See project.xlsx Narrative and Instructions Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in 1981, under the laws of the State of Illinois, with an authorized capitalization of 10,000 shares of no-par common stock with a stated value of $30 per share. The common stock is sold over the the counter in the local area. You have been hired as of Thursday, December 25, 2014, to replace the controller, who has resigned. As controller, you are responsible for the corporation's accounting recrods, preparation of the financial statements, safeguarding the corporate assets, and providing management with financial information to set prices and to monitor and control operations. Rockford Corporation closes its books annually on December 31 but prepares financial statements quarterly. Adjusting entries are posted to the general ledger only at year-end; at the end of the first, second, and third quarter the adjustments are entered only on a work sheet, not in the general ledger. Therefore, the adjusting entries to be recorded on December 31 are annual adjustments that you must journalize and the post to the general ledger accounts before preparing the financial statements. Rockford Corporation maintains a perpetual inventory system and takes a physical count each year to adjust the inventory carrying amount. Purchases are recorded at the gross amount (discounts taken are recognized at the date of payment) of the supplier's invoice, and the terms vary with each supplier. Sales on account are subject to terms of 2/10, n/30. Discounts are taken and granted only when the terms are met. The cost of all inventory sold in December was 80% of the sales price. The corporation uses the following journals and ledgers: Journals 1. A sales journal (S) - to record sales of merchandise on account. 2. A purchase journal (P)- to record purchases of merchandise on account. 3. A cash receipts journal (CR) - to record all cash receipts. 4. A cash disbursements journal (CD) - to record all cash payments. 5. A general journal (J) - to record all transacitons that cannot be recorded in the other journals. Ledgers 1. A general ledger 2. An accounts receivable subsidiary ledger. 3. An accounts payable subsidiary ledger. In recording sales transactions, each sale should be posted on the day of the sale directly to the customer's account in the subsidiary ledger, using the invoice number as the posting reference number in the subsidiary account. Also, cash receipts from customers should be posted to the subsidiary ledger on the day they are received. The purchase order number should be used as the posting reference number in the subsidiary ledger for purchases on account from suppliers. Purchases from suppliers and payments to them should be posted daily. All other individual posting may be made weekly or at the month-end. Account numbers should be used as posting reference numbers in the journals. Officers and office personnel are salaried employees and are paid monthly on the last day of each month. The delivery truck drivers and warehouse employees are hourly wage employees and are paid biweekly. Each biweekly pay period ends Friday. On the following Monday you assistants provide you with a payroll summary from which you prepare general journal entries to record the biweekly payroll and the employer's taxes on the payroll. The biweekly employees' paychecks are distributed on the following day (Tuesday). The January 1, 2014, balances appear in the general ledger accounts as well as the Noverber 30, 2014, balances, for those accounts whose balances have changed. All transacitons affecting the non- current accounts from January 1, 2014, through Noverber 30, 2014, with explanations, appear in these accounts to facilitate the preparation of the statement of cash flows. Subsidiary ledger account balances as of Noverber 30, 2014, are as follows: Accounts Receivable Acct No Amount Boecker Builders 117 62,920 The Potts Company 122 50,300 Swanson Brothers Contruction 133 24,050 A & B Hardware 143 - Trudy's Plumbing 155 15,100 Coconino Contractors Inc 160 27,800 Rankin Plumbing Corp 166 74,350 Beverly's Building Products 175 14,000 Bilder Construction Co 180 45,200 Iwanaga Plumbing and Heating 190 3,700 Total 317,420 Accounts Payable Acct No Amount Phoenix Plastics 14 17,450 Business Basics Inc 16 - Edward's Plumbing Suppliers 18 20,050 DeKalb Transport 20 - Oxenford Copperworks 35 26,400 Smith Pipe Co 39 38,100 Ron & Rod's Plumbing Products 44 14,850 Khatan Steel Corp 57 10,000 Total 126,850 The transactions through December 23 have already been recorded by the former controller. You are to begin your work by entering the transaction of December 25 for the payment of cash to repurchase stock. Dec-14 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 December Transactions December 1 Received a check in the amount of $23,569 from Swanson Brothers Contruction in full payment of invoice No. 1120 dated Novermber 26 in the amount of $24,050. 1 Sold sewer and drainage pipe to Beverly's Building Products on account, invoice No. 1201 for $13,150. 2 Purchased copper tubing and fittings from Edward's Plumbing Supplies Inc. on account, purchase order No. 315 for $24,320, terms n/60. 2 Issued check No. 1580 for $26,400 to Oxenford Copperworks in settlement of the balance owned on purchase order No. 280. 3 A court notice indicates that Iwanaga Plumbing and Heating is bankrupt and payment of its account improbable; the president orders the account to be written off as a bad debt (invoice No. 780). 3 Sold bathroom fixtures to Bilder Construction Co on account, invoice No. 1202 for $44,900.00 4 Received a check in the amount of $49,294 from the Potts Co in full payment of invoice No. 1128 dated November 27 for $50,300. 4 Sold plumbing supplies and plastic pipe to Coconino Contractors Inc. on account, invoice No. 1203 for $10,300. 4 Issued check No. 1581 for $810 to Standard Oil Co, in payment of gas, oil, and truck repair from Tierney's Standard Service. 