The unadjusted pre closing 12 31 20 account balances for the Maloney Company are listed below Net Sales $12,540 Net Purchases 9,000 Selling Expenses 424 Cash 487 Machines 6,019 Accumulated Depreciation, Machines 2,154 Accounts Payable 1,445 Retained Earnings 4,182 Allowance for Doubtful Accounts 60 Building 4,800 Accumulated Depreciation, Building 468 Common Stock 4,760 Accounts Receivable 2,877 Depreciation Expense, Machines 1,077 Inventory 1 1 20 (periodic method used) 925 During your audit, you discover the following four items that have yet to be recorded No depreciation on the building has been recorded in 2020 Depreciation on the building is based on Double Declining Balance It was purchased on 1 1 18 and has an estimated useful life of 40 years The estimated salvage value is $1,000 Maloney exchanged a machine for a similar machine on 12 31 20 The original machine cost $3,429 and had a book value of $2,134 The new machine had a fair value of $1,823 Maloney also received $511 in cash The exchange lacked commercial substance Maloney uses the Income Statement approach to record Bad Debts Bad Debts in 2020 are estimated to be 4 of Sales Ending Inventory is to be estimated using the Gross Profit Method The historic Gross Profit percentage is 25 Required Record journal entries for items 1 3 above show supporting computations In addition, compute ending inventory per 4 above show supporting computations Assume adjusting closing entries to adjust inventory, close Purchases, and Record CGS were properly made Draft the 2020 Condensed Income Statement and the 12 31 20 Balance Sheet Use the Cabrera (Textbook Illustration 4 3 in Chapter 4) and the Uptown Cabinet (Textbook Illustration 3 41 in Chapter 3) format examples in the text Assume no taxes Do not include EPS

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Posted on Jul 21, 2024

The unadjusted pre-closing 12/31/20 account balances for the Maloney Company are listed below:

Net Sales	$12,540
Net Purchases	9,000
Selling Expenses	424
Cash	487
Machines	6,019
Accumulated Depreciation, Machines	2,154
Accounts Payable	1,445
Retained Earnings	4,182
Allowance for Doubtful Accounts	60
Building	4,800
Accumulated Depreciation, Building	468
Common Stock	4,760
Accounts Receivable	2,877
Depreciation Expense, Machines	1,077
Inventory @ 1/1/20 (periodic method used)	925

During your audit, you discover the following four items that have yet to be recorded:

No depreciation on the building has been recorded in 2020. Depreciation on the building is based on Double-Declining Balance. It was purchased on 1/1/18 and has an estimated useful life of 40 years. The estimated salvage value is $1,000.
Maloney exchanged a machine for a similar machine on 12/31/20. The original machine cost $3,429 and had a book value of $2,134. The new machine had a fair value of $1,823; Maloney also received $511 in cash. The exchange lacked commercial substance.
Maloney uses the Income Statement approach to record Bad Debts. Bad Debts in 2020 are estimated to be 4% of Sales.
Ending Inventory is to be estimated using the Gross Profit Method. The historic Gross Profit percentage is 25%.

Required

Record journal entries for items #1-#3 above; show supporting computations. In addition, compute ending inventory per #4 above; show supporting computations. Assume adjusting/closing entries to adjust inventory, close Purchases, and Record CGS were properly made.
Draft the 2020 Condensed Income Statement and the 12/31/20 Balance Sheet. Use the Cabrera (Textbook Illustration 4-3 in Chapter 4) and the Uptown Cabinet (Textbook Illustration 3-41 in Chapter 3) format examples in the text. Assume no taxes. Do not include EPS.