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The Purple Company This project will give you an opportunity to apply your knowledge of accounting principles and procedures to a corporation. You will handle
The Purple Company This project will give you an opportunity to apply your knowledge of accounting principles and procedures to a corporation. You will handle the accounting work of The Purple Company for Introduction The chart of accounts and account balances of The Purple Company shown in your text have been used to open general ledger accounts with opening balances for January The company does not use reversing entries. Other Data Estimated federal income taxes are to be recorded using the tax rate of Round your amount to the nearest dollar. DATE TRANSACTIONS FOR Jan. Issued shares of percent $ par preferred stock for $ per share. The corporation has been authorized to issue shares of preferred stock. Paid estimated income taxes of $ accrued at the end of Apr. Paid semiannual bond interest on the year, percent bonds payable and amortized the premium for the period since December The interest and premium were recorded as of December ; the entry was not reversed. The bonds were issued on October at a price of and they mature on October Use straightline amortization. July The board of directors declared a cash dividend of $ per share on the common stock. The dividend is payable on July to stockholders of record as of July Paid the cash dividend on the common stock. Aug. A purchaser of shares of preferred stock issued on January asked the corporation to repurchase the shares. The corporation repurchased the stock for $ per share. The stock is to be held by the corporation until it can be resold to another purchaser. Oct. Paid the semiannual bond interest and recorded amortization of the bond premium. Dec. Because of its good cash position and current bond prices, The Purple Company repurchased and retired $ par value of the percent bonds that it has outstanding. The repurchase price was plus accrued interest. The companys board of directors declared a cash dividend of $ per share on the outstanding preferred stock. This dividend is payable on January to stockholders of record as of December The board of directors also declared a percent stock dividend on the outstanding common stock. The new shares are to be distributed on January to stockholders of record as of December At the time the dividend was declared, the common stock had a fair market value of $ per share. Received a subscription for shares of The Purple Companys common stock at $ per share from the companys president. Received cash equal to onehalf the purchase price on the date of subscription. The balance of the purchase price is to be paid on January The subscriber will not be entitled to the stock dividend previously declared on the outstanding shares of common stock. Because the management of Purple foresees the need to expand a warehouse the firm owns, the board of directors has restricted future dividend payments. Record the appropriation of $ of retained earnings for plant expansion. SUMMARY OPERATING TRANSACTIONS FOR Total sales of merchandise for the year were $ All sales were on credit. Total collections on accounts receivable during the year were $ Total purchases of merchandise for the year were $ All purchases were on credit. Total operating expenses incurred during the year were $Debit Operating Expenses and credit Accounts Payable. Total cash payments on accounts payable during the year were $ Total accounts receivable charged off as uncollectible during the year were $The Purple Company uses the allowance method to record uncollectible accounts. DATA FOR YEAREND ADJUSTMENTS The balance of Allowance for Doubtful Accounts should be adjusted to equal percent of the balance of Accounts Receivable. Debit Operating Expenses. Depreciation on the buildings should be recorded. Debit Operating Expenses. The firm uses the straightline method and an estimated life of years to compute this adjustment. Depreciation on furniture and equipment should be recorded. The firm uses the straightline method and an estimated life of years to compute this adjustment. Debit Operating Expenses. Accrued interest on the outstanding bonds payable of The Purple Company should be recorded and the premium amortized. The ending merchandise inventory is $ Required: General Journal tab: Analyze the transactions for and record each transaction in the general journal. General Ledger tab: Post the general journal entries to the general ledger on a daily basis. Worksheet tab: Prepare a worksheet for the year ended December Income Statement tab: Prepare a summary income statement
The Purple Company
This project will give you an opportunity to apply your knowledge of accounting principles and procedures to a corporation. You will handle the accounting work of The Purple Company for
Introduction
The chart of accounts and account balances of The Purple Company shown in your text have been used to open general ledger accounts with opening balances for January The company does not use reversing entries.
Other Data
Estimated federal income taxes are to be recorded using the tax rate of Round your amount to the nearest dollar.
DATE TRANSACTIONS FOR
Jan. Issued shares of percent $ par preferred stock for $ per share. The corporation has been authorized to issue shares of preferred stock.
Paid estimated income taxes of $ accrued at the end of
Apr. Paid semiannual bond interest on the year, percent bonds payable and amortized the premium for the period since December The interest and premium were recorded as of December ; the entry was not reversed. The bonds were issued on October at a price of and they mature on October Use straightline amortization.
July The board of directors declared a cash dividend of $ per share on the common stock. The dividend is payable on July to stockholders of record as of July
Paid the cash dividend on the common stock.
Aug. A purchaser of shares of preferred stock issued on January asked the corporation to repurchase the shares. The corporation repurchased the stock for $ per share. The stock is to be held by the corporation until it can be resold to another purchaser.
Oct. Paid the semiannual bond interest and recorded amortization of the bond premium.
Dec. Because of its good cash position and current bond prices, The Purple Company repurchased and retired $ par value of the percent bonds that it has outstanding. The repurchase price was plus accrued interest.
The companys board of directors declared a cash dividend of $ per share on the outstanding preferred stock. This dividend is payable on January to stockholders of record as of December
The board of directors also declared a percent stock dividend on the outstanding common stock. The new shares are to be distributed on January to stockholders of record as of December At the time the dividend was declared, the common stock had a fair market value of $ per share.
Received a subscription for shares of The Purple Companys common stock at $ per share from the companys president. Received cash equal to onehalf the purchase price on the date of subscription. The balance of the purchase price is to be paid on January The subscriber will not be entitled to the stock dividend previously declared on the outstanding shares of common stock.
Because the management of Purple foresees the need to expand a warehouse the firm owns, the board of directors has restricted future dividend payments. Record the appropriation of $ of retained earnings for plant expansion.
SUMMARY OPERATING TRANSACTIONS FOR
Total sales of merchandise for the year were $ All sales were on credit.
Total collections on accounts receivable during the year were $
Total purchases of merchandise for the year were $ All purchases were on credit.
Total operating expenses incurred during the year were $Debit Operating Expenses and credit Accounts Payable.
Total cash payments on accounts payable during the year were $
Total accounts receivable charged off as uncollectible during the year were $The Purple Company uses the allowance method to record uncollectible accounts.
DATA FOR YEAREND ADJUSTMENTS
The balance of Allowance for Doubtful Accounts should be adjusted to equal percent of the balance of Accounts Receivable. Debit Operating Expenses.
Depreciation on the buildings should be recorded. Debit Operating Expenses. The firm uses the straightline method and an estimated life of years to compute this adjustment.
Depreciation on furniture and equipment should be recorded. The firm uses the straightline method and an estimated life of years to compute this adjustment. Debit Operating Expenses.
Accrued interest on the outstanding bonds payable of The Purple Company should be recorded and the premium amortized.
The ending merchandise inventory is $
Required:
General Journal tab: Analyze the transactions for and record each transaction in the general journal.
General Ledger tab: Post the general journal entries to the general ledger on a daily basis.
Worksheet tab: Prepare a worksheet for the year ended December
Income Statement tab: Prepare a summary income statement
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