5 Issued check No. 1582 for $9,900 to Khatan Steel Corp. in full settlement of purchase order No. 312 for $10,000. 5 Issued check No. 1583 for $10,486 to Phoenix Plastics in full payment of Phoenix's invoice dated November 28 in the amount of $10,700, for purchase order No. 313, terms 2/10, n/30. 5 Received a check in the amount of $72,863 from Rankin Plumbing Corp. in full payment of invoice No. 1129 dated November 28 for $74,350. 8 Sold cast pipe to Trudy's Plumbing on account, invoice No. 1204 for $29,300. 8 Received a check in the amount of $27,800 from Coconion Contractors, Inc. in full payment of invoice No. 1091 dated October 20. 8 Purchased bathroom fixtures from Phoenix Plastics, on account, purchcase order No. 316 for $52,700 terms 1/10, n/30. 8 Received a check in the amount of $29,000 from Boecker Builders in partial payment of balance outstanding covering invoice Nos. 1050 and 1071. 9 The payroll summary for the biweekly pay period ended Friday, December 5 contained the follwing information: Delivery and warehouse wages 4,860 FICA taxes withheld 350 Federal income taxes withheld 900 State income taxes withheld 190 Net pay 3,420 Employer's payroll taxes: FICA tax 350 Federal unemployment tax - State unemployment tax - Issued check No. 1584 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were then preppared for distributions to the biweekly emplyees on Tuesday, December 9, 2014. 9 Issued check No. 1585 for $600 to Scooter Gordon for lettering and sign painting on some delivery trucks. 9 Issued check No. 1586 for $6,750 to Phoenix Plastics, in payment of Phoenix's invoice dated November 12 in the amount of $6,750, our purchase order No. 299. 10 Issued check No. 1587 for $37,719 to Smith Pipe Co in full payment of their invoice dated November 28, terms 1/15, n/30, our purchase order No. 314. 10 Received a check in the amount of $15,100 from Trudy's Plumbing in full settlement of invoice No. 1106 dated November 7. 10 Sold pipe, fixtures, and accessories to Trudy's Plumbing on account, invoice No. 1205 for $28,850.00 11 Sold pumbing supplies and copper tubing to The Potts Company on account, invoice No. 1206 for $31,450. 11 Received a check in the amount of $33,920 from Boecker Builders in full payment of invoice No. 1071. 11 Cash sales to date totaled $12,292. 12 Received a check in the amount of $28,714 from Trudy's Plumbing in payment of inoivce No. 1204. 12 Sold plumbing fixtures and supplies to Boecker Builders, on account, invoice No. 1207 for $24,730. 15 The Potts Co returned defective copper tubing that is purchased on December 11. A credit memo in the amount of $4,680 is issued relative to invoice No. 1206. The copper tubing had a cost of $3,550. 15 The defective copper tubing is returned to Edward's Plumbing supplies, Inc. along with a debit memo in the amount of $3,550 in reduction of purchase order No. 315. 15 Issud check No. 1588 for $399 in payment of November telephone bill to Northern Illinois Communications. 16 Issued check No. 1589 in the amount of $11,360 in payment of federal withholding taxes, $9,573, and FICA taxes, $1787, payable on November salaries and wages; The check is remitted to the Winnebago County Bank as the depository. 16 Issued check No. 1590 for $52,173 to Phoenix Plastics, Inc, in payment of purchase order No. 316. 17 The president informs you that Bilder Construction Co agrees to convert the $45,200 overdue account receivable (invoice No. 1120) to a 14% note due six months from today. 17 Purchased plumbing materials from Smith Pipe Company on account, purcase order No. 317 for $50,800 terms 1/15, n/60. 17 Sold drain tile, plastic pipe, and copper tubing to A & B Hardware on account, invoice No. 1208 for $7,920. 18 Sold fixtures and materials to Coconino Contractors, Inc. on account, invoice No. 1209 for $42,780.00 18 An invoice in the amount of $1,021 was received from S. White Trucking Company for freight on purchase order No. 317 and paid by issuing check No. 1591. 18 Received a check in the amount of $28,273 from Trudy's Plumbing in payment of invoice No. 1205. 19 Purchased office supplies from the Pen & Pad, issuing check No. 1592 in the amount of $1,360. (Note: Debit asset account). 19 Purchased a new Faith computer for $6,100 from Business Basics, Inc, purchase order No, 318, paying $600 down through check No. 1593 with the balance due in thirty days (n/30). The computer has an estmated life of five years with a salvage value of $1,300. 22 Purchased bathroom and kitchen fixtures from Phoenix Plastics, on account, purchase order No. 319 for $48,330, terms 1/10, n/30. 22 Received a bill from DeKalb Transport for $2,300 for freight costs incurred during the last 30 days, terms n/30. 23 The payroll summary for the biweekly pay period ended Friday, December 19 contained the follwing information: Delivery and warehouse wages 5,770 FICA taxes withheld 415 Federal income taxes withheld 1,067 State income taxes withheld 225 Net pay 4,063 Employer's payroll taxes: FICA tax 415 Federal unemployment tax - State unemployment tax - Issued check No. 1594 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were then preppared for distributions to the biweekly emplyees on Tuesday, December 23. NOTE: Transactions up to this point have been recorded. At this point you became controller and are responsible for recordign all further transactions. 25 The board of directors voted to purchase 1,000 shares of its own stock from stockholder Dionne Schivone at $83 per share and issued check No. 1595 in payment. Stock repurchases are recroded at cost. Rockford is purchasing these shares because Ms. Schivone had been a valuable employee. 26 The baord of directors declared a $1.80 per share cash dividend payable on January 14, 2015 to shareholders of record by the end of the day of December 26. 26 The president informs you that Beverly's Building Products agrees to convert the $14,000 overdue accounts receivable (invoice No. 1119) balance to a 12% note due six months from today. 