Specialty

Specialty Appliance Center-Rapids City has just purchased a franchise from Specialty Appliance Center (SAC). i (Click the icon to view the additional information.) Following is the chart of accounts for Specialty Appliance Center-Rapids City. As a new business, all beginning balances are $0. (Click the icon to view the chart of accounts.) Specialty Appliance Center-Rapids City completed the following transactions during 2024, its first year of operations: Click the icon to view the transactions.) Read the requirements Requirement 1. Record the transactions in the general journal. Omit explanations. (Record debits first, then credits. Exclude explanations from any joumal entries.) a. Received $520,000 cash from owner, A. Bamerd. Opened a new checking account at Rapids City National Bank and deposited the cash received from the owner. Date Accounts Debit Credit (a) - X Requirements 270 3,400 1,400 310,000 510,000 131,000 Bank service charge 2.100 (1.460,750) $ Ending balance, December 31, 2024 379,750 *Bank Checks is a company that prints business checks (considered a bank expense) for Specialty Appliance Center-Rapids City 4. In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2024 a. Building, straight-line, 30 years, $40,000 residual value. b. Store Fixtures, straight-line, 15 years, no residual value. c. Office Equipment, double-declining-balance, five years, $4,000 residual value. 5. Record adjusting entries for the year ended December 31, 2024: a. One year of the prepaid insurance has expired. b. Management estimates that 4% of Accounts Receivable will be uncollectible. c. An inventory of office supplies indicates $1,426 of supplies have been used. d. Calculate the interest earned on the outstanding Keard Contracting note receivable. Assume the note was received on October 31. Round to the nearest dollar. e. Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which has a 10-year life. g. Calculate the interest owed on the note payable. Assume the note was issued on January 1. 6. Post adjusting entries and prepare an adjusted trial balance. 7. Prepare a multi-step income statement and statement of owner's equity for the year ended December 31, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume Interest Receivable is a current asset and Interest Payable is a current liability. 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results. liaudits Requirements Bank service charge 2,100 (1,460,750) Ending balance, December 31, 2024 $ 379,750 *Bank Checks is a company that prints business checks (considered a bank expense) for Specialty Appliance Center-Rapids City 4. In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2024 a. Building, straight-line, 30 years, S40,000 residual value. b. Store Fixtures, straight-line, 15 years, no residual value. c. Office Equipment, double-declining-balance, five years, $4.000 residual value. 5. Record adjusting entries for the year ended December 31, 2024: a. One year of the prepaid insurance has expired. b. Management estimates that 4% of Accounts Receivable will be uncollectible. c. An inventory of office supplies indicates $1,426 of supplies have been used. d. Calculate the interest earned on the outstanding Keard Contracting note receivable. Assume the note was received on October 31. Round to the nearest dollar. e. Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which has a 10-year life. g. Calculate the interest owed on the note payable. Assume the note was issued on January 1. 6. Post adjusting entries and prepare an adjusted trial balance. 7. Prepare a multi-step income statement and statement of owner's equity for the year ended December 31, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume Interest Receivable is a current asset and Interest Payable is a current liability. 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results. a. Liquidity i. Current ratio ii. Acid-test ratio iii. Cash ratio b. Efficiency: i. Accounts receivable turnover ii. Day's sales in receivables iii. Asset turnover iv. Rate of return on total assets Print Done - More Info f. a. Received $520,000 cash from owner, A. Bamerd, in exchange for capital. Opened a new checking account at Rapids City National Bank and deposited the cash received from the owner. b. Paid $55,000 cash for a SAC franchise. C. Paid $320.000 cash and issued a $250.000, 10-year, 12% notes payable for land with an existing building. The assets had the following market values: Land, $110,000: Building, S460,000. d. Paid $52,500 for store fixtures. e. Paid $75,000 for office equipment Paid $1,400 for office supplies. g. Paid $3,400 for a two-year insurance policy h. Purchased appliances from SAC (merchandise inventory) on account for $410,000 i. Established a petty cash fund for $270. j. Sold appliances on account to XYZ Contractors for $250,000, terms n/30 (cost, $125,000). k. Sold appliances to Harris Contracting for $120,000 (cost, $65,000), receiving a 6-month, 15% note. 1. Recorded credit card sales of $60,000 (cost $33,000), net of processor fee of 1%. m. Received payment in full from XYZ Contractors. n. Purchased appliances from SAC on account for $680,000. o. Made payment on account to SAC, $310,000. p. Sold appliances for cash to EB Home Builders for $330,000 (cost, $200,000). 