Trial Balance Unadjusted:

Cash	250,000	-
Accounts Receivable	582,000	-
Allowance for Doubtful Accounts		121,000
Interest Receivable	-
Merchandise Inventory	515,000	-
LIFO Reserve		12,000
Prepaid Insurance	-	-
Prepaid Advertising	56,000
Prepaid Rent	5,500
Office Supplies	2,000	-
Note Receivable	32,000
Available for Sale Securities	110,000
Office Building	1,500,000
Accumulated Depreciation - Office Building		50,000
Storage Building	750,000
Land	375,000
Store Equipment	175,000	-
Accumulated Depreciation - Store Equipment	-	64,000
Office Equipment	130,000	-
Accumulated Depreciation - Office Equipment	-	25,000
Patent	75,000
Accounts Payable	-	375,000
Salaries Payable	-	-
Interest Payable	-	-
Income Tax Payable
Unearned Revenue	-
Loan Payable - Onstar Bank		300,000
Loan Payable - Coldstar Bank	-	1,000,000
Common Stock	-	300,000
Additional Paid in Capital		900,000
Retained Earnings	-	769,750
Accumulated Other Comprehensive Income		85,000
Dividends	250,000	-
Sales	-	2,108,500
Sales Returns and Allowances	47,000	-
Sales Discounts	62,000	-
Cost of Goods Sold	625,000	-
Sales Salaries Expense	125,000	-
Advertising Expense	25,000	-
Depreciation Expense -Store Equipment	-	-
Warranty Expense	3,500	-
Office Salaries Expense	400,000	-
Rent Expense		-
Insurance Expense	12,000	-
Depreciation Expense - Office Equipment	-	-
Office Supplies Expense	23,000	-
Miscellaneous Administrative Expense	7,250	-
Rent Revenue	-	17,000
Interest Revenue on Note Receivable
Dividend Revenue on AFS Securities		35,000
Interest Expense	-	-
Bad Debt Expense	25,000	-
	6,162,250	-

They have provided you with the unadjusted trial balance for Computers Inc. as of 12/31/16.

On the designated worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information (round all numbers to the nearest dollar). Add any new accounts as needed to the trial balance.

Computers Inc. was authorized to issue 1,000,000 shares of $2 par Common Stock but has only issued 150,000 shares of common stock as of 12/31/2016. All 150,000 shares were issued on 1/1/2014 at $8 per share. No new shares were issued during 2016.

a. Based on your review of the cash balances, you note that there was an overdraft of $28,000 in one of your bank accounts. However, there are many bank accounts at the specific bank where the account with the overdraft is deposited. The total cash at this bank equals a debit balance of $250,000. The previous accountant moved the overdraft to Accounts Payable. You also note the Board of Directors has restricted $52,000 of cash for future expansion. This $52,000 is part of the cash balance. The future expansion will not occur for several more years.

b. Based on your inquiries, you note that $25,000 of accounts receivable had been written off during the year. The clerk had debited bad debt expense for $25,000 and credited Accounts Receivable for $25,000. The company uses the allowance method based on the aging of accounts receivable at the end of the year. Based on this method, Computers inc determines that uncollectible accounts are $180,000 at the end of 2016.

c. Per a physical count of office supplies, $4,000 of supplies remained at the end of 2016. The balance on the worksheet in the office supplies account represents last years ending balance. During the year, $23,000 of office supplies were purchased and immediately expensed.

d. On August 1, 2016, Computerz Inc loaned a key supplier, Hard Drives, $32,000. A promissory note was signed and issued. The note is due in full 9-months from August 1^st. Hard Drives agrees to pay interest on the note at an annual rate of 10% Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.

e. On November 1, 2016, Computerz Inc purchased an 15 month insurance policy for $12,000.

f. On June 1, 2016, Computerz Inc paid Mega Rams $56,000 for 10 months of advertising services. Equal services are provided each month. All other advertising paid for during the year has been consumed.