29 A half-acre parcel of land adjacent to the building is acquired in exchange for 600 shares of unissued common stock. The land has a fair value of $54,000 and will be used immediately as an outside storage lot and parking lot. 29 An invoice in the amount of $2,650 is received from Wayne McManus, lawyer, for legal services involved in the acquisition of the adjacent parcel of land; check No. 1596 is issued. 29 Sold pipe and plumbing materials to Boecker Builders on account, invoice No. 1210 for $49,040.00 30 Issued check No. 1597 in the amount of $500 to the Northern Star for adverstisement run in the home building supplement of December 13. 30 Issued check No. 1598 in the amount of $925 to Standard Oil Co. in payment of gas, oil, and truck repairs from Standard Oil Co. (use Freight-out). 30 Purchased copper and cast iron pipe from Oxenford Copperworks on account, purchase order No. 320 for $63,940, terms 1/10, n/30. 30 Check No. 1599 for $15,000 is issued to the bond sinking fund trustee, Chicago Trust Co., for deposit in the sinking fund. (Use Other Assets). 30 Sold plumbing supplies to Swanson Brothers Construction on account, invoice No. 1211 for $24,650. 31 Received a check for $24,730 from Boecker Builders in payment of invoice No. 1207. 31 Issued check No. 1600 for $50,292 to Smith Pipe Company in payment of purchase order No. 317. 31 The custodian of the petty cash fund submits the following receipts for reimbursement and reports a cash-on-hand count of $8. Postage stampls used $38 United Parcel (freight-out) 23 C.O.D postage (freight costs) 51 Christmas office decorations 30 Check No. 1601 is issued and cashed to reimburse the fund. 31 Sold an electric truck-lift to Leila Stierman Co. for $2,500 cash. The original cost was $7,900 with salvage value of $900, a life of 10 years, and accumulated depreciation recorded through 11/31/13 is $4,550. The straight-line method is used. (Note: the company follows the practice of recording a half year's depreciation in the year of acquisition and a half year in the year of disposal.) First, bring the depreciation expense up to date in the general journal. Then journalize the entire entry for the sale in the cash receipts journal. 31 Sold bathroom fixtures and plumbing supplies to Trudy's Plumbing on account, invoice No. 1212 for $55,770. 31 Because for some time the petty cash fund has been smaller than required for monthly expenditures, the fund is increased by $75 by cashing check No. 1602 and placing the money in the petty cash fund. 31 The payroll summary for the monthly paid employees in submitted so that December checks can be distributed before the year-end; the details are as follows: Office and administrative salaries $42,900 Federal income taxes withheld 7,696 State income taxes withheld 1,517 FICA taxes withheld 3,120 Net pay $30,567 Issued check No, 1603 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were prepared for distribution to all monthly employees by the end of the day. Employer's payroll taxes: FICA tax (all office and administrative) $3,120 Federal unemployment tax 0 State unemployment tax 0 31 Cash sale since December 12 total $29,980. Instructions 1 Make the entries in the appropriate journal for December 25 through December 31. (adjusting entries are recorded in general journal) 2 Post any amounts to be posted as individual amounts from journals to the general ledger and update the receivable and payable subsidiary ledger accounts. (only a few entries are posted for Dec, e.g., account receivable. Please post all other entries) 3 Foot and cross-foot the columnar journals and complete the month-end postings of all books of orginal entry. 4 Prepare a trial balance by entering the accout balance from the general ledger in the work sheet (list all accounts, including those with zero balances). 5 From the following information prepare adjusting entries in the general journal and enter them in the work sheet. a The annual provison for doubtful accounts receivable is recorded by providing a charge to Bad Debt Expense in an amount equal to 2% of net credit sale. All cash sales were executed in December. b An inventory count of the office supplies revealed $830 of supplies on hand at year end. c The prepaid insurance on January 1, 2014 was $3,220, which covers the period January 1 through August 31, 2014. The insurance premium of $7,800 recorded in August covers the period of September 1, 2014 through August 31, 2015. Rockford estimates that 75% of the premiums are attributable to general activities (Use Insurance Expense) and 25% to selling activities. (Use Miscellaneous Expense). d The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2014: Delivery and Warehouse Wages $6,100 FICA Taxes Payable 430 Federal Withholding Taxes 1,036 State Withholding Taxes 218 Net pay 4,416 (will pay in 2015) e The employer's share of the FICA tax ($430) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salries earned during the last quarter exceed the manimum subject to unemployment tax. f Interest has accrued at 8% on the long-term notes payable since July 1,2014. These interests are due on January 1, 2015 (The first six-month interests have been recorded and paid in July). Interest on bonds is accrued and paid semi-annually, at a 4% coupon rate. The next interest payment is due on January 1, 2015. The bonds are dated January 1, 2008, and mature January 1, 2018. Market interest rate was 6% at issurance . Use effective interest amortization method. g The interest accrued to 12/31/14 on notes receivable is composed of the following: Platteville Plumbers, 10%, 6 months, due March 31, 2015 $1,125 Bilder Construction, 11%, 6 months, due June 14, 2015 232 Beverly's Building, 9%, 6 months, due June 26, 2015 17 $1,374 The interst accrued at 12/31/14 on the note payable (current) of $15,000 @ 10% is $1,500. Interest is payable on January 2, 2015. (The note is due in 2015) h A warehouse lease payment of $9,600 was made on Septermber 1, 2014, for rental through February 28, 2015. (The Prepaid Rent account is for advance lease payments on the warehouse.) i $530 is owned to Northern Electric Co. and $279 is owned to City of Rockford for utility services proved during December 2014. j Plant and equipmentto be depreciated are composed of the following: Assets Date Acquired cost estimated usage or life salvage value depreciation method Building 7/1/2010 $306,000 25 years $20,000 sum-of-years' digits Truck #1 4/1/2010 28,000 60,000 miles 3,100 miles driven Truck #2 9/1/2011 33,000 60,000 miles 4,200 miles driven Lift #1* 8/17/2007 7,900 10 years 900 straight-line Lift #2 3/29/2011 4,500 10 years 500 straight-line Lift #3 9/16/2012 5,000 10 years 500 straight-line Office Equipment Prior to 1/1/14 32,800 7 years 2,000 straight-line Computer 12/19/2014 6,100 4 years 1,300 Double-decling * sold 12/31/14 Truck No. 1has been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was driven 12,000 miles and truck No. 2 was driven 14,000 miles. Remember that Rockford Company takes a half-year's depreciation in the year of acquisition and a half- year in the year of sale. 6 Complete the worksheet. Compute State of Illinois corporate income taxes at 4.5% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax is not deductible on the Illinois return. Assume federal corporate income tax on income subject to federal tax is as follows: first $50,000 15% next 25,000 25% remainder 34% Income between $100,000 and $335,000 is assessed a 5% federal surtax, not to exceed $11,750.00 7 Prepare the journal entry for income taxes. Post all adjusting entries. 8 Prepare 2014's income statement (assume the weighted-average number of shares outstanding for the year 2014 is 5,600 shares). Assume that bad debt expense and depreciation expense are administrative expenses. 9 Prepare 2014's statement of retained earnings. 10

Prepare 2014's balance sheet.

ACCT 3312 Project (Spring 2015) Narrative and Instructions Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in 1981, under the laws of the State of Illinois, with an authorized capitalization of 10,000 shares of no-par common stock with a stated value of $30 per share. The common stock is sold over the the counter in the local area. You have been hired as of Thursday, December 25, 2014, to replace the controller, who has resigned. As controller, you are responsible for the corporation's accounting recrods, preparation of the financial statements, safeguarding the corporate assets, and providing management with financial information to set prices and to monitor and control operations. Rockford Corporation closes its books annually on December 31 but prepares financial statements quarterly. Adjusting entries are posted to the general ledger only at year-end; at the end of the first, second, and third quarter the adjustments are entered only on a work sheet, not in the general ledger. Therefore, the adjusting entries to be recorded on December 31 are annual adjustments that you must journalize and the post to the general ledger accounts before preparing the financial statements. Rockford Corporation maintains a perpetual inventory system and takes a physical count each year to adjust the inventory carrying amount. Purchases are recorded at the gross amount (discounts taken are recognized at the date of payment) of the supplier's invoice, and the terms vary with each supplier. Sales on account are subject to terms of 2/10, n/30. Discounts are taken and granted only when the terms are met. The cost of all inventory sold in December was 80% of the sales price. The corporation uses the following journals and ledgers: Journals 1. A sales journal (S) - to record sales of merchandise on account. 2. A purchase journal (P)- to record purchases of merchandise on account. 3. A cash receipts journal (CR) - to record all cash receipts. 4. A cash disbursements journal (CD) - to record all cash payments. 5. A general journal (J) - to record all transacitons that cannot be recorded in the other journals. Ledgers 1. A general ledger 2. An accounts receivable subsidiary ledger. 3. An accounts payable subsidiary ledger. In recording sales transactions, each sale should be posted on the day of the sale directly to the customer's account in the subsidiary ledger, using the invoice number as the posting reference number in the subsidiary account. Also, cash receipts from customers should be posted to the subsidiary ledger on the day they are received. The purchase order number should be used as the posting reference number in the subsidiary ledger for purchases on account from suppliers. Purchases from suppliers and payments to them should be posted daily. All other individual posting may be made weekly or at the month-end. Account numbers should be used as posting reference numbers in the journals. Officers and office personnel are salaried employees and are paid monthly on the last day of each month. The delivery truck drivers and warehouse employees are hourly wage employees and are paid biweekly. Each biweekly pay period ends Friday. On the following Monday you assistants provide you with a payroll summary from which you prepare general journal entries to record the biweekly payroll and the employer's taxes on the payroll. The biweekly employees' paychecks are distributed on the following day (Tuesday). The January 1, 2014, balances appear in the general ledger accounts as well as the Noverber 30, 2014, balances, for those accounts whose balances have changed. All transacitons affecting the noncurrent accounts from January 1, 2014, through Noverber 30, 2014, with explanations, appear in these accounts to facilitate the preparation of the statement of cash flows. Subsidiary ledger account balances as of Noverber 30, 2014, are as follows: Accounts Receivable Boecker Builders The Potts Company Swanson Brothers Contruction A & B Hardware Trudy's Plumbing Coconino Contractors Inc Rankin Plumbing Corp Beverly's Building Products Bilder Construction Co Iwanaga Plumbing and Heating Total Acct No 117 122 133 143 155 160 166 175 180 190 Amount 62,920 50,300 24,050 15,100 27,800 74,350 14,000 45,200 3,700 317,420 Accounts Payable Acct No Amount Phoenix Plastics 14 17,450 Business Basics Inc 16 Edward's Plumbing Suppliers 18 20,050 DeKalb Transport 20 Oxenford Copperworks 35 26,400 Smith Pipe Co 39 38,100 Ron & Rod's Plumbing Products 44 14,850 Khatan Steel Corp 57 10,000 Total 126,850 The transactions through December 23 have already been recorded by the former controller. You are to begin your work by entering the transaction of December 25 for the payment of cash to repurchase stock. S 7 14 21 28 M 1 8 15 22 29 T 2 9 16 23 30 Dec-14 W 3 10 17 24 31 T 4 11 18 25 F 5 12 19 26 S 6 13 20 27 December Transactions December 1 Received a check in the amount of $23,569 from Swanson Brothers Contruction in full payment of invoice No. 1120 dated Novermber 26 in the amount of $24,050. 