4. Received payment in full on the maturity date from Harris Contracting for the note. 1. Sold appliances to Keard Contracting for S210,000 (cost, $ 129,000), receiving a 9-month, 15% note. S. Made payment on account to SAC, $510,000 Sold appliances on account to various businesses for $990,000, terms n/30 (cost, $495,000). u. Collected $680,000 cash on account. Paid cash for expenses: Salaries, $120,000; Utilities, $11,000 W. Replenished the petty cash fund when the fund had $84 in cash and petty cash tickets for $176 for office supplies. t. v. Print Done - More Info U. Tau 299,00U CASITTUI A Tammse. C. Paid $320,000 cash and issued a $250,000, 10-year, 12% notes payable for land with an existing building. The assets had the following market values: Land, $110,000: Building, $460,000. d. Paid $52,500 for store fixtures. e. Paid $75,000 for office equipment f. Paid $1,400 for office supplies. g. Paid $3,400 for a two-year insurance policy h. Purchased appliances from SAC (merchandise inventory) on account for $410,000. i. Established a petty cash fund for $270. j. Sold appliances on account to XYZ Contractors for $250,000, terms n/30 (cost, $125,000). k. Sold appliances to Harris Contracting for $120,000 (cost, $65,000), receiving a 6-month, 15% note. 1. Recorded credit card sales of $60,000 (cost, $33,000), net of processor fee of 1%. m. Received payment in full from XYZ Contractors. n. Purchased appliances from SAC on account for $680,000 0. Made payment on account to SAC, $310,000 p. Sold appliances for cash to EB Home Builders for $330,000 (cost, $200,000). q. Received payment in full on the maturity date from Harris Contracting for the note. Sold appliances to Keard Contracting for $210,000 (cost, $129,000), receiving a 9-month, 15% note. s. Made payment on account to SAC, $510,000. t. Sold appliances on account to various businesses for $990,000, terms n/30 (cost, $495,000). 1. Collected $680,000 cash on account. v. Paid cash for expenses: Salaries, $120,000: Utilities, $11,000 W. Replenished the petty cash fund when the fund had $84 in cash and petty cash tickets for $176 for office supplies. X. Bamerd withdrew 524,000. y. Paid the franchise fee to SAC of 7% of total sales of $1,960,000. r. Print Done - Requirements 1. Record the transactions in the general journal. Omit explanations. 2. Post to the general ledger. 3. It is a common business practice to reconcile the bank accounts on a monthly basis. However, in this problem, the reconciliation of the company's checking account will be done at the end of the year, based on an annual summary. Reconcile the bank account by comparing the following annual summary statement from Rapids City National Bank to the Cash account in the general ledger. Record journal entries as needed and post to the general ledger. Use transaction z as the posting reference. Beginning Balance, January 1, 2024 0 Deposits and other credits: S 520,000 59,400 250,000 330,000 680,000 Interest Revenue 1,100 1.840,500 Checks and other debits: EFT to Bank Checks $ 80 Checks: 55,000 320,000 75,000 52,500 270 3,400 1,400 310,000 510,000 - More Info SAC is a manufacturer of kitchen appliances. SAC markets its products via retail stores that are operated as franchises. As a SAC franchisee, Specialty Appliance CenterRapids City will receive many benefits, including having the exclusive right to sell SAC brand appliances in Rapids City. SAC appliances have an excellent reputation and the SAC name and logo are readily recognized by consumers. SAC also manages national television advertising campaigns that benefit the franchisees. In exchange for these benefits, Specialty Appliance Center-Rapids City will pay an annual franchise fee to SAC based on a percentage of sales. The annual franchise fee is a separate cost and in addition to the purchase of the franchise. In addition to purchasing the franchise, Specialty Appliance CenterRapids City will also purchase land with an existing building to use for its retail store store fixtures, and office equipment. The business will purchase appliances from SAC and resell them in its store, primarily to local building contractors for installation in new homes. Print Done More Info Specialty Appliance Center-Rapids City Chart of Accounts Cash Bamerd, Capital Petty Cash Bamerd, Withdrawals Accounts Receivable Sales Revenue Allowance for Bad Debts Interest Revenue Merchandise Inventory Cost of Goods Sold Office Supplies Franchise Fee Expense Prepaid Insurance Salaries Expense Interest Receivable Utilities Expense Notes Receivable Insurance Expense Land Supplies Expense Building Bad Debt Expense Accumulated Depreciation-Building Bank Expense Store Fixtures Credit Card Expense Accumulated DepreciationStore Fixtures Depreciation Expense-Building Office Equipment Depreciation Expense-Store Fixtures Accumulated Depreciation Office Equipment Depreciation Expense-Office Equipment Franchise Amortization Expense-Franchise Accounts Payable Interest Expense Interest Payable Cash Short and Over Notes Payable Print