Part 5    Please prepare the adjusting entries for Cookie Creations.

As of December 31, Cookie Creations’ year-end, the following adjusting entry data are provided.

1. A count reveals that $45 of brochures and posters were used.

2. Depreciation is recorded on the baking equipment purchased in November. The bak- ing equipment has a useful life of 5 years. Assume that 2 months’ worth of depreci- ation is required.

3. Amortization (which is similar to depreciation) is recorded on the website. (Credit the Website account directly for the amount of the amortization.) The website is amortized over a useful life of 2 years and was available for use on December 1.

4. Interest on the note payable is accrued. (Assume that 1.5 months of interest accrued during November and December.) Round to nearest dollar.

5. One month’s worth of insurance has expired.

6. Natalie is unexpectedly telephoned on December 28 to give a cookie class at the neigh- borhood community center on December 31. In early January Cookie Creations sends an invoice for $450 to the community center.

7. A count reveals that $1,030 of baking supplies were used.

8. A cell phone invoice is received for $75. The invoice is for services provided during the month of December and is due on January 15.

9. Because the cookie-making class occurred unexpectedly on December 28 and is for such a large group of children, Natalie’s assistant helps out. Her assistant worked 7 hours at a rate of $8 per hour.

10. An analysis of the unearned revenue account reveals that two of the five classes paid for by the local school board on December 9 still have not been taught by the end of Decem- ber. The $60 deposit received on December 19 for another class also remains unearned.

Instructions

Prepare a general ledger account with the information above.

Thank you.

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below.

Information necessary to prepare the year-end adjusting entries appears below.

Depreciation on the office equipment for the year is $11,750.

Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $1,650.

On October 1, 2018, Pastina borrowed $71,400 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.

On March 1, 2018, the company lent a supplier $29,400 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2019.

On April 1, 2018, the company paid an insurance company $6,200 for a two-year fire insurance policy. The entire $6,200 was debited to insurance expense.

$980 of supplies remained on hand at December 31, 2018.

A customer paid Pastina $1,920 in December for 1,600 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.

On December 1, 2018, $2,700 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,350 per month.

For requirement 4, Assume that no common stock was issued during the year and that $3,600 in cash dividends were paid to shareholders during the year.

4. Prepare the income statement, statement of shareholders' equity and classified balance sheet for the year ended December 31, 2018.

Techlabs operates a computer training center.The following data relate to the preparation of a master budget for January 2015.

1. At the end of 2014,the company’s general ledger indicated the following balances:

                  Debits                                       Credits

           Cash $ 60,000                     Accounts Payable $ 40,000

Accounts receivable 40,000             Note payable 60,000

Equipment (net) 120,000                   Common stock 30,000

                                                        Retained earnings 90,000

Total   $220,000                                   $220,000

2. Tuition revenue in December 2014 was $80,000,and tuition revenue budgeted for January 2015 is $110,000.

3. Fifty percent of tuition revenue is collected in the month earned,and 50 percent is collected in the subsequent month.The receivable balance at the end of 2014 re?ects tuition earned in December 2014.

4.Monthly expenses (excluding interest expense) are budgeted as follows:salaries,$60,000; rent,$4,000;depreciation on equipment,$8,000;utilities,$2,000;other,$800.

5. Expenses are paid in the month incurred.Purchases of equipment are paid in the month after purchase.The $40,000 payable at the end of 2014 represents money owed for the purchase of computer equipment in December 2014.

6. The company intends to purchase $50,000 of computer equipment in January 2015.The anticipated $8,000 per month of depreciation (see number 4) re?ects the addition of $2,000 of monthly depreciation related to this purchase.

7. The note is at 15 percent per annum and requires monthly interest payments of $750. The payments are made on the 20th of each month.The principal must be paid in February 2016.

8. The tax rate is 35 percent.

Required

Complete the following budgets:

a.

Techlabs Cash Budget For January 2015

Cash receipts

Collection of December 2014 tuition $

Collection of January 2015 tuition

Total cash receipts

Cash disbursements

Payment of salaries

Payment of rent

Payment of utilities

Payment of other expenses

Payment for purchases of computer equipment

Payment of interest on note

Payment of taxes (How do you calculate this?)

