ACCTG311 Chapter Notes - Chapter 4: Accounts Payable, Deferral, Retained Earnings
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Required:
1. Correct the recorded activity for Android for Life during July on the attached spreadsheet
2. Correct the balance sheet and income statement for Android for Life in July 2015 on the attached spreadsheet.
3. Is the large decline in cash a concern?
Android for Life Inc.
On July 1, 2015, Andy incorporated her business under the name Android for Life, Inc. Listed below are various transactions that occurred during the remainder of the year:
(a) On July 1, Andy purchased all of Android for Life common stock for $100,000 cash.
(b) On July 1, Android for Life paid $3,000 to an attorney to prepare and file incorporation documents with the State of Texas.
(c) On July 2, Android for Life borrowed $100,000 from a local bank. The bank note required payment of principal in four annual installments of $25,000 beginning on July 1, 2016. In addition, the note specified interest payments of 6%, with the first payment due on July 1, 2016.
(d) On July 3, Android for Life signed a five-year lease on a building to be used as the veterinary clinic. The lease required a payment of $10,000 per month , payable on the first day of each month. Android for Life paid the amount for July on the date the lease was signed.
(e) On July 5, Android for Life paid $150,000 for medical equipment, office furniture, and other equipment.
(f) On July 6, Android for Life purchased various inventory items for $8,500 cash.
(g) Also on July 6, Android for Life purchased $500 worth of office supplies for cash.
(h) On July 28, Android for Life paid employees wages of $8,000 (which included Andyâs salary of $6,000).
(i) During July, Android for Life received $30,000 from clients for office visits and sales of merchandise (food, clothes, etc.).
A review of Android for Life records at July 31, 2015, revealed the following:
(j) Clients still owed Android for Life $3,500 for services performed during July but not yet billed. These amounts are expected to be billed and collected in August.
(k) At the end of July, a physical count of inventory revealed that $1,000 of inventory was still on-hand.
(l) At the end of July, a physical count of office supplies revealed that $100 of supplies were still on-hand.
(m) Depreciation on the equipment for July was estimated to be $1,250.
(n) Interest needs to be recorded on the note payable.
Assets | Liabilities | Stockholders' Equity | ||||||||||||
Accounts | Office | Property, Plant | Intangible | Accumulated | Notes | Interest | Common | Retained | ||||||
Transaction | Cash | Receivable | Inventory | Supplies | & Equipment | Assets | Depreciation | = | Payable | Payable | Stock | Earnings | ||
purchase of Common Stock | (100,000) | (100,000) | ||||||||||||
Payment for Articles of Incorporation | (3,000) | 3,000 | ||||||||||||
Note / Loan (interest expense on income statement?) | 100,000 | 100,000 | ||||||||||||
Long-term Lease (show on income statement $10k?) | (10,000) | (10,000) | ||||||||||||
Long-term Equipment | (150,000) | 150,000 | ||||||||||||
Inventory Items | (8,500) | 8,500 | ||||||||||||
Office Supplies | (500) | 500 | ||||||||||||
Wages | (8,000) | (8,000) | ||||||||||||
Office Visits/ Merchandise | 30,000 | 30,000 | ||||||||||||
Services Performed | 3,500 | 3,500 | ||||||||||||
Inventory Used (income statement expense?) | 7,500 | (7,500) | ||||||||||||
Office Supplies Used (income statement expense?) | (400) | (400) | ||||||||||||
Depreciation on Equipment (income statement expense?) | (1,250) | (1,250) | ||||||||||||
Interest Expense (income statement expense?) | 6,000 | (6,000) | ||||||||||||
Totals | (142,500) | 3,500 | 1,000 | 100 | 150,000 | 3,000 | (1,250) | 100,000 | 6,000 | (100,000) | 7,850 |
Android Inc. | ||
Income Statement | ||
For the month ended July 31st, 2015 | ||
Revenues | ||
Sales and Revenues | 33,500 | |
Less: Cost of goods Sold | (7,500) | |
Gross Profit | 26,000 | |
Expenses | ||
Organizational Expenses | 3,000 | |
Salaries Expense | 8,000 | |
Office Supplies Expense | 400 | |
Depreciation Expense | 1,250 | |
Interest Expense | 500 | |
TOTAL EXPENSE | 13,150 | |
NET INCOME | 12,850 | |
Android Inc. | ||
Balance Sheet | ||
As at July 31st, 2015 | ||
Assets: | ||
Current Assets | ||
Cash | 60,000 | |
Accounts Receivable | 3,500 | |
Inventory | 1,000 | |
Office Supplies | 100 | |
Total Current Assets | 64,600 | |
Plant Property and Equipment | ||
Plant Property and Equipment | 150,000 | |
Less: Accumulated Depreciation | (1,250) | 148,750 |
TOTAL ASSETS | 213,350 | |
LIABILITIES | ||
Notes Paybles | 100,000 | |
Interest Payale | 500 | |
TOTAL LIABILITIES | 100,500 | |
Shareholder's Equity | ||
Common Stock | 100,000 | |
Retained Earnings | 12,850 | |
TOTAL Shareholder's Equity | 112,850 | |
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | 213,350 | |
This worksheet looks to me as if it is already finished, but this question insists that I still need to complete it in its entirety. I have been stuck for hours on this. Please help me!
