Comprehensive Accounting Cycle Review

15.ACR  Quigley Corporation's trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described below.

Unrecorded transactions and adjustments:

• 1.On January 1, 2020, Quigley issued 1,000 shares of $20 par, 6% preferred stock for $22,000.
• 2.On January 1, 2020, Quigley also issued 1,000 shares of common stock for $23,000.
• 3.Quigley reacquired 300 shares of its common stock on July 1, 2020, for $49 per share.
• 4.On December 31, 2020, Quigley declared the annual cash dividend and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2021.
• 5.Quigley estimates that uncollectible accounts receivable at year-end is $5,100.
• 6.The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000.
• 7.The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000.
• 8.The unearned rent was collected on October 1, 2020. It was the receipt of 4 months' rent in advance (October 1, 2020 through January 31, 2021).
• 9.The 10% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2020, has not been paid or recorded.

Instructions

(Ignore income taxes.)

(a)  

Prepare journal entries for the transactions and adjustment listed above.

(b)  

Prepare an updated December 31, 2020, trial balance, reflecting the journal entries in (a).

Total $871,200

(c)  

Prepare a multiple-step income statement for the year ending December 31, 2020.

(d)  

Prepare a retained earnings statement for the year ending December 31, 2020.

(e)  

Prepare a classified balance sheet as of December 31, 2020.

Total assets $273,400

The Income Statement of Adom Enterprise for the year ended 31st March, 2020 as prepared by an AccountsAssistantindicatedanetprofitofGHS148,080.Though,thecashbookon31st March,2020 showed a balance at bank to be GHS 13,460. Your attention is however drawn to the following:

1. i) Cheques from customers totalling GHS 14,940 which were recorded in the cash book on

   March 25, 2020 were not credited by the bank until April 2, 2020.

2. ii) Cheques issued on March 13, 2020 totalling GHS 22,260 in favour of suppliers were not paid

   by the bank until after the end of the year (that is after March 31, 2020)

3. iii) On 22 February 2020, the bank paid an amount of GHS 10,800 with respect to a standing order from Adom Enterprise for rent of business premises for the three months to April 30, 2020 but

   unfortunately, no entry for this payment had been made in the cash book.
   Additionally, no provision of this outstanding rent had been made in the income statement for the period.

4. iv) On March 31, a customer known as Mr. Kwarteng had paid GHS 7,020 into Adom
   Enterprise bank account through a standing order to his bankers in full settlement of a debit balance of GHS 7,200 in Adom Enterprise sale ledger, but no entry had been made in the books.

5. v) On 30th March 2020, a cheque for GHS 1,440 was received from a customer in settlement of sales invoice for the same amount. The cheques were lodged into Adom Enterprise bank account. Both sale of goods and the cheque were entered in Adom Enterprise’s books. However, on 31st March 2020, the customer returned the goods and instructed her

   bankers not to pay the cheque (This instruction was carried out the same day) but no entries in respect of these latter developments have been made in Adom Enterprise’s books. The cost of these goods amounting to GHS 960 were not actually included in the closing inventories.

6. vi) Cheques received from two customers: Madam Adwoa Nyarkoa GHS 2,150 and Papa Kwame Ayisi of GHS 1,520 were recorded at the wrong side of the cash book.

7. vii) A cheque for GHS 2,520 from an insurance company in settlement of claim for fire damage to inventory had been paid into the bank and credited by the bank on 21st March 2020, but an estimated amount of GHS 2,400 had been entered in Adom Enterprise’s income statement.

8. viii) During a review of the financial records, it was discovered that the receipts side of the cash book was overstated by GHS 1,480. This has not been corrected.

Required:

a) Prepare a statement on March 31, 2020, clearly indicating the cash book balance.

b) Prepare the bank reconciliation statement for Adom Enterprise
c) Prepare a statement of corrected net profit of Adom Enterprise on 31st March, 2020

d) Explain TWO reasons for carrying out bank reconciliation.

e) Identify and explain any FIVE causes of discrepancies in the cash book balance and the bank

statement balance in this question

The unadjusted trial balance of Imagine Ltd., a private company following ASPE, at December 31, 2020 is as follows:

Additional information:

(a)

Prepare the year-end adjusting and correcting entries for December 31, 2020, using the information given. Record the adjusting entry for inventory using a Cost of Goods Sold account.

List and describe major systematic factors that had major influence over the Australian stock exchange from March 2020 to May 2020. These influences can be good or bad.

UnAdjusted trial balance 31 st May 2020

Office supplies 6,660

June Transaction

05-06-20 Purchased office supplies on credit, due 15 July 2020 $1,045

Additional Information

• A physical count of office supplies on 30th June shows $2940 of unused supplies on hand.

Journal entries for the year ended 30 june 2020 with workings P&L and SOFP Transaction

On January 1, 2020, ABC Company borrowed $200,000 from the bank. The loan is
a 10-year note payable that requires semi-annual payments of $24,000 every
June 30 and December 31, beginning June 30, 2020. Assume the loan has a 20%
interest rate, compounded semi-annually.

Calculate the amount of the note payable at December 31, 2020 that would be
classified as a long-term liability.

Utilizing the equal weighted series calculate the index values for each day for the market below.

Hansen Computer Corp. acquires $2,150,000 in new 7-year class assets (all tangible personal property) in February 2020. The company elects to take all available Sec. 179 expense and bonus first-year depreciation. Assume Hansen uses a calendar year and that Sec. 179 expense will not be limited by taxable income in 2020. What cost recovery deduction can Hansen take in 2020?

A company began work in 2020 on a contract for $7,800. Other data are as follows:

If the company uses the percentage-of-completion method, for the journal entry that records construction revenue, construction expense, and gross profit for 2020, how much will be recorded for Construction in Process?