ACCO 310 Lecture Notes - Lecture 10: Write-Off
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Czar was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued 520,000 shares of common stock as of 12/31/2018. No new shares were issued during 2018.
1. On the âAdjusting Journal Entriesâ worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018. (Round all numbers to the nearest dollar). Label journal entries a through t.
P- On 2,1, 2018, Czar rented a portion of one store to Pellston Inc. The contract was for 15 months and Czar required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company.
Q- Czar started to lease some new retail space in 2018 and added shelving and fixtures to this leased space. Based on your review of invoices, the previous accountant capitalized the cost of fixtures but did not capitalize the shipping and installation costs of $2,815. These costs were expensed and recorded as a miscellaneous selling expense. Czar has decided to use double declining balance (DDB) depreciation for this item and to take a full year of depreciation in the year of acquisition. The leasehold improvements have a useful life of 15 years with a salvage value of $12,000.
R- Czar uses the FIFO Inventory Method in valuing inventory. The inventory balance of $340,000 was based on a physical count at 12/31/2018. Based on your analysis, you have noted that $10,000 of marketing games that belonged to Pellston Inc. was included in the account. You also note that $5,600 of goods shipped to Czar f.o.b. destination were in transit on December 31, 2018 and included in the physical count.
Czar Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December 31, 2018 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 264,000 | - | ||||
Accounts Receivable | 555,984 | - | ||||
Allowance for Doubtful Accounts | - | 13,600 | ||||
Interest Receivable | - | - | ||||
Merchandise Inventory | 340,000 | - | ||||
Prepaid Insurance | - | - | ||||
LIFO Reserve | - | 25,600 | ||||
Prepaid Advertising | - | - | ||||
Prepaid Rent | 13,600 | - | ||||
Office Supplies | 4,800 | - | ||||
Note Receivable | 20,000 | |||||
Available for Sale Securities | 300,000 | - | ||||
Office Building | 3,000,000 | - | ||||
Accumulated Depreciation - Office Building | - | 70,000 | ||||
Storage Building | 1,020,000 | - | ||||
Accumulated Depreciation - Storage Building | - | - | ||||
Land | 600,000 | - | ||||
Leasehold Improvements | 180,000 | - | ||||
Accumulated Depreciation - Leasehold Improvements | - | - | ||||
Office Equipment | 260,000 | - | ||||
Accumulated Depreciation - Office Equipment | - | 52,000 | ||||
Patent | 120,000 | - | ||||
Accounts Payable | - | 276,000 | ||||
Sales Tax Payable | - | - | ||||
Salaries Payable | - | 113,600 | ||||
Payroll Taxes Payable | - | 20,000 | ||||
Interest Payable | - | - | ||||
Income Tax Payable | - | - | ||||
Unearned Rent Revenue | - | - | ||||
Loan Payable - First Trust | - | 520,000 | ||||
Loan Payable - Coldwell Bank | - | 1,600,000 | ||||
Common Stock | - | 520,000 | ||||
Additional Paid in Capital | - | 1,599,000 | ||||
Retained Earnings | - | 736,000 | ||||
Accumulated Other Comprehensive Income | - | 20,000 | ||||
Dividends | 67,800 | - | ||||
Sales | - | 3,622,560 | ||||
Sales Returns and Allowances | 33,800 | - | ||||
Sales Discounts | 15,400 | - | ||||
Cost of Goods Sold | 1,583,600 | - | ||||
Sales Salaries Expense | 349,120 | - | ||||
Office Salaries Expense | 219,200 | - | ||||
Advertising Expense | 12,800 | - | ||||
Depreciation Expense - Office Building | - | |||||
Depreciation Expense - Leasehold Improvements | - | - | ||||
Depreciation Expense - Office Equipment | - | - | ||||
Leasing Expense - Stores | 105,600 | - | ||||
Miscellaneous Selling Expense | 18400 | - | ||||
Research & Development Expense | 12,000 | |||||
Rent Expense - Storage Facility | - | - | ||||
Insurance Expense | 12,000 | - | ||||
Office Supplies Expense | 28,000 | - | ||||
Miscellaneous Administrative Expense | 7,336 | - | ||||
Rent Revenue | - | 60,000 | ||||
Interest Revenue on Note Receivable | - | - | ||||
Dividend Revenue on AFS Securities | - | 20,000 | ||||
Interest Expense | - | - | ||||
Bad Debt Expense | 28,000 | - | ||||
Amortization Expense | - | - | ||||
Income Tax Expense | - | - | ||||
Payroll Taxes Expense | 96,920 | - | ||||
Rebate Expense | - | - | ||||
Unrealized holding loss | - | - | ||||
Depreciation Expense-Storage Building | - | - | ||||
Loss on Impairment | - | - | ||||
Rebate Liability | - | - | ||||
Restricted Cash for Future Expansion | - | - | ||||
9,268,360 | 9,268,360 |
Rose Pico began her retail business, Pico Inc., on October 1,2016. A post-closing trial balance was prepared on November 30,2016 and those balances are posted in the ledgers at December1.
