ACTG 2011 Study Guide - Final Guide: Profit Margin, Accounts Receivable, Inventory Turnover

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pearshark821

7 Mar 2013

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To record depreciation expense: dr. depreciation expense cr. accumulated depreciation. If quarter way through year asset is sold for 400000, record quarter of the depreciation expense dr. depreciation expense 25000 cr. accumulated depreciation 25000. On date of sale, accumulated depreciation is 725000 and carrying amount is (1200000 725000 = Dr. cash 400000 dr. accumulated depreciation (contra asset) 725000 dr. loss on sale 75000 cr. equipment (1200000) write down building to recoverable amount dr. loss due to impairment of building cr. accumulated depreciation. Collections on behalf of third parties sale of tv and collection of gst dr. cash cr. revenue cr. Gst payable when future shop remits money to gov"t: dr. gst payable cr. cash. Unearned revenue gift card sale: dr. cash cr. unearned revenue gift card. Recording contribution: dr. pension expense 250000 cr. cash 200000 cr. pension liability 50000 defined benefit plan, employer promises to provide employees with specified benefits each year they are retired.

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Tierney County

Total Governmental Funds

Preclosing Trial Balance

December 31,2005

Cash 1,348,200 (dr)

Investments 7,355,600 (dr)

Due from general fund 3,500 (dr)

Taxes Receivable 189,000 (dr)

Allowance for uncollectable taxes 38,500 (cr)

Interest and penalities receivable 5.250 (dr)

Allowance for uncollectable interest and penalities 476 (cr)

accounts receivable 45,500 (dr)

Allowance for uncollectable accounts 1,750 (cr)

Accrued interest receivable 191,800 (dr)

Inventory of materials and supplies 16,450 (dr)

vouchers payable 1,016,400 (cr)

accrued salaries and wages payable 17,500 (cr)

contracts payable retained percentage 350,000 (cr)

interest payable (on current debt) 1,050 (cr)

unearned operating grant revenues 360,500 (cr)

unearned capital grant revenues 525,000 (cr)

Due to enterprise fund 11,550 (cr)

due to special revenue funds 3,500 (cr)

deferred tax revenues 107,800 (cr)

fund balance (preclosing) 695,049 (cr)

Revenues:

Taxes 3,395,000 (cr)

licenses and permits 311,500 (cr)

Fines and Forfeitures 133,000 (cr)

Unrestricrted grants 367,500 (cr)

Operating Grants 420,000 (cr)

Capital Grants 7,231,000 (cr)

Investment Income 600,000 (cr)

Other Revenues 7,000 (cr)

Current operation expenditures / expenses

General government 274,400 (dr)

public safety 1,417,500 (dr)

streets and roads 861,700 (dr)

health and sanitation 162,400 (dr)

Parks and recreation 65,100 (dr)

Captial outlay expenditures:

for construction 8,890,000 (dr)

for equipment 203,700 (dr)

Debt Service Expenditures:

bond principal retirement 700,000 (dr)

interest and bonds 356,745 (dr)

fiscal agent fees 52,500 (dr)

bond issue costs 35,000 (dr)

Other Financing Sources:

bonds 6,300,000 (cr)

bond premium 42,000 (cr)

Proceeds from sale fo general capital assets 175,000 (cr)

Transfers form general fund 616,000 (cr)

Transfers from Special revenue funds 70,000 (cr)

Transfers from enterprise funds 63,000 (cr)

Other Financing uses:

Transfers to capital projects funds 56,000 (dr)

trasfers to debt service funds 560,000 (dr)

transfers to general fund 70,000 (dr)

Totals 22,860,075 both

1. the beginning trial balance of the general capital assets andgeneral long term liabilities accounts at January 1, 2015 was

land 465,500 (dr)

buildings 4,375,000 (dr)

accumulated depreciation _ buildings 2,730,000 (cr)

machinery and equipment 1,400,000 (dr)

accumulated depreciation machinery and equipment 525,000(cr)

streets and roads 7,000,000 (dr)

accumulated depreciation streets and roads 4,200,000 (dcr

bonds payable 2,800,000(cr)

premium on bonds payable 70,000(cr)

liability for claims andjudgements - long term 490,000 (cr)

compensated absences liability -long term 350,000 (cr)

net position 2,075,500(cr)

totals 13,240,500

2. the balance of the long-termclaims and judgments obligation at december 31, 2015 was 450,000.all claims and judgements of the county are related to health andsanitation.