The question is as follows: The unadjusted trial balance information, as well as the adjustment data, have already been entered into the worksheet. You need to complete the worksheet in its entirety.
Unadjusted | Adjusted | Income | Bal. Sheet | |||||||
Trial Balance | Adjustments | Trial Balance | Statement | Stmt. Own. Equity | ||||||
Account Title | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. |
Cash | 250,000 | 250,000 | 250,000 | |||||||
Accounts Receivable | 280,000 | 280,000 | 280,000 | |||||||
Allowance for Doubtful Accounts | 12,500 | 2,415 | 14,915 | 14,915 | ||||||
Merchandise Inventory | 745,000 | 5,000 | 740,000 | 740,000 | ||||||
Office Supplies | 2,300 | 735 | 1,565 | 1,565 | ||||||
Prepaid Insurance | 7,000 | 3,500 | 3,500 | 3,500 | ||||||
Land | 1,628,803 | 1,628,803 | 1,628,803 | |||||||
Building | 1,000,000 | 1,000,000 | 1,000,000 | |||||||
Accumulated Depreciation - Building | 700,000 | 700,000 | 700,000 | |||||||
Equipment & Furniture - Warehouse | 7,900 | 7,900 | 7,900 | |||||||
Accumulated Depreciation - Equip & Furn. - Warehouse | 5,643 | 775 | 6,418 | 6,418 | ||||||
Equipment & Furniture - Office | 7,421 | 7,421 | 7,421 | |||||||
Accumulated Depreciation - Equip & Furn. - Office | 2,000 | 825 | 2,825 | 2,825 | ||||||
Accounts Payable | 800,000 | 800,000 | 800,000 | |||||||
Wages Payable | 0 | 0 | 0 | |||||||
Interest Payable | 2,500 | 2,500 | 2,500 | |||||||
Dividends Payable | 0 | 0 | 0 | |||||||
Unearned Rent | 7,400 | 2,143 | 5,257 | 5,257 | ||||||
Notes Payable | 200,000 | 200,000 | 200,000 | |||||||
Bonds Payable | 90,000 | 90,000 | 90,000 | |||||||
Mortgage (Warehouse) Payable | 197,000 | 197,000 | 197,000 | |||||||
Common Stock, $1 Par, 100,000 Authorized; 60,000 shares Issued/Outstanding | 30,200 | 30,200 | 30,200 | |||||||
Paid In Capital - Excess of Par | 1,560,000 | 1,560,000 | 1,560,000 | |||||||
Retained Earnings | 20,500 | 20,500 | 20,500 | |||||||
Treasury Stock | 0 | 0 | 0 | |||||||
Sales | 1,067,500 | 1,067,500 | 1,067,500 | |||||||
Cost of Goods Sold | 636,700 | 5,000 | 641,700 | 641,700 | ||||||
Wage Expense (hourly workers) | 10,000 | 10,000 | 10,000 | |||||||
Salaries Expense (Exempt Staff) | 32,100 | 32,100 | 32,100 | |||||||
Marketing Expense | 64,000 | 64,000 | 64,000 | |||||||
Travel and Entertainment Expense | 1,250 | 1,250 | 1,250 | |||||||
Bad Debt Expense | 0 | 2,415 | 2,415 | 2,415 | ||||||
Property Tax Expense | 1,455 | 1,455 | 1,455 | |||||||
Office Maintenance & Repair Expense | 0 | 0 | 0 | |||||||
Legal Expenses | 6,340 | 6,340 | 6,340 | |||||||
Insurance Expense | 0 | 3,500 | 3,500 | 3,500 | ||||||
Utilities Expense | 2,000 | 2,000 | 2,000 | |||||||
Office Supplies Expense | 0 | 735 | 735 | 735 | ||||||
Telecommunications Expense | 754 | 754 | 754 | |||||||
Depreciation Expense - Equip & Furniture - Warehouse | 0 | 775 | 775 | 775 | ||||||
Depreciation Expense - Equip & Furniture - Office | 0 | 825 | 825 | 825 | ||||||
Rent Income | 0 | 2,143 | 2,143 | 2,143 | ||||||
Interest Expense | 12,220 | 12,220 | 12,220 | |||||||
Total | 4,695,243 | 4,695,243 | 15,393 | 15,393 | 4,699,258 | 4,699,258 | 780,069 | 1,069,643 | 3,919,189 | 3,629,615 |
289,574 | 289,574 | |||||||||
Net Income (Loss) | 1,069,643 | 1,069,643 | 3,919,189 | 3,919,189 |
Below is the journal I completed. Based on this, please help meout to complete following worksheet and income statement, statementof retained earning, and balance sheet. (also, how do I close allthe accounts?)
