This exercise serves as a review of basic accounting, but will also become part of a complex consolidation problem. Students may be a bit fuzzy on the accounting cycle and understanding consolidations requires a firm grasp of accounting fundamentals. The top panel provides ending ledger balances (post-closing trial balance) for Piels Inc followed by summary tranactions for 2011 and 2012.

The next below panel provides detail on long-lived assets needed for annual depreciation, and in 2012, amortization. Finally, the financial stament format, which also serves as a chart of accounts is at bottom.

Requirements:

1. Journalize data 2 set up full set of T-Accounts to serve as lesgerand post jpurnal entries to acccounts, 3. ledger balances, and 4. enter balances in financial statements. Repeat for 2012.

Remenber that balance sheet accounts continue from year-to-year, income statements cacts close tp $0.

For this assignment, you do not have to use formulas, not even links. Here and here only, having the correct amounts is sufficent. Future assignments will require correct use of basic fiormulas. Mostly addition, subtraction, multiplication, diviison, and linking cells. Anything more compex will be covered in class. However, Exce;l exists for a reaoon ( it makes our lives easier), so sbetter to start now.

2 3 12/31/2010 BALANCE SHEET P 4 CASH 28,000 5 ACCTS RECEIV 8,000 6 INVENTORY 9,000 7 EQUIPMENT 30,000 8 PATENT 9 GOODWILL 10 INVESTMENT 35,000 11 TOTALS 110,000 12 13 ACCUMULATED DEPRECIATION 9,000 14 ACC PAYABLE 3,000 15 ACCRUED PAYABLES 2,000 16 COMMON STOCK 11,000 17 RET EARNINGS 85,000 18 TOTALS 110,000 19 20 TRANSACTION DATA-JOURNALIZE, POST, TBs for P 11 & 12 21 TRANSACTION DATA-2011 P 22 SALES: ALL SALES ARE ON ACCOUNT 100,000 23 CASH COLLECTIONS: 12/31 BALANCE IN AR + 95% 24 INVENTORY PURCHASES AS % OF SALES 65% RECORD COST OF GOODS SOLD-GROSS PROFIT 25 AS % OF SALES 60% CASH PAID FOR INVENTORY: 12/31 BALANCE IN 26 ACC PAY + % OF PURCHASES 95% SELLING AND ADMIN EXPENSES EXCEPT DEP & 27 AMORT AS: % OF SALES 20% CASH DISBURSEMENTS FOR ACCRUED PAY: 28 12/31 BAL + S&A EXCEPT D&A*% 85% 29 DIVIDENDS DECLARED AND PAID $ 5,000 $ DON'T FORGET JES FOR EQUIP, PATENT, 30 DEPREC, AMORT USING DATA BELOW 110,000 95% 60% 60% 90% 20% 10% 7,000 21 2011' 2012 17 48 19 SALES 50 COGS 51 GROSS PROFIT ON SALES 52 SELLING & ADMIN EXP 53 DEPREC & AMORT 54 OPERATING INCOME 55 EQUITY INCOME 56 GAINS 57 (LOSSES) 58 NET INCOME 59 50 51 Statement of Retained Earnings 52 63 Beginning Retained Earnings 54 Net Income 55 Dividends Declared 56 Ending Retained Earnings 57 58 9 Balance Sheet -o 1 ASSETS 2 CASH 3 A/R 4 INVENTORY 5 EQUIPMENT 6 PATENT 7 GOODWILE 8 INVESTMENT 9 ACCUM DEPRECIATION 0 TOTAL ASSETS 31 2 LIABILITIES 3 A/P 4. ACCRUED PAYABLES 55 TOTAL LIABILITES 56 37 EQUITY 8 COMMON STOCK 9 RET EARNINGS 10 TOTAL EQUITY 1 TOTAL EQUITY & LIABILITIES 12 GENERAL LEDGER JE# CREDIT CASH 2011 Journal Account 1 ACC REC SALES Acct # DEBIT SKIP 100,000 FOR ACC REC 8,000 100,000 103,000 100,000 NOW 103,000 CASH ACC REC tso 103,000 ,000 12/31/11 12/31/12