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Exam 2 Softbyte Inc. Balance Sheet December 31, 2012 Assets Cash $500,000 Accounts Receivable 700,000 Inventory...

Exam 2 Softbyte Inc. Balance Sheet December 31, 2012 Assets Cash $500,000 Accounts Receivable 700,000 Inventory 300,000 Property, Plant & Equipment 900,000 Accumulated Depreciation (100,000) Total Assets $2,300,000 Liabilities & Equity Accounts Payable $300,000 Notes Payable 1,000,000 Common Stock 500,000 Retained Earnings 500,000 Total Liabilities & Equity $2,300,000 Instructions: Open the balances in the T-accounts (general ledger). Post the journal entries to the T-accounts (general ledger). Prepare an income statement, statement of retained earnings, balance sheet, and statement of cash flows-indirect method. Journal Entries for January 2013 Transaction 1: Sales Return Description: The buyer returns merchandise to the seller. Journal Entry: Dr. Cr. Sales Returns & Allowances 22,000 Accounts Receivable 22,000

Transaction 2: Sales Discounts Description: Recorded collection within 2/10, n/30 period. Journal Entry: Dr. Cr. Cash 24,500 Sales Discounts 500 Accounts Receivable 25,000

Transaction 3: Services Provided for Cash Description: Receives cash from customers for programming services it has provided. Journal Entry: Dr. Cr. Cash 155,000 Sales Revenue 155,000

Transaction 4: Cost Flow Assumption Description: Recorded cost of goods sold under one of the cost flow assumptions. Journal Entry: Dr. Cr. Cost of Goods Sold 45,000 Inventory 45,000

Transaction 5: Recording Estimated Uncollectible Description: The credit manager estimates that $16,000 of sales will be uncollectible. Journal Entry: Dr. Cr. Bad Debts Expense 16,000 Allowance for Doubtful Accounts 16,000

Transaction 6: Write-off of an uncollectible account Description: The credit manager authorizes a write-off of a $5,500 balance owed by a customer. Journal Entry: Dr. Cr. Allowance for Doubtful Accounts 5,500 Accounts Receivable 5,500

Transaction 7: Depreciation Expense Description: Recorded depreciation expense under one of the depreciation methods. Journal Entry: Dr. Cr. Depreciation Expense 12,000 Accumulated Depreciation 12,000

Transaction 8: Investment by Stockholders
 Description: Invested $55,000 cash in the business in exchange for common stock.
 Journal Entry: Dr. Cr. Cash 55,000 Common Stock 55,000

Transaction 9: Dividends Description: The corporation pays a dividend of $4,700 in cash to the stockholders. Journal Entry: Dr. Cr. Dividends 4,700 Cash 4,700

Transaction 10: Purchase of Equipment Description: Purchases computer equipment for $7,800 cash. Journal Entry: Dr. Cr. Equipment 7,800 Cash 7,800

Transaction 11: Purchase of Supplies on Credit Description: Purchases $4,800 of inventory on credit. Journal Entry: Dr. Cr. Inventory 4,800 Accounts Payable 4,800

1.What is the ending cash balance? A. $750,000 B. $767,000 C. $722,000 D. $725,000

2.What is the ending accounts receivable balance net of allowance for doubtful accounts? $637,000 B. $638,000 C. $652,000 D. $675,000

3.What is the ending inventory balance? A. $241,900 B. $259,800 C. $249,600 D. $245,300

4.What is the ending equipment balance net of accumulated depreciation? A. $773,000 B. $776,800 C. $786,000 D. $795,800

5.What is the ending accounts payable balance? A. $304,800 B. $314,000 C. $316,800 D. $320,000

6.What is the ending retained earnings balance? A. $500,000 B. $545,000 C. $554,800 D. $567,800

7.What is the net income? A. $48,500 B. $59,500 C. $65,000 D. $68,200

8.What is the amount of total expenses? A. $63,000 B. $75,000 C. $73,000 D. $81,000

9.What is the net increase in cash for the period? A. $222,000 B. $225,000 C. $300,000 D. $325,000

10.What is the net cash provided by operating activities? A. $179,500 B. $186,500 C. $183,400 D. $178,300

11.What is the net cash used by investing activities? A. $(7,200) B. $(9,200) C. $(8,900) D. $(7,800)

12.What is the net cash provided by financing activities? A. $40,300 B. $50,500 C. $50,300 D. $40,200

Questions 13 to 15 cover the inventory methods:

13.January 1, 2013: Purchased 10 units at $6 January 15, 2013: Purchased 10 units at $9 Sold 14 units: What is the cost of goods sold under LIFO? A. $114 B. $120 C.$126 D.$132

14.January 1, 2013: Purchased 10 units at $6 January 15, 2013: Purchased 10 units at $9 Sold 13 units: What is the cost of goods sold under FIFO? A.$81 B. $87 C.$93 D. $99

15.January 1, 2013: Purchased 10 units at $6 January15, 2013: Purchased 10 units at $9 Sold 8 units: What is the cost of goods sold under average-cost? A.$50 B.$55 C.$60 D. $65

Use the following information for questions 16 to 20: Cost: $10,000 Salvage $1,000 Useful life: 5 years Units over life: 36,000

16.What is the depreciation expense under straight-line?A. $1,700 B. $1,800 C.$1,900 D. $2,000

17.What is the second year depreciation expense under declining-balance = 200%? A.$4,000 B.$1,440 C.$864 D. $2,400

18.What is the fourth year depreciation expense under sum-of-years digits? A.$2,400 B.$1,000 C.$1,100 D.$1,200

19.Assume the asset produced 13,000 units. What is the depreciation expense under the units of production method?A. $1,300B. $2,500 C.$3,250 D. $4,250

20.Assume the declining-balance = 200% method is used. What is the residual book value at the end of year 2? A.$6,000 B. $3,600 C.$2,160 D.$1,296

Solutions

Expert Solution

1) Cash Balance            722,000
2) Ending Net Accounts Receivable balance            637,000
3) Ending Inventory Balance            259,800
4) ending Equipment Blance net of allowance            795,800
5) Ending Accounts Payable Balance            304,800
6) Retained earnings            554,800
7) Net Income              59,500
8)Total Expenses              73,000
9)Net increase in Cash            222,000
10) Net Cash Provided by operating Activities            179,500
11) Net Cash useed by Investing Activities               (7,800)
12) Net Cash provided by financing Activities              50,300
Sales Costs of goods sold Dividends Bad Debts Depreciation Accounts Receivable Allowance Cash Inventory PPE Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings
Opening                             700,000          500,000            300,000          900,000           (100,000)          300,000           1,000,000          500,000          500,000
1            (22,000)                             (22,000)
2                  (500)                             (25,000)             24,500
3            155,000          155,000
4              45,000             (45,000)
5            16,000           (16,000)
6                                (5,500)               5,500
7              12,000             (12,000)
8             55,000            55,000
9                 4,700             (4,700)
10             (7,800)               7,800
11                 4,800               4,800
Transfer          (132,500)             (45,000)               (4,700)          (16,000)            (12,000)            54,800
                      -                          -                          -                       -                         -                               647,500           (10,500)          722,000            259,800          907,800           (112,000)          304,800           1,000,000          555,000          554,800
        2,414,600       2,414,600

ekkarill92 answered 2 years ago
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