ACG-2021 Lecture Notes - Lecture 10: Operating Lease, Payroll Tax, Accounts Payable
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Required:
1. Open T-accounts for the listed accounts, inserting their unadjustedJune 30, 2014, balances.
2. Post the June 30, 2014, adjusting entries to the T-accounts opened.Round all amounts to the nearest whole dollar.
3. Prepare the liability section ofShell Storage Unitsâ balance sheet at June 30, 2014
The general ledger of Shell Storage Units at June 30, 2014, theend of the companyâs fiscal year, includes the following accountbalances before adjusting entries.
Notes Payable,Short-Term $20,000
AccountsPayable $235,620
Current Portion of Long-term Debt payable
Interest Payable
Salaries payable
Employee Income Tax Payable
Employer Payroll Costs Payable
Employee Insurance Benefits Payable
Estimated Vacation Pay Liability $12,360
Sales Tax and GSTPayable $5972
Unearned RentRevenue $18,000
Long-Term DebtPayable $250,000
The additional data needed to develop the adjusting entries atJune 30 are as follows:
A) The$20,000 short-term note payable was issued on February 28. Itmatures six months from data of issuance and bears interest at6%.
B) Thelong-term debt is payable in annual installments of $50,000 withthe next installment due on August 31. On that date, Shell StorageUnits will also pay one yearâs interest at 3%. Interest was lastpaid August 31 of the preceding year.
C) GrossSalaries for the last payroll of the fiscal year were $6328. Ofthis amount, employee payroll withholdings payable were $1365 andsalary payable was $4963.
D) Employer Payroll Costs Payable was $820, and Shell Storageâsliability for employee health insurance was $991.
E) ShellStorage estimates that vacation pay expense is 6% of gross salariesof $147,500 (the $147,500 includes the last payroll of the fiscalyear).
F) On March 1, the company collected one yearâs rent of $18,000 inadvance.
G) At June 30,Shell Storage is the defendant in a $200,000 lawsuit, which thecompany expects to win. However, the outcome is uncertain.
Notes Payable, |
| Current Portion of Long- | |||||
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Interest Payable | Salaries Payable | Employee Income Tax Payable | |||||
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Employer Payroll Costs Payable | Employee Insurance Benefits | Estimated Vacation | |||||
Sales Tax and |
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The following accounts (in no particular order) are for PerfectReb Corporation for the fiscal year ended December 31, 2015. (S/T =Short-Term; L/T = Long-Term)
REQUIRED:
A) Calculate Perfect Reb Corporationâs netincome or net loss for the 2015 fiscal year. You may solve this inany
manner that you wish, but it is highly recommended to prepare amultiple step income statement.
B) Using proper form, prepare Perfect RebCorporationâs balance sheet for 2015.
C) Using the information provided, solve forthe requested ratios and respond to the correspondingquestions.
Common Stock (13,000 shares outstanding) | $52,000 | Sales Discounts | $5,000 | |
Accrued Expenses (Payables) | 20,000 | Income Tax Expense (25% of IBIT) | ??? | |
Miscellaneous Operating Expenses | 50,000 | Cash | 142,000 | |
Accounts Receivable | 20,000 | Interest Expense | 4,000 | |
Buildings | 186,000 | Marketable Securities | 62,000 | |
Retained Earnings | ??? | Notes Payable (due in 5 years) | 12,000 | |
Wages Expense | 60,000 | Rent Expense | 11,000 | |
Inventory | 40,000 | Unearned Revenue | 19,000 | |
Accumulated Depreciation â Buildings | 48,000 | Allowance for Uncollectible Accounts | 15,000 | |
Accounts Payable | 41,000 | Sales | 433,000 | |
Gain on Sale of Equipment | 62,000 | Mortgage Payable ($12,000 S/T) | 144,000 | |
Land | 50,000 | Sales Returns & Allowances | 12,000 | |
Bad Debt Expense | 2,000 | Depreciation Expense | 11,000 | |
L/T Investments | 7,000 | Cost of Goods Sold | 109,000 | |
Notes Receivable ($2,000 S/T) | 13,000 | Interest Revenue | 3,000 |
A) NET INCOME (10 points) â SHOW ALL WORK ANDCALCULATIONS!!!!
B) CLASSIFIED BALANCE SHEET (15 points)
Perfect Reb Corporation Balance Sheet December 31,2015 | ||||||
ASSETS | LIABILITIES | |||||
Current Assets | Current Liabilities | |||||
Total Current Liabilities | ||||||
Total Current Assets | ||||||
Long-Term Assets | Long-Term Liabilities | |||||
Total Long-Term Assets | Total Long Term Liabilities | |||||
Fixed Assets | ||||||
Total Liabilities | ||||||
EQUITY | ||||||
Total Fixed Assets | ||||||
Total Equity | ||||||
TOTAL ASSETS | TOTAL LIABILITIES & EQUITY |
C) RATIOS AND ANALYSIS (15 points):
Use the financial statements and additional information tocalculate the ratios. Round your answers to two decimalplaces. Be sure to label your answer correctly (example,%, times, days, etc.). IF AN ANSWER SHOULD BE EXPRESSED ASA PERCENTAGE, DO NOT LEAVE IT IN DECIMAL FORM!!!! (i.e. 0.5015 =50.15%!!!!)
Previous (December 31, 2014) year end balancesfor:
Accounts receivable, net of allowanceInventory
Stockholdersâ Equity
Market price per share for one share of common stock atDec 31, 2015 Dividend per share for one share of common stock forFYE Dec 31, 2015
$2,000 15,000 139,000
$94.50/share $1.25/share
No new shares of common stock were issued during 2015.The companyâs credit policy is net 15.
RATIO | CALCULATION | ANSWER |
1) Quick (Acid-Test) Ratio (2points) | ||
2) Dividend Yield (2points) | ||
3) Gross Profit Percentage (2points) | ||
4) Average Daysâ Sales Uncollected 2points) | ||
5) Inventory Turnover (2points) | ||
6) Price-Earnings Ratio (2points) |
7) Using the liquidity ratios (and generalaccepted norms for the current ratio and quick/acid-test ratio),comment on the companyâs financial position. (3points)