Question

Your Name, Inc.

Balance Sheet

12/31/2017

                        Current Assets

                                    Cash                                                    $18,000

                                    Marketable Securities (Short-term)        2,000

                                    Accounts Receivable                           14,000

                                        Allowance for Bad Debt                 (2,000)

                                    Inventory                                            15,000

                                    Prepaid Insurance                                   5,000

                                       Total Current Assets                        $52,000

                        Property, Plant, and Equipment

                                    Land                                                    $30,000

                                    Building                                              150,000

                                        Accumulated Dep. – Building        (45,000)

                                    Equipment                                           100,000

                                        Accumulated Dep. - Equipment     (20,000)

                                       Total PPE                                         $215,000

                                    Total Assets                                        $267,000

                        Current Liabilities

                                    Accounts Payable                                    $9,000

                                    Unearned Revenue                                  3,000

                                    Income Taxes Payable                            3,000

                                       Total Current Liabilities                     $15,000

                        Long-term Liabilities

                                    Bonds, 10%, due in 2021                    $100,000

                        Equity

                                    Common Stock                                    $ 50,000

                                       (100,000 authorized, 50,000 issued)                        cont.

                                    Additional Pd.-in Capital                        80,000

                                    Retained Earnings                                 not given (must be calc.)

               Total Equity                                                  $152,000

                                    Total Liabilities & Equity                $267,000

Additional Information (for all entries):

Sales for 2018 are $250,000. All sales are on credit.

Gross Margin/Profit ratio is 40 percent

Accounts Receivable:

$180,000 of the accounts receivable is paid by the end of the year (the remaining balance remains on the balance sheet).

$3,000 of A/R is written off during the year.

5% of Accounts Receivable (after write-off and collections) is considered to be uncollectible.

Inventory:

Inventory purchases is $175,000, all on credit (the periodic method is used).

All accounts payable is from inventory purchases; all but $12,000 of inventory purchased is paid by the end of the year.

Additional equipment is purchased on 4/1/18 for $20,000 cash. All equipment when new, including the new purchase, has/had a five year life, no salvage value, and is depreciated using the straight-line method.

The building depreciates at $5,000 per year.

Half of the marketable securities were sold for $1,300. The FMV of the other half of the securities is also $1,300 and an adjustment to FMV is required.

Salaries are $2,100 per month (12 months of salaries expense must be booked). It is expected that one-half month will be owed on 12/31/18 because of when payday falls (therefore, 11.5 months of salaries have been paid and ½ month is still owed to the employees at year end).

$60,000 in cash is borrowed on 10/31/18 by issuing a Note Payable. Interest is 8% per year.

The bonds were sold at face value last December and pay interest on Dec. 31, 2018.

10,000 additional shares of stock were sold for $4 a share (for EPS purposes, assume these shares were outstanding all year).

Insurance costing $20,000 was purchased on 7/1/18 (the same time in which the policy purchased in 2017 expired. The new policy was for 12 months).

On Dec. 31, 2018, 1000 shares of stock are repurchased from the market at $2.80/share (treasury stock).

The tax rate is 30 percent. Income taxes for the current year are due and therefore paid during the first two months of the next year (you will have to complete an entry to pay the 2017 taxes, however the 2018 taxes will not be paid until the end of January 2019).

Dividends of $4,000 were paid during 2018.

The unearned revenue has been earned during the year (classified as other revenue on the multi-step income stmt.).

Required:

1. Adjusted Trial Balance for 2018 (includes the posted amounts of all entries and adjusting entries)

2. Post-Close Trial Balance for 2018 (include your closing entries above your post close trial balance)

3. Classified Balance Sheet

If you could please help with all 3 of these required.

Answer 1

1:- For Preparation of Trial Balance we need to pass adjustment entries and calculate balance sheet figures as follows :-

1- GP is 100,000 as sale 250000*40% margin.

2- AR in balance sheet:-  

Opening Balance:- 14000

Add: Sales - 250000

Less paid: 180000

Less:- Bad debts - 3000

Balance:-81000

Provision for bad debts:- 5% - 4050.

3. Account payable is 12000 and paid creditors is opening 9000 and add 175000 less 12000 i.e 172000.

4. Depreciation- 20000/5*86/365= 4092 on addition purchase

Adjusted Trial Balance for 2018
Particular	Debit	Credit
Sales		250,000
Purchase	175,000
Allowance for Bad Debt	4,050
Bad Debts	1,000
Depreciation	25,942
Profit On marketable security		600
Salary	25,200
Interest	800
Interest on Bond	10,000
Insurance	20,000
Unearned Revenue		3,000
Common Stock		50,000
(100,000 authorized, 50,000 issued)
Additional Pd.-in Capital		120,000
Retained Earnings		18,000
Bonds, 10%, due in 2021		100,000
Accounts Payable		13,050
Note Payable		60,800
Land	30,000
Building	150,000
Accumulated Dep. – Building		50,000
Equipment	120,000
Accumulated Dep. - Equipment		40,942
Cash	43,350
Marketable Securities (Short-term)	4,100
Accounts Receivable	81,000
Allowance for Bad Debt		4,050
Closing Stock	15,000
Prepaid Insurance	5,000
Total Amount	710,442	710,442

2-

Post-Close Trial Balance for 2018
	Debit	Credit
Common Stock		50,000
(100,000 authorized, 50,000 issued)
Additional Pd.-in Capital		120,000
Retained Earnings		29,626
Bonds, 10%, due in 2021		100,000
Accounts Payable		13,050
Interest		800
Note Payable		60,000
Income Taxes Payable		4,982
Land	30,000
Building	150,000
Accumulated Dep. – Building		50,000
Equipment	120,000
Accumulated Dep. - Equipment		40,942
Cash	43,350
Marketable Securities (Short-term)	4,100
Accounts Receivable	81,000
Allowance for Bad Debt		4,050
Closing Stock	40,000
Prepaid Insurance	5,000
Total Amount	473,450	473,450

3 -

Equity & Liabilities	Amount
Equity
Common Stock	50,000
(100,000 authorized, 50,000 issued)
Additional Pd.-in Capital	120,000
Retained Earnings	29,626
Equity	199,626
Long-term Liabilities
Bonds, 10%, due in 2021	100,000
Current Liabilities
Accounts Payable	13,050
Interest	800
Note Payable	60,000
Income Taxes Payable	4,982
Current Liabilities Total	78,832
Total Liabilities & Equity	378,458
Assets	Amount
Property, Plant, and Equipment
Land	30,000
Building	150,000
Accumulated Dep. – Building	(50,000)
Equipment	120,000
Accumulated Dep. - Equipment	(40,942)
Total Property, Plant, and Equipment	209,058
Current Assets
Cash	43,350
Marketable Securities (Short-term)	4,100
Accounts Receivable	81,000
Allowance for Bad Debt	(4,050)
Closing Stock	40,000
Prepaid Insurance	5,000
Total Current Assets	169,400
Total assets	378,458