Done Specialty Appliance Center-Rapids City has just purchased a franchise from Specialty Appliance Center (SAC). i (Click the icon to view the additional information.) Following is the chart of accounts for Specialty Appliance Center-Rapids City. As a new business, all beginning balances are $0. (Click the icon to view the chart of accounts.) Specialty Appliance Center-Rapids City completed the following transactions during 2024, its first year of operations: Click the icon to view the transactions.) Read the requirements Requirement 1. Record the transactions in the general journal. Omit explanations. (Record debits first, then credits. Exclude explanations from any joumal entries.) a. Received $520,000 cash from owner, A. Bamerd. Opened a new checking account at Rapids City National Bank and deposited the cash received from the owner. Date Accounts Debit Credit (a) - X Requirements 270 3,400 1,400 310,000 510,000 131,000 Bank service charge 2.100 (1.460,750) $ Ending balance, December 31, 2024 379,750 *Bank Checks is a company that prints business checks (considered a bank expense) for Specialty Appliance Center-Rapids City 4. In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2024 a. Building, straight-line, 30 years, $40,000 residual value. b. Store Fixtures, straight-line, 15 years, no residual value. c. Office Equipment, double-declining-balance, five years, $4,000 residual value. 5. Record adjusting entries for the year ended December 31, 2024: a. One year of the prepaid insurance has expired. b. Management estimates that 4% of Accounts Receivable will be uncollectible. c. An inventory of office supplies indicates $1,426 of supplies have been used. d. Calculate the interest earned on the outstanding Keard Contracting note receivable. Assume the note was received on October 31. Round to the nearest dollar. e. Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which has a 10-year life. g. Calculate the interest owed on the note payable. Assume the note was issued on January 1. 6. Post adjusting entries and prepare an adjusted trial balance. 7. Prepare a multi-step income statement and statement of owner's equity for the year ended December 31, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume Interest Receivable is a current asset and Interest Payable is a current liability. 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results. liaudits Requirements Bank service charge 2,100 (1,460,750) Ending balance, December 31, 2024 $ 379,750 *Bank Checks is a company that prints business checks (considered a bank expense) for Specialty Appliance Center-Rapids City 4. In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2024 a. Building, straight-line, 30 years, S40,000 residual value. b. Store Fixtures, straight-line, 15 years, no residual value. c. Office Equipment, double-declining-balance, five years, $4.000 residual value. 5. Record adjusting entries for the year ended December 31, 2024: a. One year of the prepaid insurance has expired. b. Management estimates that 4% of Accounts Receivable will be uncollectible. c. An inventory of office supplies indicates $1,426 of supplies have been used. d. Calculate the interest earned on the outstanding Keard Contracting note receivable. Assume the note was received on October 31. Round to the nearest dollar. e. Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which has a 10-year life. g. Calculate the interest owed on the note payable. Assume the note was issued on January 1. 6. Post adjusting entries and prepare an adjusted trial balance. 7. Prepare a multi-step income statement and statement of owner's equity for the year ended December 31, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume Interest Receivable is a current asset and Interest Payable is a current liability. 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results. a. Liquidity i. Current ratio ii. Acid-test ratio iii. Cash ratio b. Efficiency: i. Accounts receivable turnover ii. Day's sales in receivables iii. Asset turnover iv. Rate of return on total assets Print Done - More Info f. a. Received $520,000 cash from owner, A. Bamerd, in exchange for capital. Opened a new checking account at Rapids City National Bank and deposited the cash received from the owner. b. Paid $55,000 cash for a SAC franchise. C. Paid $320.000 cash and issued a $250.000, 10-year, 12% notes payable for land with an existing building. The assets had the following market values: Land, $110,000: Building, S460,000. d. Paid $52,500 for store fixtures. e. Paid $75,000 for office equipment Paid $1,400 for office supplies. g. Paid $3,400 for a two-year insurance policy h. Purchased appliances from SAC (merchandise inventory) on account for $410,000 i. Established a petty cash fund for $270. j. Sold appliances on account to XYZ Contractors for $250,000, terms n/30 (cost, $125,000). k. Sold appliances to Harris Contracting for $120,000 (cost, $65,000), receiving a 6-month, 15% note. 1. Recorded credit card sales of $60,000 (cost $33,000), net of processor fee of 1%. m. Received payment in full from XYZ Contractors. n. Purchased appliances from SAC on account for $680,000. o. Made payment on account to SAC, $310,000. p. Sold appliances for cash to EB Home Builders for $330,000 (cost, $200,000). 