Date | Accounts and Explanation | Debit | Credit |
12/2/14 | Inventory | 1,300 | |
Account Payable | 1,300 | ||
Purchased 10 Units of Software on Account for $1300 | |||
12/2/14 | Salaries Payable | 2,500 | |
Cash | 2,500 | ||
Paid Employees Salaries Owed | |||
12/2/14 | Account Receivable | 3,200 | |
Service Revenue | 3,200 | ||
Provided Accounting Service on Account, $3200 | |||
12/5/14 | Office Equipment | 4,800 | |
Account Payable | 4,800 | ||
Purchased Office Equipment on Account, $4800 | |||
12/8/14 | Supplies | 950 | |
Cash | 950 | ||
Purchased Supplies for $950 Cash | |||
12/10/14 | Cash | 3,000 | |
Account Receivable | 3,000 | ||
Received $3000 Payment on Account | |||
12/11/14 | Account Receivable | 4,500 | |
Sales Revenue | 4,500 | ||
Sold 15 Units of Inventory on Account, $4500 | |||
12/11/14 | Cost of goods sold | 2,000 | |
Inventory | 2,000 | ||
12/11/14 | Account Payable | 1,200 | |
Cash | 1,200 | ||
Made Payment on Account | |||
12/12/14 | Inventory | 2,400 | |
Account Payable | 2,400 | ||
Purchased Inventory on Account | |||
12/14/14 | Advertising Expense | 375 | |
Cash | 375 | ||
Paid for Advertising | |||
12/15/14 | Cash | 8,000 | |
Service Revenue | 8,000 | ||
Provided Accounting Service for Cash | |||
12/16/14 | Salaries Expense | 2,500 | |
Cash | 2,500 | ||
Paid Salaries for December 1st-15th | |||
12/17/14 | Account Receivable | 6,000 | |
Service Revenue | 6,000 | ||
Provided Accounting Service on Account | |||
12/19/14 | Account Receivable | 3,000 | |
Sales Revenue | 3,000 | ||
12/19/14 | Cost of goods sold | 1,200 | |
Inventory | 1,200 | ||
12/22/14 | Cash | 2,500 | |
Accounts Receivable | 2,500 | ||
12/23/14 | Accounts Payable | 2,800 | |
Cash | 2,800 | ||
Made Payment on Account | |||
12/24/14 | Utility Expense | 850 | |
Cash | 850 | ||
Paid Monthly Utility Bills | |||
12/27/14 | Cash | 2,000 | |
Unearned Service Revenue | 2,000 | ||
(Advance Received against Services) | |||
12/29/14 | Cash | 5,000 | |
Service Revenue | 5,000 | ||
Provided Accounting Service for Cash | |||
12/30/14 | Cash | 15,000 | |
Common Stock | 1,000 | ||
Additional Paid in Capital | 14,000 | ||
Issued 1000 shares of Common Stock | |||
12/31/14 | Dividend Payable | 31,500 | |
Cash | 31,500 | ||
(Dividend paid) | |||
12/31/14 | Salary Expense | 2,500 | |
Adj | Salary Payable | 2,500 | |
To accrue salary expense | |||
12/31/14 | Depreciation Expense - Building | 7,500 | |
Adj | Accumulated Depreciation- Building | 7,500 | |
12/31/14 | Depreciation Expense - Furniture | 12,000 | |
Adj | Accumulated Depreciation - Furniture | 12,000 | |
12/31/14 | Depreciation Expense - Equiptment | 200 | |
Adj | Accumulated Depreciation - Equiptment | 200 | |
12/31/14 | Supplies Expense | 1,625 | |
Adj | Supplies | 1,625 | |
12/31/14 | Cost of Inventories Sold | 280 | |
Adj | Inventory | 280 | |
12/31/14 | Unearned Revenue | 500 | |
Adj | Revenue | 500 | |
12/31/14 | Uncollectible Account Expense | 167 | |
Adj | Allowance for Uncollectible Accounts | 167 | |
Service Revenue | |||
Clo | Retained Earnings | ||
Retained Earnings | |||
Clo | Salary Expense | ||
Supplies Expense | |||
Depreciation Expense | |||
Utilities Expense | |||
Retained Earnings | |||
Clo | Dividends | ||
Worksheet (I worked onit, but debit and credit balances are not correct. Please help meout to find errors and complete it correctly.) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Please help me! Thanks