3. the balance fo the long-termliability for compensated absences at december 31, 2015 was425,000, compensated absence liabilities are generated equally bythe general government, public safety, streets and roads, andhealth and sanitation.

4. the bons issuance occurred atyear end. the equipment purchases occurred at the beginning of theyear.

5. the january 1, 2015 balance ofaccrued salaries and wages payable was 25,000

6. the january 1, 2015 balance ofdeferred tax revenue was 84,000

7. the operating grants revenueswere associated with public safety (100,000) and health andsanitaiton. the capital grants were associated with streets androads.

8. the accrued interst associatedwith bonds at december 31,2015 was 99,000 the january 1 2015balance was 87,500

9. the remaining term of thebonds payable with the premium (70,000) is 10 years. use straightline amortization.

10. the county depereciatesmachinery and equipment over 5 years, building over 20 years, andstreets and roads over 30 years. assume zero salvagevaleus.

11. depreciation expense on thebuildings and on the machinery and equipment is associated withfunctions as follows: general government 10 %, pulbic safety 50%,streets and roads 25%, health and sanitaiton 10%, and parks andrecreation 5%.

12. the cpaital asset sold wasequipment, which cost 500,000 and had accumulated depreciation atthe january 1 sale date of 400,000

13. the county's only internalservice fund provides 75% of its services to enterprise funds andsets its billings equal to its costs of providing services. Theinternal service fund billings to general governmental departmentsduring the year totaled 100,000. billings of 25,000 were associatedwith each functional category of expenditures except parks andrecreation.

Reguired: the december 31, 2015total fund balance (postclosing) was 6,721,274. Prepare a balancesheet conversion worksheet to derive government-wide, governmentalactivities data for Tierney County.

cerisealligator433

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

On January 1, 2013, NRC Credit Corporation leased equipment toBrand Services under a direct financing lease designed to earn NRCa 12% rate of return for providing long-term financing. The leaseagreement specified:

Twelve annual payments of $64,000 (including executory costs)beginning January 1, 2013, the inception of the lease and eachDecember 31 thereafter through 2021.

The estimated useful life of the leased equipment is 12 yearswith no residual value. Its cost to NRC was $403,080.

The leasequalifies as a capital lease to Brand.

A 12-year service agreement with Quality Maintenance Company wasnegotiated to provide maintenance of the equipment as required.Payments of $5,900 per year are specified, beginning January 1,2013. NRC was to pay this executory cost as incurred, but leasepayments reflect this expenditure.

A partial amortization schedule, appropriate for boththe lessee and lessor, follows

Payments

Effective
Interest

Decrease in
Balance

Outstanding
Balance

(12% Ã Outstanding balance)

403,080

1/1/13

58,100

344,980

12/31/13

58,100

0.12

(344,980

)

41,398

16,702

328,278

12/31/14

58,100

0.12

(328,278

)

39,393

18,707

309,571

Assume the contract specified that NRC (the lessor) wasto pay, not only the $5,900 maintenance fees, but also insurance of$790 per year, and was to receive a $340 management fee forfacilitating service and paying executory costs. The lesseeâs leasepayments were increased to include an amount sufficient toreimburse executory costs plus NRCâs fee.

Required:

Prepare the appropriate entries for both the lessee andlessor to record the second lease payment, executory costs, anddepreciation (straight line) on December 31, 2013. (If no entry isrequired for a particular transaction, select "No journal entryrequired" in the first account field. Enter your answers in wholedollars.)

1. Record the cash payment.

2. Record the depreciation expense.

3. Record the cash received.

Journal Accounts List:

No journal entry required

Accretion revenue

Accumulated depreciation

Airplanes

Amortization expense

Building

Cash

Cost of goods sold

Deferred gain on sale-leaseback

Deferred initial direct cost

Deferred profit

Deferred rent expense payable

Depreciation expense

Gain on sale-leaseback

Insurance premium payable

Interest expense

Interest payable

Interest receivable

Interest revenue

Inventory of equipment

Lease expense

Lease payable

Lease receivable

Lease revenue

Leased building

Leased equipment

Leased land

Leased property

Leasehold improvements

Loss on leased assets

Loss on residual value guarantee

Maintenance fee payable

Notes payable

Prepaid maintenance

Prepaid rent

Profit

Rent expense

Rent revenue

Residual asset

Right-of-use equipment

Sales revenue

Selling expense

Unearned miscellaneous revenue

Unearned rent revenue

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ACTG 2011 Study Guide - Final Guide: Profit Margin, Accounts Receivable, Inventory Turnover

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