1 Sold sewer and drainage pipe to Beverly's Building Products on account, invoice No. 1201 for $13,150. 2 Purchased copper tubing and fittings from Edward's Plumbing Supplies Inc. on account, purchase order No. 315 for $24,320, terms n/60. 2 Issued check No. 1580 for $26,400 to Oxenford Copperworks in settlement of the balance owned on purchase order No. 280. 3 A court notice indicates that Iwanaga Plumbing and Heating is bankrupt and payment of its account improbable; the president orders the account to be written off as a bad debt (invoice No. 780). 3 Sold bathroom fixtures to Bilder Construction Co on account, invoice No. 1202 for $44,900.00 4 Received a check in the amount of $49,294 from the Potts Co in full payment of invoice No. 1128 dated November 27 for $50,300. 4 Sold plumbing supplies and plastic pipe to Coconino Contractors Inc. on account, invoice No. 1203 for $10,300. 4 Issued check No. 1581 for $810 to Standard Oil Co, in payment of gas, oil, and truck repair from Tierney's Standard Service. 5 Issued check No. 1582 for $9,900 to Khatan Steel Corp. in full settlement of purchase order No. 312 for $10,000. 5 Issued check No. 1583 for $10,486 to Phoenix Plastics in full payment of Phoenix's invoice dated November 28 in the amount of $10,700, for purchase order No. 313, terms 2/10, n/30. 5 Received a check in the amount of $72,863 from Rankin Plumbing Corp. in full payment of invoice No. 1129 dated November 28 for $74,350. 8 Sold cast pipe to Trudy's Plumbing on account, invoice No. 1204 for $29,300. 8 Received a check in the amount of $27,800 from Coconion Contractors, Inc. in full payment of invoice No. 1091 dated October 20. 8 Purchased bathroom fixtures from Phoenix Plastics, on account, purchcase order No. 316 for $52,700 terms 1/10, n/30. 8 Received a check in the amount of $29,000 from Boecker Builders in partial payment of balance outstanding covering invoice Nos. 1050 and 1071. 9 The payroll summary for the biweekly pay period ended Friday, December 5 contained the follwing information: Delivery and warehouse wages 4,860 FICA taxes withheld 350 Federal income taxes withheld 900 State income taxes withheld 190 Net pay 3,420 Employer's payroll taxes: FICA tax 350 Federal unemployment tax State unemployment tax Issued check No. 1584 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were then preppared for distributions to the biweekly emplyees on Tuesday, December 9, 2014. 9 Issued check No. 1585 for $600 to Scooter Gordon for lettering and sign painting on some delivery trucks. 9 Issued check No. 1586 for $6,750 to Phoenix Plastics, in payment of Phoenix's invoice dated November 12 in the amount of $6,750, our purchase order No. 299. 10 Issued check No. 1587 for $37,719 to Smith Pipe Co in full payment of their invoice dated November 28, terms 1/15, n/30, our purchase order No. 314. 10 Received a check in the amount of $15,100 from Trudy's Plumbing in full settlement of invoice No. 1106 dated November 7. 10 Sold pipe, fixtures, and accessories to Trudy's Plumbing on account, invoice No. 1205 for $28,850.00 11 Sold pumbing supplies and copper tubing to The Potts Company on account, invoice No. 1206 for $31,450. 11 Received a check in the amount of $33,920 from Boecker Builders in full payment of invoice No. 1071. 11 Cash sales to date totaled $12,292. 12 Received a check in the amount of $28,714 from Trudy's Plumbing in payment of inoivce No. 1204. 12 Sold plumbing fixtures and supplies to Boecker Builders, on account, invoice No. 1207 for $24,730. 15 The Potts Co returned defective copper tubing that is purchased on December 11. A credit memo in the amount of $4,680 is issued relative to invoice No. 1206. The copper tubing had a cost of $3,550. 15 The defective copper tubing is returned to Edward's Plumbing supplies, Inc. along with a debit memo in the amount of $3,550 in reduction of purchase order No. 315. 15 Issud check No. 1588 for $399 in payment of November telephone bill to Northern Illinois Communications. 16 Issued check No. 1589 in the amount of $11,360 in payment of federal withholding taxes, $9,573, and FICA taxes, $1787, payable on November salaries and wages; The check is remitted to the Winnebago County Bank as the depository. 16 Issued check No. 1590 for $52,173 to Phoenix Plastics, Inc, in payment of purchase order No. 316. 17 The president informs you that Bilder Construction Co agrees to convert the $45,200 overdue account receivable (invoice No. 1120) to a 14% note due six months from today. 17 Purchased plumbing materials from Smith Pipe Company on account, purcase order No. 317 for $50,800 terms 1/15, n/60. 17 Sold drain tile, plastic pipe, and copper tubing to A & B Hardware on account, invoice No. 1208 for $7,920. 18 Sold fixtures and materials to Coconino Contractors, Inc. on account, invoice No. 1209 for $42,780.00 18 An invoice in the amount of $1,021 was received from S. White Trucking Company for freight on purchase order No. 317 and paid by issuing check No. 1591. 18 Received a check in the amount of $28,273 from Trudy's Plumbing in payment of invoice No. 1205. 19 Purchased office supplies from the Pen & Pad, issuing check No. 1592 in the amount of $1,360. (Note: Debit asset account). 