accounting assighment

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timer Asked: Nov 19th, 2014

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201 extra credit 2 Fall 20141.docx

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BUS ADM-201 Fall 2014 EXTRA CREDIT TWO Due in DS week of Nov 17 NOTE: You must complete all requirements a through g to receive any credit. Partial credit will only be given if you complete everything but make mistakes. Aberkonkie & Fitch Corporation prepares quarterly financial statements. The balance sheet at 12/31/13 is presented below. Balance Sheet 12/31/2013 Cash $ 24,300 Accounts payable $ 12,370 Accounts receivable 22,400 Common stock 90,000 Allowance for doubtful accounts (1,200) Retained earnings 53,130 Equipment 20,000 Accumulated depreciation - equipment (15,000) Land 20,000 Building 100,000 Accumulated depreciation - building (15,000) $ 155,500 $155,500 During the first quarter of 2014, the following transactions occurred: 1. Aberkonkie & Fitch performed services during the first quarter for $140,000 on account. 2. On 2/1/14, Aberkonkie & Fitch collected fees of $12,000 in advance for $1,000 of services to be performed each month from 2/1/14 to 1/31/15. 3. On 2/1/14, Aberkonkie & Fitch purchased computer equipment for $9,000 plus sales taxes of $600. $3,000 cash was paid with the rest on account. Check #455 was used. 4. Aberkonkie & Fitch collected $133,000 on 3/5/14 from customers on account. 5. Aberkonkie & Fitch paid $16,370 on accounts payable. Check #456 was used. 6. Paid other operating expenses of $97,525. Check #457 was used. 7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/14. Check #458 was used. 8. Wrote off a customer receivable of $200 who went bankrupt. 9. On 3/31/14, Aberkonkie & Fitch sold for $1,620 cash equipment which originally cost $11,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of 12/31/13 was $8,000 using the straight line method. Record depreciation on the equipment sold, then record the sale. 1 10. AJE: Record revenue earned from item 2 above. 11. AJE: $26,000 of accounts receivable at 3/31/14 are not due yet. The bad debt percentage for these is 4%. The balance of A/R are past due. The bad debt percentage for these is 23.75%. Record bad debt expense. HINT: You will need to compute the balance in accounts receivable before calculating this. 12. AJE: Depreciation is recorded on the equipment still owned at 3/31/14. The new equipment purchased in February is being depreciated on a double declining basis over 5 years and salvage value was estimated at $1,000. The old equipment still owned is being depreciated over a 10 year life using straight line with no salvage value. 13. AJE: Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000. 14. AJE: Amortization is recorded on the patent. 15. The company reconciles its bank statement every quarter. Information from the 12/31/13 Bank Reconciliation is: Deposit in transit: 12/30/13 $5,000 Outstanding Checks #440 3,444 #452 333 #453 865 #454 5,845 The Bank statement received for the quarter ended 3/31/14 is as follows: Beginning balance per bank $ 29,787 Deposits: 1/2/14 $5,000, 2/2/14 $12,000, 3/6/14 $133,000 150,000 Checks: #452 $333, #453 $865, #456 $16,370, #457 $97,525 (115,093) Debit memo: Bank service charge (Record as operating expense) ( 100) Ending bank balance $ 64,594 16. AJE: The income tax rate is 30%. This amount will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount. 2 REQUIRED: Print out the solution pages for the general ledger, journal and worksheet that follow and enter the following transactions. I suggest that you use a pencil. a. Enter the transactions 1-9 in the general journal provided on the following pages. b. Enter the 12/31/13 balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages. c. Post the journal entries to the ledger accounts for items 1 – 9. d. Prepare an unadjusted trial balance at March 31 and enter on the worksheet. Then complete the other worksheet columns. (See below.) Worksheet requirement: Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet similar to the one on page in the chapter 4 appendix of your text. e. Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE. f. Journalize and post all other adjusting entries. (Items 10 - 16) g. Prepare an income statement and a retained earnings statement for the quarter ended 3/31/14 and a classified balance sheet at 3/31/14. Use your own paper. (No formatted sheets are supplied as we did for the other items.) 3 h. EXTRA CREDIT TWO SOLUTION – Name ________________________ DS ____________ Part a, e and f Extra Credit 2 – General Journal a.1. Debit a.2. a.3. a.4. a.5. a.6. a.7. a.8. a.9. a.10. a.11. a.12. a.13. a.14. a.15. a.16. 4 Credit Part b, c and d General Ledger b. CASH DR CR BALANCE DR CR BALANCE DR CR BALANCE Beginning item 2 item 3 item 4 item 5 item 6 item 7 item 9 Item 15 b. ACCOUNTS RECEIVABLE Beginning item 1 item 4 item 8 b. ALLOW FOR DOUBTFUL ACCTS Beginning item 8 item 11 5 b. EQUIPMENT DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE Beginning Item 3 Item 9 b. ACCUM DEPR EQUIPMENT Beginning item 9 item 9 Item 12 b. LAND Beginning b. BUILDING Beginning b. ACCUM DEPR BUILDING Beginning item 13 b. PATENTS item 7 item 14 6 b. ACCOUNTS PAYABLE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE Beginning item 3 item 5 b. UNEARNED REVENUE item 2 item 10 b. INCOME TAXES PAYABLE item 16 b. COMMON STOCK Beginning b. RETAINED EARNINGS Beginning b. SERVICE REVENUE item 1 item 10 b. OPERATING EXPENSES item 6 Item 15 7 b. DEPRECIATION EXPENSE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE DR CR BALANCE item 9 item 12 item 13 b. AMORTIZATION EXPENSE item 14 b. LOSS ON DISPOSAL item 9 b. BAD DEBT EXPENSE item 11 b. INCOME TAX EXPENSE item 16 8 Worksheet (d) 9
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