Assignment
1. The following trial balance was taken from the company as of December 31, 2016.
|
Account
|
Debit
|
Credit
|
|
Cash
|
$30,000
|
|
|
Accounts Receivable
|
40,000
|
|
|
Allowance for doubtful accounts
|
|
2,000
|
|
S-T Notes receivable
|
19,000
|
|
|
Inventory, January 1, 2016
|
50,000
|
|
|
Prepaid insurance
|
20,000
|
|
|
Furniture and equipments
|
100,000
|
|
|
Accumulated depreciation of F & E
|
|
40,000
|
|
Patents
|
110,000
|
|
|
Accounts payable
|
|
12,000
|
|
Bonds payable
|
|
20,000
|
|
L-T notes payable
|
|
10,000
|
|
Common stock
|
|
40,000
|
|
Retained earnings
|
|
140,000
|
|
Sales
|
|
360,000
|
|
Purchase
|
149,000
|
|
|
Salary Expense
|
50,000
|
|
|
Rent expense
|
56,000
|
|
|
Totals
|
624,000
|
624,000
|
At the year end, the following items have not been recorded.
a. Prepaid Insurance expired during the year, $11,000.
b. Estimated bad debts, 1.0% sales.
c. Inventory as of December 31, 2016 turned out to be $40,000.
d. Four month rent of $56,000 was paid in advance on October 1, 2016 and charged to rent expense then.
e. Furniture and equipment have an average useful life of 5 years and no salvage value. Company uses the straight line method of depreciation.
f. Utility bill of $600 for the month of December 2016 will be paid on its due date, January 10, 2017..
g. Salaries earned but not yet paid by December 31, 2016, $6,000
Instruction:
1. Prepare any necessary adjusting entries at the end of 2016.
2. Prepare income statement and statement of retained earnings and balance sheet of the Company for the year 2016.
3. Prepare any necessary closing entries at the end of 2016.
2. On January 1, 2016, Company purchased 7%, 10-year bonds with a face value of $2,000,000 at $2,100,000. The interests will be paid annually on December 31 of each year. Company uses the straight-line method to amortize the Premium on bonds and the calendar year for its fiscal period. The fair market values of the bonds were $2,070,000 on 12/31/2016 and $2,120,000 on 12/31/2017. Company sold the bonds for $2,110,000 on 1/1/2018.
- Presume that Company classified the bond investments as for available for sales security. Prepare any necessary journal entries.
a. for the acquisition of the bonds on 1/1/2016.
b. the receipt of interest and premium amortization on 12/31/2016 and 12/31/2017.
c. any unrealized holding gain or loss as of 12/31/2016 and 12/31/2017.
d. the sales of the bond investment on 1/1/2018.
3. On January 2, 2017. Company co. purchased 30,000 shares of common stock, representing 30% ownership interest of WILDCATS co., for $1,200,000. In January 2018, WILDCATS reported net income of $400,000 for the year 2017 and declared and paid cash dividends of $250,000.
- Using the equity method, prepare any necessary journal entries of Company for
a. the purchase of the common stocks on 1/2/2017.
b. its share in WILDCATS net income announced in 2019.
c. dividend payments in 2018.
4. Bears construction, inc. had a 3 year project whose contract price was $8,000,000. construction activities are summarized in the table below.
|
|
12/31/16
|
12/31/17
|
12/31/18
|
|
Costs to date
|
2,000,000
|
5,000,000
|
9,000,000
|
|
Additional costs to complete
|
3,000,000
|
4,000,000
|
0
|
|
Progress billings to date
|
2,800,000
|
5,800,000
|
8,000,000
|
|
Cash collected to date
|
2,500,000
|
5,600,000
|
8,000,000
|
- Prepare any necessary journal entries for the above project in 2016, 2017 and 2018 using the percentage of completion method.
5. On 4/1/2016, Bears Company sold merchandise with a cost of $60,000 for $96,000 on the installment basis over 40 months with 20% down payment. The monthly payment will be made at the end of each month for 40 months starting from 4/30/2016. On 1/1 2018, Bears Company repossessed the merchandise from the customer due to default payments. Presume 0% interest on install payments.
- Prepare any necessary journal entries for the following transactions using the installment sales method.
a. For the sale and the adjustment to defer the gross profit in 2016.
b. For the payments received 2016(record the annual total).
c. For the recognition of the gross profit realized in 2016.
d. For the payments received in 2017 (record the annual total).
e. For the recognition of the gross profit realized in 2017.
f. For the repossessed merchandise on 1/1/2018 when its market value was $40,000.
g. This is independent of the previous instruction a.
f. Presume 24% interest on install payments, calculate the monthly payment.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.