Pico Inc. uses a perpetual inventory system. During December,Pico Inc. entered into the following transactions:
Dec. | 2 | Purchased merchandise on accountfrom Ohio Wholesale, $4,000 terms FOB shipping, 2/10, n/30, withprepaid freight of $125 added to the invoice. |
4 | Received cash from Third Street onaccount, $1,960. | |
8 | Returned $180 (net of discount) ofmerchandise purchased on Dec. 2. | |
11 | Issue Check #5471 to Ohio Wholesaleon account for full amount of Dec. 2 purchase. | |
12 | Issued Check #5472 to Decker OfficeProducts as partial payment toward current balance, $512. | |
13 | Issued Invoice #3462 to KitchenWorld for merchandise sold on account, $8,300, n/30. The cost ofmerchandise sold was $2,490. | |
15 | Issued Check #5473 to thereceptionist for bi-monthly salary, $600. | |
16 | Issued Invoice #3463 to My Garage,terms 2/10, n/30, for merchandise sold on account, $6,800. The costof the merchandise sold was $2,040. | |
18 | Purchased supplies from DeckerOffice Products on account, $580, Invoice #2915, terms n/30. | |
19 | Issued Invoice #3464 to Liz's Housefor merchandise sold on account, list price $6,000, trade discount30%. Cost: $1,500 | |
21 | Purchased merchandise on accountfrom EDH Distribution, $6,000 terms FOB destination, 2/10,n/30. | |
22 | Issued Invoice #3465 to Arnie'sWholesale Club, for merchandise sold on account, $6,700 terms 2/10,n/30. The cost of merchandise sold was $1,970 | |
26 | Received cash from My Garage onaccount, for full amount owed. | |
27 | Received cash from Liz's House onaccount, $2,500. | |
29 | Issued Check #5474 in payment ofwindow cleaning, $65. | |
30 | Issued Check #5475 to thereceptionist for bi-monthly salary, $600. | |
31 | Issued Invoice #3466 to Geideman's,for merchandise sold on account $4,800. The cost of the merchandisesold was $1,450. | |
31 | Issued Check #5476 to Rose Pico asa personal withdrawal, $8,500. |
Note: You may find it useful to copy and pastethe following instructions to a file and print them. Also, in thisproblem, you will see [More] in many locations. Click on thoselinks for helpful hints and additional instructions. In thespecial journals and all ledgers, dates must be entered in Mon DDformat. (December 9 would be entered as Dec. 9)
Required: | |||||||||||
1. | Journalize each of the Decembertransactions using the following journals. (Posting references willbe inserted in requirement 2.) [More]
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2. | Post the journal entries to theappropriate ledgers. [More] Posting should be completed in thefollowing order:
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3. | Total each of the columns ofthe special journals. Verify that total debits equal total creditsin each journal. | ||||||||||
4. | Post the totals of the specialjournals to the appropriate general ledger accounts. [More] Specialjournals must be posted in the following order:
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5. | Prepare an unadjusted trialbalance. [More] | ||||||||||
6. | At the end of December, thefollowing adjustment data were assembled. Analyze and use thesedata to complete parts (7) and (8).
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