4. Received payment in full on the maturity date from Harris Contracting for the note. 1. Sold appliances to Keard Contracting for S210,000 (cost, $ 129,000), receiving a 9-month, 15% note. S. Made payment on account to SAC, $510,000 Sold appliances on account to various businesses for $990,000, terms n/30 (cost, $495,000). u. Collected $680,000 cash on account. Paid cash for expenses: Salaries, $120,000; Utilities, $11,000 W. Replenished the petty cash fund when the fund had $84 in cash and petty cash tickets for $176 for office supplies. t. v. Print Done - More Info U. Tau 299,00U CASITTUI A Tammse. C. Paid $320,000 cash and issued a $250,000, 10-year, 12% notes payable for land with an existing building. The assets had the following market values: Land, $110,000: Building, $460,000. d. Paid $52,500 for store fixtures. e. Paid $75,000 for office equipment f. Paid $1,400 for office supplies. g. Paid $3,400 for a two-year insurance policy h. Purchased appliances from SAC (merchandise inventory) on account for $410,000. i. Established a petty cash fund for $270. j. Sold appliances on account to XYZ Contractors for $250,000, terms n/30 (cost, $125,000). k. Sold appliances to Harris Contracting for $120,000 (cost, $65,000), receiving a 6-month, 15% note. 1. Recorded credit card sales of $60,000 (cost, $33,000), net of processor fee of 1%. m. Received payment in full from XYZ Contractors. n. Purchased appliances from SAC on account for $680,000 0. Made payment on account to SAC, $310,000 p. Sold appliances for cash to EB Home Builders for $330,000 (cost, $200,000). q. Received payment in full on the maturity date from Harris Contracting for the note. Sold appliances to Keard Contracting for $210,000 (cost, $129,000), receiving a 9-month, 15% note. s. Made payment on account to SAC, $510,000. t. Sold appliances on account to various businesses for $990,000, terms n/30 (cost, $495,000). 1. Collected $680,000 cash on account. v. Paid cash for expenses: Salaries, $120,000: Utilities, $11,000 W. Replenished the petty cash fund when the fund had $84 in cash and petty cash tickets for $176 for office supplies. X. Bamerd withdrew 524,000. y. Paid the franchise fee to SAC of 7% of total sales of $1,960,000. r. Print Done - Requirements 1. Record the transactions in the general journal. Omit explanations. 2. Post to the general ledger. 3. It is a common business practice to reconcile the bank accounts on a monthly basis. However, in this problem, the reconciliation of the company's checking account will be done at the end of the year, based on an annual summary. Reconcile the bank account by comparing the following annual summary statement from Rapids City National Bank to the Cash account in the general ledger. Record journal entries as needed and post to the general ledger. Use transaction z as the posting reference. Beginning Balance, January 1, 2024 0 Deposits and other credits: S 520,000 59,400 250,000 330,000 680,000 Interest Revenue 1,100 1.840,500 Checks and other debits: EFT to Bank Checks $ 80 Checks: 55,000 320,000 75,000 52,500 270 3,400 1,400 310,000 510,000 - More Info SAC is a manufacturer of kitchen appliances. SAC markets its products via retail stores that are operated as franchises. As a SAC franchisee, Specialty Appliance CenterRapids City will receive many benefits, including having the exclusive right to sell SAC brand appliances in Rapids City. SAC appliances have an excellent reputation and the SAC name and logo are readily recognized by consumers. SAC also manages national television advertising campaigns that benefit the franchisees. In exchange for these benefits, Specialty Appliance Center-Rapids City will pay an annual franchise fee to SAC based on a percentage of sales. The annual franchise fee is a separate cost and in addition to the purchase of the franchise. In addition to purchasing the franchise, Specialty Appliance CenterRapids City will also purchase land with an existing building to use for its retail store store fixtures, and office equipment. The business will purchase appliances from SAC and resell them in its store, primarily to local building contractors for installation in new homes. Print Done More Info Specialty Appliance Center-Rapids City Chart of Accounts Cash Bamerd, Capital Petty Cash Bamerd, Withdrawals Accounts Receivable Sales Revenue Allowance for Bad Debts Interest Revenue Merchandise Inventory Cost of Goods Sold Office Supplies Franchise Fee Expense Prepaid Insurance Salaries Expense Interest Receivable Utilities Expense Notes Receivable Insurance Expense Land Supplies Expense Building Bad Debt Expense Accumulated Depreciation-Building Bank Expense Store Fixtures Credit Card Expense Accumulated DepreciationStore Fixtures Depreciation Expense-Building Office Equipment Depreciation Expense-Store Fixtures Accumulated Depreciation Office Equipment Depreciation Expense-Office Equipment Franchise Amortization Expense-Franchise Accounts Payable Interest Expense Interest Payable Cash Short and Over Notes Payable Print Done