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Prepare in journal entry form all adjusting andcorrecting journal entries based on the followinginformation. All information was provided to you as of12/31/2018. (Round all numbers to the nearestdollar).

(i) Czar has two loans outstanding as of12/31/2018. Interest is paid annually on January 1st. The facts oneach loan are as follows: First Trust Bank Loan –outstanding since January 1, 2018 with a 6% interest rate. Thisloan was taken out to finance the construction of the StorageBuilding. Interest for the year and 10% of the principle will bepaid to the bankon January1, 2019. Except for recording the initial cash receivedand loan, no additional entries have been made. Loan Payable has acredit balance of $520,000 for First Trust Ban ColdwellBank Loan – also outstanding all of 2018 with 5 % interestrate. Interest is due on January 1, 2019. Principle is due onJanuary 1, 2025. Since interest will not be paid to theBank until 2019, Czar’ office staff did not accrueany interest. Loan Payable has a credit balance of $1,600,000 forColdwell Bank.

(J) On January 1, 2018, Czar recorded a patentin the amount of $120,000. The company paid outside legal fees of$64,000 to have the patent registered. The other $56,000 representsinternal costs in developing the patent. The patent is good for 20years, but the company estimates that the patent will have a usefullife of 8 years with no residual value. Amortizationis straight line. The companydepreciates using partial years for intangibleassets. No amortization has been recorded for2018.

(K) As of 12/31/2018 the Available for SaleSecurities have a fair value of $232,430. Due to the marketconditions, the company does not plan on selling the assets in2019, but their intent is to sell at some point in time.You can ignore the tax effect on unrealized gains andlosses.

(L) The office building was bought in January1, 2016 and Czar plans to use the building for 40 years andbelieves it will have a salvage value of $200,000 at the end of 40years. Czar depreciates the building on astraight line basis. Due to the location of the buildingand use potential, Czar is concerned aboutimpairment. At 12/31/2018 it is determined thatthe future cash flows for the building are $2,400,000. The fairvalue of the building is $2,720,000 at 12/31/2018.

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Elin Hessel
Elin HesselLv2
28 Sep 2019

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Prepare in journal entry form all adjusting andcorrecting journal entries based on the followinginformation. All information was provided to you as of12/31/2018. (Round all numbers to the nearestdollar).

(e) Per a physical count of office supplies,$4,430 of supplies remained at the end of 2018. The balance $4,800in the office supplies account represents last years endingbalance. During the year, $28,000 of office supplieswere purchased and immediately expensed.

(f) On November 1, 2018 Czar paid EwaldAdvertising $12,800 for a four-month campaign ofadvertising services. Equal services areprovided each month.

(g) Because of a new product line, Czar neededsome temporary additional storage space so on January 1, 2018 theyrented a unit for an annual rate of $13,600 and they paid theentire amount up front.

(h) The storage building was self-constructedthis year by Czar. The Company had their initialexpenditure of $400,000 on January 1. They paid an additional$300,000 on May 1st, $200,000 on August 1st,and then the final payment of $120,000 on December 1stwhen the building was completed and occupancy occurred. The companyhas decided to use the Straight-Line Method fordepreciation. The storage building is estimatedto have a life of 40 years and a salvage value of $56,430. Thecompany depreciates using partial years.

Prepare in journal entry form all adjusting andcorrecting journal entries based on the followinginformation. All information was provided to you as of12/31/2018. (Round all numbers to the nearestdollar).

(m) After reviewing details of sales, you notethat the sales taxes collected on the last week of December’s saleswere included in sales revenue. Sales recorded the last week ofDecember that included the sales tax of 1% amounted to$280,000.

(n) Czar uses the Dollar Value LIFOinventory method. For internal purposes, the MerchandiseInventory Account is maintained at FIFO (current costs). At the endof the year, the LIFO reserve account is adjusted so inventory onthe balance sheet reflects Dollar Value LIFO. You need tocalculate the proper inventory balance and adjust the LIFOreserve. The price index for this year is 1.20. For theyear ended December 31, 2018 there is a debit balance of $340,000for Merchandise Inventory. Prior year inventory records show thefollowing calculation for 2018:

140,000X 1.0 = 140,000

80,000X 1.05 = 84,000

(o) All office equipment was purchased January1, 2017. Czar uses the DDB method to depreciate officeequipment. No office equipment has been added since theinitial purchase. It is estimated that the office equipment has auseful life of 10 years with a salvage value of $9,600. There is adebit balance of $260,000 for Office Equipment on the balance sheetfor the year ended December 31, 2018.

(p) On January 1, 2018, Czar rented a portionof one store to Pellston Inc. The contract was for 15 months andCzar required all of the cash up front. The rent is being earnedequally each month. This is the only item in which rent is beingearned by the company. There is a credit balance of $60,000 forRent Revenue on the balance sheet for the year ended December 31,2018.

Prepare in journal entry form all adjusting andcorrecting journal entries based on the followinginformation. All information was provided to you as of12/31/2018. (Round all numbers to the nearestdollar).

(a) Based on your review of the cash balances,you note that there was an overdraft of $9,600 in one of your bankaccounts. However, there are many bank accounts at thespecific bank where the account with the overdraft isdeposited. The total cash at this bank equaled a debitbalance of $144,000. The previous accountant moved theoverdraft to Accounts Payable. You also note the Boardof Directors has restricted $52,000 of cash for futureexpansion. This $52,000 is part of the cashbalance. The future expansion will not occur for severalmore years.

(b) Based on your inquiries, you note that$28,000 of accounts receivable had been written off during theyear. The clerk had debited bad debt expense for $28,000and credited Accounts Receivable for $28,000. When $6,800 ofaccounts previously written off had been collected, the accountantdebited cash and credited sales. The company uses theallowance method based on the aging of accountsreceivable. Based on this method, Czardetermines that uncollectible accounts are $36,000 at the end of2018.

(c) On April 1, 2018, Czarrenewed a 10month insurance policy for $12,000. Allcash was paid at the time the policy was signed and insuranceexpense was increased. All other transactions involving insurancewere properly recorded.

(d) On November 1, 2018, Czarloaned a keysupplier, $20,000. A promissory note was signed and issued. Thenote is due in full 6-months. The supplier agrees to pay intereston the note at an annual rate of 2%. Principle and interest will bepaid at the end of the 9-months. The note was recordedin Notes Receivable and is the only note outstanding.

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