In: Accounting
A -Based on your review of the cash balances, you note that there was an overdraft of $12,000 in one of your bank accounts. However, there are many bank accounts at the specific bank where the account with the overdraft is deposited. The total cash at this bank equaled a debit balance of $180,000. The previous accountant moved the overdraft to Accounts Payable. You also note the Board of Directors has restricted $65,000 of cash for future expansion. This $65,000 is part of the cash balance. The future expansion will not occur for several more years.
B- Based on your inquiries, you note that $35,000 of accounts receivable had been written off during the year. The clerk had debited bad debt expense for $35,000 and credited Accounts Receivable for $35,000. When $8,500 of accounts previously written off had been collected, the accountant debited cash and credited sales. The company uses the allowance method based on the aging of accounts receivable. Based on this method, Accounting Creations determines that uncollectible accounts are $46,500 at the end of 2018.
C - On April 1, 2018, Accounting Creations renewed a 15-month insurance policy for $15,000. All cash was paid at the time the policy was signed and insurance expense was increased. All other transactions involving insurance were properly recorded.
Accounting Creations Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December 31, 2018 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 330,000 | - | ||||
Accounts Receivable | 694,980 | - | ||||
Allowance for Doubtful Accounts | - | 17,000 | ||||
Interest Receivable | - | - | ||||
Merchandise Inventory | 425,000 | - | ||||
Prepaid Insurance | - | - | ||||
LIFO Reserve | - | 32,000 | ||||
Prepaid Advertising | - | - | ||||
Prepaid Rent | 17,000 | - | ||||
Office Supplies | 6,000 | - | ||||
Note Receivable | 25,000 | |||||
Available for Sale Securities | 375,000 | - | ||||
Office Building | 3,750,000 | - | ||||
Accumulated Depreciation - Office Building | - | 87,500 | ||||
Storage Building | 1,275,000 | - | ||||
Accumulated Depreciation - Storage Building | - | - | ||||
Land | 750,000 | - | ||||
Leasehold Improvements | 225,000 | - | ||||
Accumulated Depreciation - Leasehold Improvements | - | - | ||||
Office Equipment | 325,000 | - | ||||
Accumulated Depreciation - Office Equipment | - | 65,000 | ||||
Patent | 150,000 | - | ||||
Accounts Payable | - | 345,000 | ||||
Sales Tax Payable | - | - | ||||
Salaries Payable | - | 142,000 | ||||
Payroll Taxes Payable | - | 25,000 | ||||
Interest Payable | - | - | ||||
Income Tax Payable | - | - | ||||
Unearned Rent Revenue | - | - | ||||
Loan Payable - Onstar Bank | - | 650,000 | ||||
Loan Payable - Coldstar Bank | - | 2,000,000 | ||||
Common Stock | - | 650,000 | ||||
Additional Paid in Capital | - | 1,998,750 | ||||
Retained Earnings | - | 920,000 | ||||
Accumulated Other Comprehensive Income | - | 25,000 | ||||
Dividends | 84,750 | - | ||||
Sales | - | 4,528,200 | ||||
Sales Returns and Allowances | 42,250 | - | ||||
Sales Discounts | 19,250 | - | ||||
Cost of Goods Sold | 1,979,500 | - | ||||
Sales Salaries Expense | 436,400 | - | ||||
Office Salaries Expense | 274,000 | - | ||||
Advertising Expense | 16,000 | - | ||||
Depreciation Expense - Office Building | - | |||||
Depreciation Expense - Leasehold Improvements | - | - | ||||
Depreciation Expense - Office Equipment | - | - | ||||
Leasing Expense - Stores | 132,000 | - | ||||
Miscellaneous Selling Expense | 23,000 | - | ||||
Research & Development Expense | 15,000 | |||||
Rent Expense - Storage Facility | - | - | ||||
Insurance Expense | 15,000 | - | ||||
Office Supplies Expense | 35,000 | - | ||||
Miscellaneous Administrative Expense | 9,170 | - | ||||
Rent Revenue | - | 75,000 | ||||
Interest Revenue on Note Receivable | - | - | ||||
Dividend Revenue on AFS Securities | - | 25,000 | ||||
Interest Expense | - | - | ||||
Bad Debt Expense | 35,000 | - | ||||
Amortization Expense | - | - | ||||
Income Tax Expense | - | - | ||||
Payroll Taxes Expense | 121,150 | - | ||||
11,585,450 | 11,585,450 |
Accounting Creations was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued 650,000 shares of common stock as of 12/31/2018. No new shares were issued during 2018. 1. On the “Adjusting Journal Entries” worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018. (Round all numbers to the nearest dollar). Label journal entries a through t. |