For each of the following situations, prepare the appropriateadjusting entry to be recorded on March 31, 2014. Do not roundintermediate calculations. If required, round your final answers tothe nearest dollar.
a. Kretz Corporation takes out a 90-day, 8%,$15,000 note on March 1, 2014, with interest and principal to bepaid at maturity. Assume a 360-day year.
b. The asset account Office Supplies on Handhas a balance of $1,280 on March 1, 2014. During March, Kretz adds$750 to the account for purchases during the period. A count of thesupplies on hand at the end of March indicates a balance of$1,370.
c. The company purchased office equipment lastyear for $62,600. The equipment has an estimated useful life of sixyears and an estimated salvage value of $5,000. Use the straightline method of depreciation.
d. The company's plant operates seven days perweek with a daily payroll of $950. Wage earners are paid everySunday. The last day of the month is Saturday, March 31.
e. The company rented an idle warehouse to aneighboring business on February 1, 2014, at a rate of $2,500 permonth. On this date, Kretz Corporation credited Rent Collected inAdvance for six months' rent received in advance.
f. On March 1, 2014, Kretz Corporation crediteda liability account, Customer Deposits, for $4,800. This sumrepresents an amount that a customer paid in advance and that Kretzwill earn evenly over a four-month period.
g. Based on its income for the month, KretzCorporation estimates that federal income taxes for March amount to$3,900.
For each of the following situations, prepare the appropriateadjusting entry to be recorded on March 31, 2014. Do not roundintermediate calculations. If required, round your final answers tothe nearest dollar.
a. Kretz Corporation takes out a 90-day, 8%,$15,000 note on March 1, 2014, with interest and principal to bepaid at maturity. Assume a 360-day year.
b. The asset account Office Supplies on Handhas a balance of $1,280 on March 1, 2014. During March, Kretz adds$750 to the account for purchases during the period. A count of thesupplies on hand at the end of March indicates a balance of$1,370.
c. The company purchased office equipment lastyear for $62,600. The equipment has an estimated useful life of sixyears and an estimated salvage value of $5,000. Use the straightline method of depreciation.
d. The company's plant operates seven days perweek with a daily payroll of $950. Wage earners are paid everySunday. The last day of the month is Saturday, March 31.
e. The company rented an idle warehouse to aneighboring business on February 1, 2014, at a rate of $2,500 permonth. On this date, Kretz Corporation credited Rent Collected inAdvance for six months' rent received in advance.
f. On March 1, 2014, Kretz Corporation crediteda liability account, Customer Deposits, for $4,800. This sumrepresents an amount that a customer paid in advance and that Kretzwill earn evenly over a four-month period.
g. Based on its income for the month, KretzCorporation estimates that federal income taxes for March amount to$3,900.
Related questions
On April 15, 2015, fire damaged the office and warehouse ofStanislaw Corporation. The only accounting record saved was thegeneral ledger, from which the trial balance below wasprepared.
STANISLAW CORPORATION | ||
Cash | $24,900 | |
Accounts receivable | 42,800 | |
Inventory, December 31, 2014 | 83,000 | |
Land | 38,700 | |
Buildings | 115,000 | |
Accumulated depreciation | $44,100 | |
Equipment | 3,800 | |
Accounts payable | 27,000 | |
Other accrued expenses | 23,870 | |
Common stock | 103,030 | |
Retained earnings | 59,100 | |
Sales revenue | 139,900 | |
Purchases | 59,100 | |
Miscellaneous expense | 29,700 | |
$397,000 | $397,000 | |
The following data and information have been gathered.
