Wuycik Co, is a retailing business operating in the southeastern US. Wuycik's fiscal year-end is December 31, and it prepares financial statements just once a year, at year-end. The company has already recorded most of its transaction and adjusting entries for the year ended December 31, 2022. The resulting trial balance follows: Wuycik, has not yet recorded certain transactions and adjustments, and these omitted items are the focus of this assignment. Information pertaining to the omitted transactions and adjustments follows: 1. On January 2,2022, Wuxcik received a promissory note from a customer as consideration in an inventory sale transaction. Wuxcik recorded the sale, but it has not yet recorded the interest earned on the note during 2022. The 4%,$33,625 term note requires the customer to pay interest annually each January 1, 2023 through 2025. The relevant market rate of interest on the issue date was 8%. 2. Wuxcikpurchased its buildings in 2012 and its equipment in 2015. Wuxcik uses the straight-line depreciation method. For the buildings, the company uses an estimated life of 36 years and no salvage value. For the equipment, it uses an estimated life of 9 years and no salvage value. (Note - For the 2022 depreciation calculations, ignore the new fixed assets Wuxcikacquired on December 31,2022 - the new buildings and equipment received in T1, T2 and T3. Do consider the old buildings Wuxcik gave in T1 and T2, though, as the company used these assets for the full year. You should assume that Wuxcik computed the 2022 depreciation on them for T1 and T2, but has not yet recorded the amounts.) 2 3. The Notes Payable balance of $759,320 results from two loans the company has taken. On May 1,2021 , Wuycik took a 5-year, 5%,$635,320 loan. The interest on this loan is payable annually, on each April 30. Also, on June 1,2022, Wuycik, took a 1-year, 8%,$124,000 construction loan (see A5 below). The interest on the construction loan is payable on the loan's maturity date, May 31,2023 . (Note - Wuycik already recorded the interest paid on these loans in 2022. For this adjustment, consider any accrued interest on the loans at the December 31, 2022 reporting date.) 4. On October 29,2022 , Wuxcik received $51,210 from a customer as payment in advance for goods to be delivered over the next 8 months. The company recorded the collection in advance into a liability account. As of December 31,2022, Wuycik, has delivered $9,467 of the goods promised to the customer. A5. On April 11, 2022, Wuxcik hired a contractor to construct a new office building. The construction work commenced on June 1,2022 , and it is expected to continue through November 30,2023 , the estimated completion date. Wuxcik, made progress payments to the contractor in 2022 as follows: As stated in A3 above, Wuxcik took a 1-year, 8%,$124,000 construction loan to help fund the work on this project. The company also has a 5 -year, 5%,$635,320 loan that is not related to the construction project. Give the adjusting entry needed at December 31,2022 to record the capitalization of interest for this project. A6. On November 19, 2022, Juxcikpaid $91,038 for ads to run evenly over a 6-month period, starting December 1,2022. Wuxcik, records prepayments into an asset account. Prepare the entry to record the prepaid advertising expense. Also, give the adjusting entry needed at year-end. A7. Whucikestimates that 6.99% of the 2021 year-end Accounts Receivable balance will not be collected. A8. The company's Inventory balance (historical cost) is $318,765, determined under the LIFO method. The company considers the need for an inventory write-down. It applies the write-down procedure to the inventory as a whole. Information concerning the company's December 31, 2022 inventory follows: A9. The company's income tax rate for the year is 30%. Income tax will be paid in 2023. Wuycik Co, is a retailing business operating in the southeastern US. Wuycik's fiscal year-end is December 31, and it prepares financial statements just once a year, at year-end. The company has already recorded most of its transaction and adjusting entries for the year ended December 31, 2022. The resulting trial balance follows: Wuycik, has not yet recorded certain transactions and adjustments, and these omitted items are the focus of this assignment. Information pertaining to the omitted transactions and adjustments follows: 1. On January 2,2022, Wuxcik received a promissory note from a customer as consideration in an inventory sale transaction. Wuxcik recorded the sale, but it has not yet recorded the interest earned on the note during 2022. The 4%,$33,625 term note requires the customer to pay interest annually each January 1, 2023 through 2025. The relevant market rate of interest on the issue date was 8%. 2. Wuxcikpurchased its buildings in 2012 and its equipment in 2015. Wuxcik uses the straight-line depreciation method. For the buildings, the company uses an estimated life of 36 years and no salvage value. For the equipment, it uses an estimated life of 9 years and no salvage value. (Note - For the 2022 depreciation calculations, ignore the new fixed assets Wuxcikacquired on December 31,2022 - the new buildings and equipment received in T1, T2 and T3. Do consider the old buildings Wuxcik gave in T1 and T2, though, as the company used these assets for the full year. You should assume that Wuxcik computed the 2022 depreciation on them for T1 and T2, but has not yet recorded the amounts.) 2 3. The Notes Payable balance of $759,320 results from two loans the company has taken. On May 1,2021 , Wuycik took a 5-year, 5%,$635,320 loan. The interest on this loan is payable annually, on each April 30. Also, on June 1,2022, Wuycik, took a 1-year, 8%,$124,000 construction loan (see A5 below). The interest on the construction loan is payable on the loan's maturity date, May 31,2023 . (Note - Wuycik already recorded the interest paid on these loans in 2022. For this adjustment, consider any accrued interest on the loans at the December 31, 2022 reporting date.) 4. On October 29,2022 , Wuxcik received $51,210 from a customer as payment in advance for goods to be delivered over the next 8 months. The company recorded the collection in advance into a liability account. As of December 31,2022, Wuycik, has delivered $9,467 of the goods promised to the customer. A5. On April 11, 2022, Wuxcik hired a contractor to construct a new office building. The construction work commenced on June 1,2022 , and it is expected to continue through November 30,2023 , the estimated completion date. Wuxcik, made progress payments to the contractor in 2022 as follows: As stated in A3 above, Wuxcik took a 1-year, 8%,$124,000 construction loan to help fund the work on this project. The company also has a 5 -year, 5%,$635,320 loan that is not related to the construction project. Give the adjusting entry needed at December 31,2022 to record the capitalization of interest for this project. A6. On November 19, 2022, Juxcikpaid $91,038 for ads to run evenly over a 6-month period, starting December 1,2022. Wuxcik, records prepayments into an asset account. Prepare the entry to record the prepaid advertising expense. Also, give the adjusting entry needed at year-end. A7. Whucikestimates that 6.99% of the 2021 year-end Accounts Receivable balance will not be collected. A8. The company's Inventory balance (historical cost) is $318,765, determined under the LIFO method. The company considers the need for an inventory write-down. It applies the write-down procedure to the inventory as a whole. Information concerning the company's December 31, 2022 inventory follows: A9. The company's income tax rate for the year is 30%. Income tax will be paid in 2023