19 Purchased a new Faith computer for $6,100 from Business Basics, Inc, purchase order No, 318, paying $600 down through check No. 1593 with the balance due in thirty days (n/30). The computer has an estmated life of five years with a salvage value of $1,300. 22 Purchased bathroom and kitchen fixtures from Phoenix Plastics, on account, purchase order No. 319 for $48,330, terms 1/10, n/30. 22 Received a bill from DeKalb Transport for $2,300 for freight costs incurred during the last 30 days, terms n/30. 23 The payroll summary for the biweekly pay period ended Friday, December 19 contained the follwing information: Delivery and warehouse wages 5,770 FICA taxes withheld 415 Federal income taxes withheld 1,067 State income taxes withheld 225 Net pay 4,063 Employer's payroll taxes: FICA tax 415 Federal unemployment tax State unemployment tax Issued check No. 1594 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were then preppared for distributions to the biweekly emplyees on Tuesday, December 23. NOTE: Transactions up to this point have been recorded. At this point you became controller and are responsible for recordign all further transactions. 25 The board of directors voted to purchase 1,000 shares of its own stock from stockholder Dionne Schivone at $83 per share and issued check No. 1595 in payment. Stock repurchases are recroded at cost. Rockford is purchasing these shares because Ms. Schivone had been a valuable employee. 26 The baord of directors declared a $1.80 per share cash dividend payable on January 14, 2015 to shareholders of record by the end of the day of December 26. 26 The president informs you that Beverly's Building Products agrees to convert the $14,000 overdue accounts receivable (invoice No. 1119) balance to a 12% note due six months from today. 29 A half-acre parcel of land adjacent to the building is acquired in exchange for 600 shares of unissued common stock. The land has a fair value of $54,000 and will be used immediately as an outside storage lot and parking lot. 29 An invoice in the amount of $2,650 is received from Wayne McManus, lawyer, for legal services involved in the acquisition of the adjacent parcel of land; check No. 1596 is issued. 29 Sold pipe and plumbing materials to Boecker Builders on account, invoice No. 1210 for $49,040.00 30 Issued check No. 1597 in the amount of $500 to the Northern Star for adverstisement run in the home building supplement of December 13. 30 Issued check No. 1598 in the amount of $925 to Standard Oil Co. in payment of gas, oil, and truck repairs from Standard Oil Co. (use Freight-out). 30 Purchased copper and cast iron pipe from Oxenford Copperworks on account, purchase order No. 320 for $63,940, terms 1/10, n/30. 30 Check No. 1599 for $15,000 is issued to the bond sinking fund trustee, Chicago Trust Co., for deposit in the sinking fund. (Use Other Assets). 30 Sold plumbing supplies to Swanson Brothers Construction on account, invoice No. 1211 for $24,650. 31 Received a check for $24,730 from Boecker Builders in payment of invoice No. 1207. 31 Issued check No. 1600 for $50,292 to Smith Pipe Company in payment of purchase order No. 317. 31 The custodian of the petty cash fund submits the following receipts for reimbursement and reports a cash-on-hand count of $8. Postage stampls used $38 United Parcel (freight-out) 23 C.O.D postage (freight costs) 51 Christmas office decorations 30 Check No. 1601 is issued and cashed to reimburse the fund. 31 Sold an electric truck-lift to Leila Stierman Co. for $2,500 cash. The original cost was $7,900 with salvage value of $900, a life of 10 years, and accumulated depreciation recorded through 11/31/13 is $4,550. The straight-line method is used. (Note: the company follows the practice of recording a half year's depreciation in the year of acquisition and a half year in the year of disposal.) First, bring the depreciation expense up to date in the general journal. Then journalize the entire entry for the sale in the cash receipts journal. 31 Sold bathroom fixtures and plumbing supplies to Trudy's Plumbing on account, invoice No. 1212 for $55,770. 31 Because for some time the petty cash fund has been smaller than required for monthly expenditures, the fund is increased by $75 by cashing check No. 1602 and placing the money in the petty cash fund. 31 The payroll summary for the monthly paid employees in submitted so that December checks can be distributed before the year-end; the details are as follows: Office and administrative salaries $42,900 Federal income taxes withheld 7,696 State income taxes withheld 1,517 FICA taxes withheld 3,120 Net pay $30,567 Issued check No, 1603 for the amount of the net pay and deposited it in the payroll bank account. Individual payroll checks were prepared for distribution to all monthly employees by the end of the day. Employer's payroll taxes: FICA tax (all office and administrative) $3,120 Federal unemployment tax 0 State unemployment tax 0 31 Cash sale since December 12 total $29,980. Instructions 1 Make the entries in the appropriate journal for December 25 through December 31. (adjusting entries are recorded in general journal) 2 Post any amounts to be posted as individual amounts from journals to the general ledger and update the receivable and payable subsidiary ledger accounts. (only a few entries are posted for Dec, e.g., account receivable. Please post all other entries) 3 Foot and cross-foot the columnar journals and complete the month-end postings of all books of orginal entry. 4 Prepare a trial balance by entering the accout balance from the general ledger in the work sheet (list all accounts, including those with zero balances). 