Question 2                            

Required: Prepare the proper ADJUSTING journal entries for the following events. Also, prepare a balance sheet after adjusting entries have been made.

The unadjusted trial balance for Tahini & Jam Inc. appears below:

                                       Tahini & Jam Inc.

                                  Unadjusted Trial Balance

                                      December 31, 2020

                                                                     Debit                    Credit

Cash                                                         $75,500

Accounts receivable                                    5,000

Prepaid rent                                                 1,000

Prepaid insurance                                      15,000

Supplies                                                       3,000

Equipment                                                 40,000

Accumulated depreciation-equipment                                     $4,000

Accounts payable                                                                     11,000

Bank loan payable                                                                  10,000

Unearned service revenue                                                        10,500

Common shares                                                                       48,250

Retained earnings                                                                    32,000

Dividends                                                    5,000

Service revenue                                                                       44,600

Salary expense                                             7,200

Utilities expense                                          1,200

Rent expense                                               5,250

Advertising expense                                    2,200             ________

                                                               $160,350               $160,350

Additional data is as follows. Record the adjusting entry below the information.

1. Unearned service revenue NOT YET earned at year end, $2,000.

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2. Depreciation for the current year amounts to $4,500.

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3. Prepaid insurance consists of a policy purchased on January 1, 2020 for a 15 months coverage.

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4. Supplies on hand/counted at year end amount to $1,200.

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5. Accrued salaries on December 31, 2020, amount to $2,500.

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6. The bank loan was received on March 1, 2020, and the annual interest rate was 12%.

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7. Rent is $500/month, and January, 2021 rent is included in the trial balance amount.

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8. Corporate income tax is 20% of net income before tax.

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The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $17,100; cost of goods sold, $7,100; selling expenses, $1,390; general and administrative expenses, $890; interest revenue, $160; interest expense, $210. Income taxes have not yet been recorded. The company’s income tax rate is 40% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount.

Investments were sold during the year at a loss of $310. Schembri also had unrealized gains of $400 for the year on investments.

One of the company’s factories was closed during the year. Restructuring costs incurred were $2,100.

During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $620 in 2018 prior to the sale, and its assets were sold at a gain of $1,580.

In 2018, the company’s accountant discovered that depreciation expense in 2017 for the office building was understated by $290.

Negative foreign currency translation adjustment for the year totaled $330.

Required:
1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2018.
2. Prepare a separate statement of comprehensive income for 2018.

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

34. Genuine Parts received a promissory note from a customer on March 1, 2016. The face amount of the note is $8,000, the terms are 90 days and 9% interest. At the maturity date, the customer pays the amount due for the note and interest. What entry is required on the books of Genuine Parts on the maturity date assuming none of the interest had already been recognized?

A) Increase cash $8,000; Decrease notes receivable $8,000

B) Increase cash $8,180; Increase interest revenue $180; Decrease notes receivable $8,000

C) Increase cash $8,720; Decrease notes receivable $8,000; Decrease interest revenue $720

D) No entry is required; the customer pays the amount due to the bank

35.Comfort Shoes received a promissory note from a customer on April 1, 2016. The face amount of the note is $2,000, the terms are 12 months and 8% annual interest. How much total interest revenue will Comfort Shoes recognize for the year ended December 31, 2016?

A) $40

B) $107

C) $120

D) $160

36. What are the effects on the accounting equation from the purchase of a short-term investment?

A) Assets and stockholders’ equity decrease

B) No effects- assets increase and decrease by the same amount

C) Assets and liabilities decrease

D) Stockholders’ equity decrease and liabilities increase

37. Goodwill can be recorded as an asset when a(n)

A) business has above normal profitability compared to other businesses in its industry.

B) business can determine that it has created customer goodwill and name recognition.

C) offer is received to purchase the business at a price in excess of the value of the assets.

D) business is purchase and payment is made in excess of the value of the net assets.

The Highland Cove Resort has a May 31 fiscal year end and prepares adjusting entries on a monthly basis. The following trial balance was prepared before recording the May 31 month-end adjustments:

Prepare and post adjusting entries, and prepare adjusted trial balance and financial statements.