| 1. | The fiscal year of the corporation ends on December 31. | |||||||||||||||||||||||||||||||
| 2. | An examination of the April bank statement and canceled checksrevealed that checks written during the period April 1â15 totaled$22,000: $5,940 paid to accounts payable as of March 31, $3,790 forApril merchandise shipments, and $4,410 paid for other expenses.Deposits during the same period amounted to $17,500, whichconsisted of receipts on account from customers with the exceptionof a $850 refund from a vendor for merchandise returned inApril. | |||||||||||||||||||||||||||||||
| 3. | Correspondence with suppliers revealed unrecorded obligationsat April 15 of $23,000 for April merchandise shipments, including$3,040 for shipments in transit (f.o.b. shipping point) on thatdate. | |||||||||||||||||||||||||||||||
| 4. | Customers acknowledged indebtedness of $48,200 at April 15,2015. It was also estimated that customers owed another $8,700 thatwill never be acknowledged or recovered. Of the acknowledgedindebtedness, $830 will probably be uncollectible. | |||||||||||||||||||||||||||||||
| 5. | The companies insuring the inventory agreed that thecorporationâs fire-loss claim should be based on the assumptionthat the overall gross profit rate for the past 2 years was ineffect during the current year. The corporationâs audited financialstatements disclosed this information: | |||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| 6. | Inventory with a cost of $7,950 was salvaged and sold for$3,920. The balance of the inventory was a total loss. | |||||||||||||||||||||||||||||||
Compute the amount of inventory fire loss
On April 15, 2015, fire damaged the office and warehouse ofStanislaw Corporation. The only accounting record saved was thegeneral ledger, from which the trial balance below wasprepared.
STANISLAW CORPORATION | ||
Cash | $24,900 | |
Accounts receivable | 42,800 | |
Inventory, December 31, 2014 | 83,000 | |
Land | 38,700 | |
Buildings | 115,000 | |
Accumulated depreciation | $44,100 | |
Equipment | 3,800 | |
Accounts payable | 27,000 | |
Other accrued expenses | 23,870 | |
Common stock | 103,030 | |
Retained earnings | 59,100 | |
Sales revenue | 139,900 | |
Purchases | 59,100 | |
Miscellaneous expense | 29,700 | |
$397,000 | $397,000 | |
The following data and information have been gathered.
| 1. | The fiscal year of the corporation ends on December 31. | |||||||||||||||||||||||||||||||
| 2. | An examination of the April bank statement and canceled checksrevealed that checks written during the period April 1â15 totaled$22,000: $5,940 paid to accounts payable as of March 31, $3,790 forApril merchandise shipments, and $4,410 paid for other expenses.Deposits during the same period amounted to $17,500, whichconsisted of receipts on account from customers with the exceptionof a $850 refund from a vendor for merchandise returned inApril. | |||||||||||||||||||||||||||||||
| 3. | Correspondence with suppliers revealed unrecorded obligationsat April 15 of $23,000 for April merchandise shipments, including$3,040 for shipments in transit (f.o.b. shipping point) on thatdate. | |||||||||||||||||||||||||||||||
| 4. | Customers acknowledged indebtedness of $48,200 at April 15,2015. It was also estimated that customers owed another $8,700 thatwill never be acknowledged or recovered. Of the acknowledgedindebtedness, $830 will probably be uncollectible. | |||||||||||||||||||||||||||||||
| 5. | The companies insuring the inventory agreed that thecorporationâs fire-loss claim should be based on the assumptionthat the overall gross profit rate for the past 2 years was ineffect during the current year. The corporationâs audited financialstatements disclosed this information: | |||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| 6. | Inventory with a cost of $7,950 was salvaged and sold for$3,920. The balance of the inventory was a total loss. | |||||||||||||||||||||||||||||||
Compute the amount of inventory fire loss
| Introduction |
Jones Widget Company (JWC) incorporated at the beginning of2014. Below is the post closing trial balance as of 12/31/2014. |
| Account Title | Balance | ||
| Cash | 10,900 | ||
| AccountsReceivable | 8,950 | ||
| Allowance for DoubtfulAccounts | 1,095 | ||
| Inventory | 11,560 | ||
| Prepaid Rent | 3,000 | ||
| Equipment | 39,000 | ||