5 From the following information prepare adjusting entries in the general journal and enter them in the work sheet. a The annual provison for doubtful accounts receivable is recorded by providing a charge to Bad Debt Expense in an amount equal to 2% of net credit sale. All cash sales were executed in December. b An inventory count of the office supplies revealed $830 of supplies on hand at year end. c The prepaid insurance on January 1, 2014 was $3,220, which covers the period January 1 through August 31, 2014. The insurance premium of $7,800 recorded in August covers the period of September 1, 2014 through August 31, 2015. Rockford estimates that 75% of the premiums are attributable to general activities (Use Insurance Expense) and 25% to selling activities. (Use Miscellaneous Expense). d The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2014: Delivery and Warehouse Wages $6,100 FICA Taxes Payable 430 Federal Withholding Taxes 1,036 State Withholding Taxes 218 Net pay 4,416 (will pay in 2015) e The employer's share of the FICA tax ($430) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salries earned during the last quarter exceed the manimum subject to unemployment tax. f Interest has accrued at 8% on the long-term notes payable since July 1,2014. These interests are due on January 1, 2015 (The first six-month interests have been recorded and paid in July). Interest on bonds is accrued and paid semi-annually, at a 4% coupon rate. The next interest payment is due on January 1, 2015. The bonds are dated January 1, 2008, and mature January 1, 2018. Market interest rate was 6% at issurance . Use effective interest amortization method. g The interest accrued to 12/31/14 on notes receivable is composed of the following: Platteville Plumbers, 10%, 6 months, due March 31, 2015 $1,125 Bilder Construction, 11%, 6 months, due June 14, 2015 232 Beverly's Building, 9%, 6 months, due June 26, 2015 17 $1,374 The interst accrued at 12/31/14 on the note payable (current) of $15,000 @ 10% is $1,500. Interest is payable on January 2, 2015. (The note is due in 2015) h A warehouse lease payment of $9,600 was made on Septermber 1, 2014, for rental through February 28, 2015. (The Prepaid Rent account is for advance lease payments on the warehouse.) i $530 is owned to Northern Electric Co. and $279 is owned to City of Rockford for utility services proved during December 2014. j Plant and equipmentto be depreciated are composed of the following: depreciati Date estimated salvage on Assets Acquired cost usage or life value method Building 7/1/2010 $306,000 25 years $20,000 sum-of-years' digits Truck #1 4/1/2010 28,000 60,000 miles 3,100 miles driven Truck #2 9/1/2011 33,000 60,000 miles 4,200 miles driven Lift #1* 8/17/2007 7,900 10 years 900 straight-line Lift #2 3/29/2011 4,500 10 years 500 straight-line Lift #3 9/16/2012 5,000 10 years 500 straight-line Office Equipment 1/1/14 Prior to 32,800 7 years 2,000 straight-line Computer 12/19/2014 6,100 4 years 1,300 Double-decling * sold 12/31/14 Truck No. 1has been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was driven 12,000 miles and truck No. 2 was driven 14,000 miles. Remember that Rockford Company takes a half-year's depreciation in the year of acquisition and a halfyear in the year of sale. 6 Complete the worksheet. Compute State of Illinois corporate income taxes at 4.5% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax is not deductible on the Illinois return. Assume federal corporate income tax on income subject to federal tax is as follows: first $50,000 15% next 25,000 25% remainder 34% Income between $100,000 and $335,000 is assessed a 5% federal surtax, not to exceed $11,750.00 7 Prepare the journal entry for income taxes. Post all adjusting entries. 8 Prepare 2014's income statement (assume the weighted-average number of shares outstanding for the year 2014 is 5,600 shares). Assume that bad debt expense and depreciation expense are administrative expenses. 9 Prepare 2014's statement of retained earnings. 10 Prepare 2014's balance sheet. adapted from Rockford Practice Set @Wiley Date Account Titles 3-Dec Allowance for Doutful Account Accounts Receivable - Iwanaga Plumbing and Heating Ref Debit Credit 113 112/190 3,700 730 214 350 412 112/122 4,680 120 505 3,550 15-Dec Accounts Payable - Edward's Plumbing Supplies Inc Inventory 201/18 120 3,550 17-Dec Notes Receivable Accounts Receivable - Bilder Construction 115 112/180 45,200 22-Dec Inventory Accounts Payable - DeKalb Transport 120 201/20 2,300 730 214 415 9-Dec Payroll Tax Expense FICA Taxes Payable 15-Dec Sales Returns and Allowance Accounts Receivable - The Potts Co Inventory Cost of Goods Sold 23-Dec Payroll Tax Expenses FICA Taxes Payable 3,700 350 4,680 3,550 3,550 45,200 2,300 415 Date Order No Account Credited 2-Dec 315 Edward's Plumbing Supplies, Inc. n/60 8 316 Phoenix Plastics 1/10, n/30 17 317 Smith Pipe Company 1/15, n/60 19 318 (see cash disbursements journal) 22 319 Phoenix Plastics 1/10, n/30 Account No Amount 18 24,320 14 52,700 39 50,800 14 48,330 Date Invoice No Account Debited 1-Dec 1201 Beverly's Building Products 3 1202 Bilder Construction Co 4 1203 Coconino Contractors, Inc 8 1204 Trudy's Plumbing 10 1205 Trudy's Plumbing 11 1206 The Potts Company 12 1207 Boecker Builders 17 1208 A & B Hardware 18 1209 Coconino Contractors, Inc Acct No. Acct. Rec. Dr Sales Rev. Cr COGS Dr inventory Cr 175 13,150 10,520 180 44,900 35,920 160 10,300 8,240 155 29,300 23,440 155 28,850 23,080 122 31,450 25,160 117 24,730 19,784 143 7,920 6,336 160 42,780 34,224 Date Description Cash Dr Sales Discounts Dr Ref AR Cr Sales Rev Cr Acct No 1-Dec Swanson Brothers Construction 4 The Potts Company 5 Rankin Plumbing Corp 8 Coconino Contractors Inc 8 Boecker Builders 10 Trudy's Plumbing 11 Boecker Builders 11 Cash Sales 23,569 49,294 72,863 27,800 29,000 15,100 33,920 12,292 481 1,006 1,487 133 122 166 160 117 155 117 Sundry Acct. Dr 12,292 505 120 12 Trudy's Plumbing 18 Trudy's Plumbing 28,714 28,273 Cr 24,050 50,300 74,350 27,800 29,000 15,100 33,920 586 577 155 155 29,300 28,850 9,834 9,834 Date Check No Payee Cash Cr Ref AP Dr Inventory Cr Acct No 2-Dec 4 5 5 9 1580 Oxenford Copperworks 1581 Standard Oil Company 1582 Khatan Steel Corp. 1583 Phoenix Plastics 1584 Payroll Bank Account 26,400 810 9,900 10,486 3,420 9 9 10 15 16 1585 Scooter Gordon 1586 Phoenix Plastics 1587 Smith Pipe Company 1588 