Additional information:

1. The company pays $6,360 for its annual insurance policy on July 31 of each year.
2. A count shows $560 of supplies on hand on May 31, 2021.
3. The building has an estimated useful life of 50 years.
4. The furniture has an estimated useful life of 10 years.
5. Services related to two thirds of the unearned revenue have been performed.
6. The mortgage interest rate is 6.5% per year. Interest has been paid to May 1, 2021.
7. Salaries accrued to the end of May were $1,450.
8. The May utility bill of $3,420 is unrecorded and unpaid.

Instructions

Prepare and post the monthly adjusting journal entries on May 31.

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $18,500; cost of goods sold, $7,800; selling expenses, $1,460; general and administrative expenses, $900; interest revenue, $100; interest expense, $250. Income taxes have not yet been recorded. The company’s income tax rate is 20% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount. Investments were sold during the year at a loss of $380. Schembri also had unrealized gains of $480 for the year on investments. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,900. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $700 in 2018 prior to the sale, and its assets were sold at a gain of $1,720. In 2018, the company’s accountant discovered that depreciation expense in 2017 for the office building was understated by $360. Negative foreign currency translation adjustment for the year totaled $400. Required: 1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2018. 2. Prepare a separate statement of comprehensive income for 2018.

Prepare Adjusting Journal Entries

1. The 3/1/19 Notes Payable principle from First Hawaiian Bank is due in 5 years at an annual interest rate of 4%. Interest must be paid every 6-months.  

  2. The boat purchased on 3/1/19 is depreciated using the straight-line method over a useful life of 9 years. Salvage is zero.

3. ​​​​​​​Due to the use of office supplies, the Office Supplies and lures only added up to $100 at the end of the 2019 year.

​​​​​​​ 4. Insurance expense was recorded. The 18 month policy was purchased on 5/1/19 for $2900 and paid in full.

​​​​​​​ 5. On 12/30/19, 50% of the services were provided early from the customers that paid cash on 9/1/19.

Don’t worry about updating the General Ledger or the unadjusted trail balance.

Post to the Worksheet

Prepare Financial Statements:

1. Income Statement (Single-step)
2. Statement of Retained Earnings
3. Balance Sheet

Prepare Closing Journal Entries

1. Record all temporary accounts in Closing Journal Entries
2. $800 dividend was declared and paid at the end of the year 12/31/19.

           ** Ignore Tax

3.2 Problem you will be responsible for completing the accounting cycle from adjusting entries to post-closing trial balance. Below is the unadjusted trial balance for Walton Anvils as of December 31, 2016, and the data for the adjustments. There is also an Excel Template for this problem that you may download and use (or you may use your own). Walton Anvils Unadjusted Trial Balance December 31, 2016 Balance Account Title Debt Credit Cash $ 16,900.00 Accounts Receivable 17,500 Prepaid Rent 2,500 Office Supplies 1,900 Equipment 23,000 Accumulated Depreciation - Equipment $ 7,000.00 Accounts Payable 6,200.00 Salaries Payable Unearned Revenue 5,600.00 Common Stock 28,000.00 Retained Earnings 1,600.00 Dividends 4,500 Service Revenue 20,800.00 Salaries Expense 2,900 Rent Expense Depreciation Expense - Equipment Supplies Expense Total $ 69,200.00 $ 69,200.00 Adjustment Data a. Unearned revenue still unearned at December 31, 2016 $1,800 b. Prepaid rent still in force at December 31, 2016 $2,300 c. Office supplies used $1,400 d. Depreciation $380 e. Accrued Salaries Expense at December 31, 2016 $210 Requirements Open T-accounts using the balances in the unadjusted trial balance. Complete the worksheet for the year ended December 31, 2016. Prepare the adjusting entries and post to the T-accounts. Prepare the adjusted trial balance. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. Prepare the closing entries and post to the T-accounts. Prepare a post-closing trial balance. Calculate the current ratio for the company