Question

Here is the problem. I used their template and was told the only thing that I was correct on was the income statement and t accounts There was no feedback from my professor as to what I even got wrong, so I'm hoping that I can get help. I was really confused when putting this together:

Comprehensive Problem

Patricia Allison began an engineering consulting business on January 1, 2011, organized as a corporation (PA Engineering, Inc.) under the laws of Delaware. The annual reporting period ends December 31, 2011. The trial balance on January 1, 2012, is provided in the following table:

PA Engineering Trial Balance, January 1, 2012

Account Titles	Debit	Credit
Cash	$10,000
Accounts Receivable
Office Supplies	$20,000
Land
Computers	$80,000
Accumulated Depreciation (on computers)
Miscellaneous Other Assets	$5,000
Accounts Payable
Salaries and Wages Payable
Interest Payable
Income Taxes Payable
Long-Term Notes Payable
Contributed Capital (100,000 shares)		$115,000
Retained Earnings
Service Revenue
Depreciation Expense
Supplies Expense
Wages Expense
Interest Expense
Income Tax Expense
Remaining Expenses (not detailed to simplify)
Totals	$115,000	$115,000

Transactions during 2012 are as follows:

a. Borrowed $20,000 cash on a five-year, 10 percent note payable, dated July 1, 2012.

b. Purchased land for a future building site; paid cash, $10,000.

c. Earned $200,000 in revenues for 2012, including $60,000 on credit and the rest in cash.

d. Sold 4,000 additional shares of capital stock for cash at $1.15 market value per share on January 3, 2012.

e. Incurred $120,000 in remaining expenses for 2012, including $20,000 on credit and the rest paid in cash.

f. Collected accounts receivable, $40,000.

g. Purchased other assets for $8,000 cash.

h. Paid accounts payable, $18,000.

i. Purchased office supplies on account for future use, $25,000.

j. Signed a three-year, $33,000 service contract to start February 1, 2013.

k. Declared and paid cash dividends, $10,000.

Data for adjusting entries:

l. Supplies counted on December 31, 2012, $18,000.

m. Depreciation for the year on the equipment, $21,000.

n. Interest accrued on notes payable (to be computed).

o. Wages earned by employees since the December 24 payroll but not yet paid, $15,000.

p. Income tax expense, $10,000, payable in 2013.

Complete the following for this problem:

Set up T-accounts for the accounts on the trial balance and enter beginning balances.

Prepare journal entries for transactions (a) through (k) and post them to the T-accounts.

Journal and post the adjusting entries (l) through (p).

Prepare an income statement (including earnings per share), statement of stockholders' equity, balance sheet, and statement of cash flows.

Journal closing entries.

Compute the following ratios for 2012 and explain what the results suggest about the company.

Current ratio. (Industry average is 2.2 to 1.0.)

Total asset turnover. (Industry average is 3 times a year.)

Net profit margin. (Industry average is 5.00%.)

This is what I got:

Learner: Brandi Wade
PA Engineering, Inc.
Statement of Stockholder's Equity
For the Year Ended December 31, 2012
Contributed Capital: December 31, 2011, 100,000 shares	$                    115,000.00
Add:   January 3, 2012 issue of 4,000 shares	4,600.00
Total Contributed Capital at December 31, 2012	119,600.00
Retained Earnings:
Balance December 31, 2011	10,000.00
Add: Net Income	6,000.00
Less Dividends	10,000.00
Balance December 31, 2012	16,000.00
Total Stockholder's Equity	$                    135,600.00
End of worksheet