N. ILL. Communications 1589 Winnebago County Bank 600 6,750 37,719 399 11,360 16 18 19 19 1590 Phoenix Plastics 1591 S. White Trucking 1592 Pen & Pad 1593 Business Basics Inc 52,173 1,021 1,360 600 23 1594 Payroll Bank Account 4,063 35 26,400 57 14 10,000 10,700 Sundry Acct. Dr Cr 644 726 214 216 218 610 14 6,750 38,100 52,700 4,860 732 216 214 14 39 810 399 9,573 1,787 120 126 151 201/16 726 214 216 218 1,021 1,360 6,100 100 214 350 900 190 600 381 527 5,500 5,770 415 1,067 225 Account: Cash Date Explanation 30-Nov Balance Account: Petty Cash Date Explanation 30-Nov Balance Account: Accounts Receivable Date Explanation 30-Nov Balance 3-Dec 15-Dec 17-Dec Ref Debit Credit 101 Balance 24 4 4 30 Ref Debit Credit 105 Balance 150 Ref Debit Credit J J J 3700 4 680 4 5200 112 Balance 3174 00 313700 309020 263820 Account: Allowance for Doubtful Accounts Date Explanation 30-Nov Balance Ref Debit Credit 113 Balance 4 560 Account: Notes Receivable Date Explanation 30-Nov Balance Ref Debit Credit 115 Balance 4 5000 Account: Interest Receivable Date Explanation 30-Nov Balance Ref Debit Credit 118 Balance 0 Account: Inventory Date Explanation 30-Nov Balance Ref Debit Credit 120 Balance 531960 Account: Supplies Date Explanation 30-Nov Balance Ref Debit Credit 126 Balance 2320 Account: Prepaid Insurance Date Explanation 30-Nov Balance Ref Debit Credit 130 Balance 11020 Account: Prepaid Rent Date Explanation 30-Nov Balance Ref Debit Credit 131 Balance 254 10 Account:Other Assets Date Explanation 30-Nov Balance Ref Debit Credit 135 Balance 139769 Explanation 1-Jan Balance Ref Debit Credit 14 0 Balance 4 3000 Explanation 1-Jan Balance Ref Debit Credit 14 5 Balance 306000 Account:Accum. Depr - Building Date Explanation 1-Jan Balance Ref Debit Credit 14 6 Balance 7304 0 Account:Equipment Date Explanation 1-Jan Balance Ref Debit Credit 151 Balance 32800 Account:Accum. Depr - Equipment Date Explanation 1-Jan Balance Ref Debit Credit 152 Balance 13200 Account:Land Date Account:Building Date Account:Trucks Date Ref Debit Credit 163 Balance 784 00 Account:Accum. Depr - Trucks Date Explanation 1-Jan Balance Ref Debit Credit 164 Balance 3954 0 Account:Notes Payable Date Explanation 1-Jan Balance Ref Debit Credit 200 Balance 15000 Account:Accounts Payable Date Explanation 30-Nov Balance Ref Debit Credit 201 Balance 126850 Account:Salaries and Wages Payable Date Explanation 30-Nov Balance Ref Debit Credit 212 Balance 0 Account:FICA Taxes Payable Date Explanation 30-Nov Balance Ref Debit Credit 214 Balance 1787 Account:Income Taxes Payable Date Explanation 30-Nov Balance Ref Debit Credit 215 Balance 0 Account:Federal Withholding Taxes Payable Date Explanation 30-Nov Balance Ref Debit Credit 216 Balance 9573 Account:State Withholding Taxes Payable Date Explanation 30-Nov Balance Ref Debit Credit 218 Balance 24 86 Account:FUTA Taxes Payable Date Explanation 30-Nov Balance Ref Debit Credit 224 Balance 4 00 Account:SUTA Taxes Payable Date Explanation 30-Nov Balance Ref Debit Credit 225 Balance 2600 Account:Interest Payable Date Explanation 30-Nov Balance Ref Debit Credit 230 Balance 0 Account:Dividends Payable Date Explanation 30-Nov Balance Ref Debit Credit 250 Balance 0 Account:Notes Payable (Long term) Date Explanation 1-Jul Balance Ref Debit Credit 268 Balance 113000 Account: Bonds Payable Date Explanation 1-Jan Balance Ref Debit Credit 270 Balance 275000 Account: Discount on Bonds Payable Date Explanation 1-Jan Balance Ref Debit Credit 273 Balance 17131 Account: Common Stock - $30 Stated Value Date Explanation 1-Jan Balance (6300 shares) Ref Debit Credit 311 Balance 189000 Account: Paid-in Captial in Excess of Stated Value Date Explanation 1-Jan Balance Ref Debit Credit 317 Balance 2564 00 Account: Retained Earnings Date Explanation 1-Jan Balance Ref Debit Credit 320 Balance 36274 8 Account: Treasury Stock Date Explanation 1-Jan Balance (700 shares) Ref Debit Credit 330 Balance 4 2610 Explanation Ref Debit Credit 332 Balance Account: Income Summary Date Explanation Ref Debit Credit 350 Balance Account: Sales Revenue Date Explanation 30-Nov Ref Debit Credit 4 01 Balance 5234 94 0 Account: Sales Return and Allowance Date Explanation 30-Nov Ref Debit Credit 4 12 Balance 9380 Account: Sales Discount Date Explanation 30-Nov Ref Debit Credit 4 14 Balance 7304 4 Account: Cost of Goods Sold Date Explanation 30-Nov Ref Debit Credit 505 Balance 364 8722 Account: Advertising Expense Date Explanation 30-Nov Ref Debit Credit 610 Balance 6578 Explanation 1-Jan Balance Account: Dividends Date Account: Bad Debt Expense Date Explanation 612 Balance Ref Debit Credit Account: Supplies Expense Date Explanation 30-Nov Ref Debit Credit 631 Balance 154 0 Account: Freight-out Date Explanation 30-Nov Ref Debit Credit 64 4 Balance 17732 Account: Misc Expense Date Explanation Ref Debit Credit 64 9 Balance Account: Depreciation Expense Date Explanation Ref Debit Credit 711 Balance Account: Insurance Expense Date Explanation Ref Debit Credit 722 Balance Ref Debit Credit Account: Salaries and Wages Expense Date Explanation 30-Nov Account: Rent Expense Date Explanation 726 Balance 933122 729 Balance Ref Debit Credit Account: Payroll Tax Expense Date Explanation 30-Nov Ref Debit Credit 730 Balance 82916 Account: Utilities Expense Date Explanation 30-Nov Ref Debit Credit 732 Balance 16270 Account: Interest Revenue Date Explanation 30-Nov Ref Debit Credit 820 Balance 3150 Ref Debit Credit Ref Debit Credit Ref Debit Credit Ref Debit Credit Account: Gain on Disposal of Plant Assets Date Explanation Account: Interest Expense Date Explanation 30-Nov Account:Loss on Disposal of Plant Assets Date Explanation Account:Income Tax Expense Date Explanation 30-Nov 826 Balance 905 Balance 24 570 921 Balance 999 Balance 72000 Three journal entries are posted here *you must post date, reference (type of journals), debit (credit) amount, and balance ** J means general journal entries (see instructions) Rockford Corporation Work Sheet December 31 2014 Account Titles Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet