Introduction to Financial Accounting Assignment
Complete the following questions.
Question 1) Parsonsfield, Inc. had the following transactions in 2017
The business was started when it acquired $200,000 in cash from the issuance of common stock.
The company purchased $900,000 of merchandise throughout the year.
During the year, the Company sold merchandise for $1,200,000 (broken out as follows):
- $ 520,000 Cash Sales
- 380,000 Credit Card Sales - The Credit Card Company charges a 4% service fee
- 300,000 Sales on Account
- $ 1,200,000
The merchandise sold was pulled from merchandise inventory and totaled $710,000.
The company collected all of the sales from the credit card receivable.
The company collected $210,000 of Accounts Receivable.
The company paid $190,000 cash for selling and administrative expenses.
Determined that 5% of the ending accounts receivable balance would be uncollectible.
REQUIRED -
A) Show the effects of each of the transactions on the elements of the financial statements, using a horizontal statements model like the one shown below. Use a "+" for an increase, "-" for a decrease and "N/A" for No effect.
B) Prepare Journal entries for each of the transactions and post them to T-Accounts?
C) Prepare an income statement, balance sheet, and statement of cash flows for 2017?
Question 2) Rosado Enterprises, Ltd manufactures sporting goods. The following information applies to a machine purchased on January 1, 2017.
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2017
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2018
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2019
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2020
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2021
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Purchase Price
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$80,000
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Delivery Cost
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$3,000
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Installation Charge
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$2,000
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Estimated life
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5 years
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Estimated Units (Units/Yr)
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160,000
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25,000
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45,000
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35,000
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30,000
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25,000
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Salvage Estimate
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$5,000
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REQUIRED - Determine the amount of depreciation for 2017 and 2018 using each of the following methods
A) Straight - Line.
B) Double-Declining Balance.
C) Units of Production.
Question 3) The following transactions were taken from the books of Platt Industries for 2017:
On February 1, 2017 borrowed $70,000 cash from the local bank. The note had a 6% interest rate and was due on June 30, 2017.
Cash sales for he year amounted to $240,000 plus sales tax at a rate of 6%.
Platt provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 1% of sales.
Paid the sales tax to the state sales tax agency on $210,000 of the sales.
Paid the note due on June 30 including the related interest
On November 1, 2017, borrowed $20,000 cash from the local bank. The note had a 6% interest rate and a one year term to maturity.
Paid $2,100 in warranty repairs.
A customer has filed a lawsuit against Ripley for $1 million for breach of contract. The company attorney does not believe the suit has any merit.
REQUIRED - A) Answer the following questions:
i. What amount of cash did Platt pay for interest in 2017?
ii. What amount of interest expense is reported on Platt's income statement for 2017?
iii. What is the amount of warranty expense for 2017?
B) Prepare the Current Liabilities portion of the balance sheet at December 31, 2017 (T-Accounts would help!).
Complete the above questions. Excel can be used. If prepared on separate sheets please attach this sheet to your work.