g. Computerz Inc added a one-year warranty to one of its new products this year. It is estimated that the total cost of servicing the warranties on the 2016 sales will be $10,000. During 2016, $3,500 was refunded to customers for warranty issues on 2016 sales and recorded as warranty expense.

h. Office salaries for the last week of 2016 of $13,500 remained unpaid at 12/31/16, but the prior accountant did not accrue.

i. Because of a new product line, Computers Inc. needed some temporary additional storage space so on October 1 (Enter your birthday month), 2016 they rented a unit for an annual rate of $5,500 and they paid the entire amount up front.

j. The office building was bought in January 1, 2014 and Computers Inc plans to use the building for 40 years and believes it will have a salvage value of $500,000 at the end of 40 years. Computers INC depreciates the building on a straight line basis. Due to the location of the building and use potential, they are concerned about impairment. At 12/31/2016 it is determined that the future cash flows for the building are $1,350,000. The fair value of the building is $1,300,000 at 12/31/2016.

k. The store equipment was purchased January 1, 2014. Computers Inc uses the straight line method to depreciate store equipment. No store equipment has been added since the initial purchase. It was estimated that the store equipment had a useful life of 5 years with a salvage value of $15,000. Now in 2016, Computers Inc estimates the useful life to be 10 years with a salvage value of 12,500.

l. The office equipment was not purchased until January 1, 2015. Computers Inc uses the DDB method to depreciate office equipment. No office equipment has been added since the initial purchase. It is estimated that the office equipment has a useful life of 5 years with a salvage value of $5,000.

m. On April 1, 2016, Computers Inc rented a portion of their store to Bytes and Bits. The contract was for 10 (enter the last digit of your student number) months and Computers Inc required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company.

n. The storage building was self-constructed this year by Computers Inc The Company had their initial expenditure of $250,000 on January 1. They paid an additional $350,000 on March 1^st and then the final payment of $150,000 on December 1^st. when the building was completed and occupancy occurred. The company has decided to use S/L method for depreciation. The storage building is estimated to have a life of 40 years and a savage value of $10,000. The company depreciates this asset using partial years.

o. Computers Inc uses the Dollar Value LIFO inventory method. For internal purposes, the Merchandise Inventory Account is maintained at FIFO (current costs). At the end of the year, the LIFO reserve account is adjusted so inventory on the balance sheet reflects Dollar Value LIFO. You need to calculate the proper inventory balance and adjust the LIFO reserve. The price index for this year is 1.10. Prior year inventory records show the following calculation for 2015:

275,000 X 1.0 = 275,000

125,000 X 1.08 = 135,000

p. As of 12/31/2016 the Available for Sale Securities have a fair value of $100,000. Due to the market conditions, the company does not plan on selling the assets in 2016, but their intent is to sell at some point in time. (Ignore income taxes when recording this information.)

q. Computers Inc has two loans outstanding. Interest is paid annually on January 1^st. The facts on each loan is as follows:

Onstar Bank outstanding since January 1, 2016 with a 5.0% interest rate. This loan was taken out to finance the construction of the Storage Building. The loan and the related interest will be paid off on January 1, 2017.

Coldstar Bank outstanding all of 2016 with a 4.0 %. This is a six year loan with interest due annually on January 1st. Principle is due on January 1, 2020. Since interest will not be paid to the bank until 1/1/2016, ComputersInc did not accrue any interest.

r. On September 1, 2016, Computers Inc recorded a patent in the amount of $75,000. The company paid outside legal fees of $20,000 to have the patent registered. The other $55,000 represents internal costs in developing the patent. The patent is good for 20 years, but the company estimates that the patent will have a useful life of 5 years with no residual value. No one knows what to do with this information so no amortization has been recorded for 2016. Amortization is straight line and the company depreciates using partial years for intangible assets.

s. After reviewing details of sales, you note that the sales taxes collected on the last week of Decembers sales were included in sales revenue. Sales recorded the last week of December that included the sales tax of 10% amounted to $30,000

t. Computers inc has a straight tax rate of 28%. Income tax expense is Net Income before taxes times 28%.