The following are the transactions that occurred during 2018 and need to be recorded in the trial balance (tab A). Please include the journal entry on this tab.
Note:
Bad debt expense is included in "Selling Expense" and so if you need to use a bad debt expense account, label it "Selling Expense - bad debt expense".
Pension expense is included in "General and administrative expense" and so if you need to use a pension expense account, label it "General and administrative expense - Pension expense". Depreciation expense is accounted for similarly.
1. Close out the 2017 Income Statement Accounts into retained earnings. And close out Unrealized holding gain or loss - income into Accumulated other comprehensive income.
2. During 2018, Poke Farms sold $1,200,000 worth of seed on credit that had a cost of $620,000.
3. During 2018, Poke Farms collected $1,000,000 of their Accounts Receivable balance.
4. During 2018, Poke Farms sold $900,0000 of seed for cash that had a cost of $400,000.
5. During 2018, Poke Farms purchased on credit $1,100,000 of Inventory.
6. During 2018, Poke Farms paid $980,000 of the AP balance due to Inventory.
7. During 2018, Poke Farms purchased with cash $450,000 of Inventory.
8. During 2018, Poke Farms increased its Allowance for Doubtful Accounts by $12,000.
9. During 2018, Poke Farms wrote off $4,500 of its accounts receivable balance.
10. At the beginning of 2018, Poke Farms purchased equipment for $120,000 with cash. All equipment is depreciated straight line over 10 years and has 0 salvage value. 2017 was the 1st year depreciation expense was taken for the $600,000 included in the 12/31/2017 numbers. Depreciation is included in G&A expenses so use the account "General and administrative expenses - depreciation expense" for the depreciation expense account.
11. During 2018, Poke Farms purchaed an additional $80,000 investements into AFS Equity Investments.
12. At the end of 2018, the fair market value of Poke Farms' investement is $190,000.
13. During 2018, Poke Farms had $215,000 of selling expenses that were ultimately paid with cash during 2018.
14. During 2018 Poke Farms had $90,500 of General and administrative expenses that were ultimately paid with cash during 2018.
15. Use tab "F. Pension Worksheet" to calculate pension expense and the appropriate journal entry for 2018.
16. On May 1, 2018, Poke Farms issued 5,000 shares of $5 par value common stock and 400 shares of $50 par value preferred stock for a lump sum of $80,000. Common stock had a market price of $10 per share and Preferred stock had a market price of $83.33 per share.
17. On June 1, 2018, Poke Farms declared and distributed a dividend to preferred shareholders of $2 per share.
18. On March 15, 2018, Poke Farms filed IRS From 1120 and paid their income taxes. The amount paid was in the income taxes payable account at the end of 2017.
19. After preparing the Income Statement, prepare the income tax journal entry for 2018 assuming, that the DTL for 2017 was the result of a single temporary difference of $80,000 related to a difference between book and tax depreciation. The depreciation difference grew in 2018 to $150,000. The tax rate for 2017 and 2018 is 20%.