates a residual value of $3,300 and a six-year service life. | ||
| January | 4 | Pay cash on accounts payable, $11,300. | ||
| January | 8 | Purchase additional inventory on account, $100,900. | ||
| January | 15 | Receive cash on accounts receivable, $23,800. | ||
| January | 19 | Pay cash for salaries, $31,600. | ||
| January | 28 | Pay cash for January utilities, $18,300. | ||
| January | 30 | Sales for January total $238,000. All of these sales are on account. The cost of the units sold is $124,000. |
Information for adjusting entries:
- Depreciation on the equipment for the month of January is calculated using the straight-line method.
- The company estimates future uncollectible accounts. The company determines $4,800 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 2% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
- Accrued interest revenue on notes receivable for January.
- Unpaid salaries at the end of January are $34,400.
- Accrued income taxes at the end of January are $10,800.
rev: 11_22_2018_QC_CS-148298, 06_13_2019_QC_CS-170054
Exercise 7-21B Part 4
4. Prepare a multiple-step income statement for the period ended January 31, Year 1.
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen and Peter Brewer
14th edition
978-007811100, 78111005, 978-0078111006