Total disbursements

Excess disbursements over receipts

Plus beginning cash balance

Ending cash balance $

b.

Techlabs Budget Income Statement For January 2015

Tuition revenue $

Less:

Salaries

Rent

Utilities

Depreciation

Other

Interest expense

Total expense

Income before taxes

Taxes on income

Net income $

c.

Techlabs Budgeted Balance Sheet As of January 31,2015

Assets

Cash $

Accounts receivable

Equipment (net)

Total assets $

Liabilities

Accounts payable $

Note payable

Total liabilities $

Stockholders’equity

Common stock

Retained earnings

Total stockholders’equity

Total liabilities and stockholders’equity $

Pastina Company sells various types of pasta to grocery chains as private label brands. The company’s reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $10,900.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,500.
3. On October 1, 2021, Pastina borrowed $51,800 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
4. On March 1, 2021, the company lent a supplier $21,800 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2022.
5. On April 1, 2021, the company paid an insurance company $6,900 for a two-year fire insurance policy. The entire $6,900 was debited to prepaid insurance.
6. $800 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,900 in December for 1,554 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022, at $1,000 per month. The entire amount was debited to prepaid rent.

Required: Prepare the necessary December 31, 2021, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

______     6.      You are trying to decide whether to run your business as a corporation or as an individual owner (for example, as a “sole proprietorship”). One of the factors is the problem of double taxation. Assume that the corporate income tax rate is 35%, the individual income tax rate on dividend income is 15%, and the individual income tax rate on other income is 39.6%. (Note – use these tax rates. Don’t use the actual tax rate schedule.) The business is expected to generate $625,000 of taxable income. Similar to the example given in class, assume that the amount of dividend income is equal to the corporate after-tax cash flow. How much more after-tax cash flow will you have if you run the business as a sole proprietorship rather than as a corporation? Hint: fill out the following table to help answer the question.

______     7.      You are trying to decide whether to run your business as a corporation or as an individual owner (for example, as a “sole proprietorship”). One of the factors is the problem of double taxation. Assume that the corporate income tax rate is 35%, the individual income tax rate on dividend income is 15%, and the individual income tax rate on other income is 39.6%. (Note – use these tax rates. Don’t use the actual tax rate schedule.) The business is expected to generate $720,000 of taxable income. Similar to the example given in class, assume that the amount of dividend income is equal to the corporate after-tax cash flow. How much more after-tax cash flow will you have if you run the business as a sole proprietorship rather than as a corporation? Hint: fill out the following table to help answer the question.

Required information

[The following information applies to the questions displayed below.]

Washington County’s Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the board’s decision appear below.

In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $115,000. The old snowplow could be sold now for $11,500. The new, larger plow will cost $7,000 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $76,000 per year in additional tax revenue for the county.

In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 10 percent.

Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Required:

1. Prepare a net-present-value analysis of the proposed long runway.

2. Should the County Board of Representatives approve the runway considering NPV?

3-a. Which of the data used in the analysis are likely to be most uncertain?

3-b. Which of the data used in the analysis are likely to be least uncertain?

Prepare a net-present-value analysis of the proposed long runway. (Round your "Annuity discount factor" to 3 decimal places. Negative amounts should be indicated by a minus sign.)

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below.

Information necessary to prepare the year-end adjusting entries appears below.

Depreciation on the office equipment for the year is $12,000.

Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $1,400.

On October 1, 2018, Pastina borrowed $52,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.

On March 1, 2018, the company lent a supplier $22,000 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2019.

On April 1, 2018, the company paid an insurance company $6,240 for a two-year fire insurance policy. The entire $6,240 was debited to insurance expense.

$900 of supplies remained on hand at December 31, 2018.

A customer paid Pastina $2,200 in December for 1,560 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.

On December 1, 2018, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,200 per month.

Required:
Prepare the necessary December 31, 2018, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)