| AccumulatedDepreciation | 3,800 | ||
| Accounts Payable | 0 | ||
| Sales Tax payable | 600 | ||
| FICA Taxes Payable | 1,000 | ||
| Federal Income Tax(FIT) Payable | 600 | ||
| Wages Payable | 1,350 | ||
| Unemployment taxespayable | 1,000 | ||
| Unearned Revenue | 3,750 | ||
| Interest Payable | 360 | ||
| Notes Payable | 16,000 | ||
| Common Stock | 20,300 | ||
| Add'l PIC | 16,210 | ||
| RE - December 31,2014 | 12,545 | ||
| Treasury Stock | 5,200 | ||
| Additional Information: |
| ⢠| JWC establishes a policy that it will sell inventory at $150 perunit. Sales taxes are 6%. JWC will use the FIFO method and recordCOGS on a perpetual basis. |
| ⢠| Employee wages are $3,800 per month. Employees are paid on the16th for the first half of the month and on the first of thefollowing month for the second half of each month. The income taxeswithheld are $300 each paycheck, and the FICA taxes are $250 perpaycheck. The withholding and the employerâs matching contributionare paid monthly on the second day of the month. In addition,unemployment taxes of $65 are accrued with each payroll. The taxesare paid on March 31. |
| ⢠| The Beginning inventory of $11,560 consists of 170 units. |
| ⢠| ThePrepaid Rent balance is for January 2015. |
| ⢠| The equipment was purchased on July 1, 2014. It is beingdepreciated using the straight line method. |
| ⢠| Unearned Revenue is for 25 units ordered and paid for in advanceby two customers in late December. One order will be filled inJanuary, the remainder in early February. |
| ⢠| The Notes payable represents a $16,000 bank loan received onOctober 1, 2013 at 9% annual interest. |
| ⢠| The parvalue on the common stock is $2. |
| ⢠| Thetreasury stock account has 400 shares. |
| ⢠| Record alltransactions to the nearest dollar. |
| Below are transactions for January2015 |
| Jan 1 | PaidDecember 31 payroll previously accrued. |
| Jan 2 | A $104,0006% six year bond is issued. The effective yield is 7%. |
| 6% | 7% | ||
| Present Value of $1factors | .7050 | .6663 | |
| Present Value of anAnnuity of $1 factors | 4.9173 | 4.7665 | |
| Jan 2 | A truck is purchased for $17,000 cash. It is estimated the truckwill be used for 50,000 miles and will have no salvage value.(Record the purchase to the account "Vehicles"). |
| Jan 2 | Payroll taxes payable (FIT & FICA) recorded in December areremitted to the IRS. |
| Jan 5 | A $1,050customer account is written off as uncollectible. |
| Jan 6 | Sales on account of 165 units of inventory occur during January.Include sales tax of 6%. |
| Jan 10 | Sales taxes of $600 which had been collected and recorded inDecember are paid to the state. |
| Jan 11 | Anadditional 60 units of inventory are purchased on account for$3,900. |
| Jan 12 | The equipment purchased in 2014 for $39,000 is sold for $37,000.No additional depreciation is recorded for January. |
| Jan 14 | Having sold the equipment, JWC pays off the note in full. Theamount paid is $16,414 which includes an additional $54 interestthrough Jan 14. |
| Jan 15 | A portion of the advance order from December (20 units) isdelivered. There is no sales tax on this order. |
| Jan 16 | Record and pay payroll for January 1-15. Record the employerâsmatching share of FICA taxes And the unemployment taxes also. |
| Jan 20 | 200 sharesof the treasury stock are sold for $3,800. |
| Jan 21 | Collections from sales on account totaled $9,900. |
| Jan 27 | Sold theother 200 shares of the treasury stock for $2,000. |
| Jan 28 | JWC declares and distributes a 10% Stock dividend. The marketprice of the stock at the time is $5 per share. (Hint on thestatement of retained earnings, this amount will should be shown asa dividend). |
| Jan 31 | (Adjusting 1) Record depreciation on the truck. During January,the truck is driven 2,500 miles. |
| Jan 31 | (Adjusting 2) It is estimated that 3% of the ending accountsreceivable balance will be uncollectible. |
| Jan 31 | (Adjusting3) Record January rent expired. |
| Jan 31 | (Adjusting 4) Accrue January 31 payroll, which will be payableon February 1. Record the employerâs matching share of FICA taxesalso. |
| Jan 31 | (Adjusting 5) Record ONE MONTHâS interest expense andamortization of premium or discount on the bond. Round to thenearest dollar. |
| 1-a. | Prepare all January journal entries and adjusting entries
|