Learner: Brandi Wade
PA Engineering, Inc.
Balance Sheet
At December 31, 2012
Assets				Liabilities
Current Assets				Current Liabilities
Cash	$        68,600.00			Accounts Payable	$        28,000.00
Accounts Receivable	20,000.00			Salaries and Wages Payable	15,000.00
Prepaid Office Supplies	18,000.00			Interest Payable	1,000.00
				Income Tax Payable	10,000.00
Total Current Assets		106,600.00		Total Current Liabilities		54,000.00
				Long-Term Notes Payable
Long-Term Assets
Land	10,000.00
Computers	80,000.00			Contributed Capital		119,600.00
Less: Accumulated Depreciation (enter as -)	(21,000.00)			Retained Earnings		10,000.00
Miscellaneous Other Assets	8,000.00					129,600.00
Total Long-Term Assets		77,000.00
				Total Liabilities and Owners' Equity		$      183,600.00
Total Assets		$      183,600.00
End of worksheet Worksheet 7 of 9. Template for requirement 4: Prepare a statement of cash flows. Learner: Brandi Wade PA Engineering, Inc. Statement of Cash Flows For the Year Ending December 2012 Cash flows from operating activities Cash collected from customers 200,000 Cash paid to suppliers (18,000) Cash paid for remaining expenses (100,000) Net cash flows from operating activities 82,000 Cash flows from investing activities Cash paid for land (10,000) Cash paid for other assets (8,000) Net cash flows from investing activities (18,000) Cash flows from financing activities Cash received from issuing stock to owners 4,600 Cash received from note payable 8,000 Cash paid for dividends (1,000) Net cash flows from financing activities 11,600 Net increase in cash during the month 75,600 Cash and cash equivalents, January 1 61,600 Cash and cash equivalents, December 31 137,200 Ending Cash balance should agree to Balance Sheet balance of $68,600. If agrees to Balance Sheet, next cell will be zero. Worksheet 8 of 9. Template for requirement 5: Journal closing entries. Learner: Brandi Wade PA Engineering, Inc. Closing Entries DR CR Service Revenue          200,000.00 Income Summary Income Summary Depreciation Expense            21,000.00 Supplies Expense            27,000.00 Wages Expense            15,000.00 Interest Expense               1,000.00 Income Tax Expense            10,000.00 Remaining Expense          120,000.00 Income Summary Retained Earnings               6,000.00 Retained Earnings               4,600.00 Dividends Declared 4600 Debits must equal credits          204,600.00          204,600.00 End of worksheet Worksheet 9 of 9. Template for requirement 6: Compute the current ratio, asset turnover, and net profit margin for 2012 and explain what the results suggest about PA Engineering, Inc.   Learner: Brandi Wade Ratios Current Ratio = Current Assets ÷ Current Liabilities Current Assets          183,600.00 =           1.00 Current Liabilities          183,600.00 Current ratio results compared to industry average (2.2 to 1.0): Current assets and liabilities balances. Asset Turnover = Sales ÷ Assets Sales          200,000.00 =           1.09 Assets          183,600.00 Asset turnover results compared to industry average (3 times per year): Asset turnover is almost 2% less than the national average of 3% Net Profit Margin = Net Income ÷ Sales Net Income              6,000.00 = 3% Sales          200,000.00 Net profit margin results compared to industry average (%5.00): The net profit margin is 2% below the 5% industry average End of worksheet $        68,600.00

Answer 1

Journal Entries

S.N.	Particulars	Debit ($)	Credit ($)
a.	Cash                    To, Notes Payable	20,000	20,000
b.	Land                     To, Cash	10,000	10,000
c.	Debtor Cash                      To, Sales	60,000 140,000	200,000
d.	Cash (4,000*1.15)                       To, Capital Stock	4,600	4,600
e.	Remaining Expense                        To, Cash                        To, Credit	120,000	20,000 100,000
f.	Cash                        To, Account Receivables	40,000	40,000
g.	Other Assets                         To, Cash	8,000	8,000
h.	Accounts Payable                         To, Cash	12,000	12,000
i.	Office Supplies                          To, Cash	25,000	25,000
j.	Cash                           To, Contractee	33,000	33,000
k.	Dividend                           To. Cash	10,000	10,000
l.	Closing Stock                           To, P/L Account	18,000	18,000
m.	Depreciation                           To, Equipment	21,000	21,000
n.	Interest on Note Payable (20,000 * 0.1 * 0.5)                            Accrued Interest	1,000	1,000
o.	Wages                          To, Wages Payable	15,000	15,000
p.	Income Tax Expense                             To, Income Tax Payable	10,000	10,000