ACCT 2001 Study Guide - Quiz Guide: Accounts Payable, Retained Earnings, Current Liability
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Spreadsheet and Statement of Cash Flows
The following information was taken from Lamberson Company's accounting records:
Account Balances | ||
Account Titles | January 1, 2016 | December 31, 2016 |
Debits | ||
---|---|---|
Cash | $ 1,400 | $ 2,400 |
Accounts Receivable (net) | 2,800 | 2,690 |
Marketable Securities (at cost) | 1,700 | 3,000 |
Allowance for Change in Value | 500 | 800 |
Inventories | 8,100 | 7,910 |
Prepaid Items | 1,300 | 1,710 |
Investments (long-term) | 7,000 | 5,400 |
Land | 15,000 | 15,000 |
Buildings and Equipment | 32,000 | 46,200 |
Discount on Bonds Payable | â | 290 |
$69,800 | $85,400 | |
Credits | ||
Accumulated Depreciation | $16,000 | $16,400 |
Accounts Payable | 3,800 | 4,150 |
Income Taxes Payable | 2,400 | 2,504 |
Wages Payable | 1,100 | 650 |
Interest Payable | â | 400 |
Note Payable (long-term) | 3,500 | â |
12% Bonds Payable | â | 10,000 |
Deferred Taxes Payable | 800 | 1,196 |
Convertible Preferred Stock, $100 par | 9,000 | â |
Common Stock, $10 par | 14,000 | 21,500 |
Additional Paid-in Capital | 8,700 | 13,700 |
Unrealized Increase in Value of Marketable Securities | 500 | 800 |
Retained Earnings | 10,000 | 14,100 |
$69,800 | $85,400 |
Additional information for the year:
Sales | $ 39,930 | |
Cost of goods sold | (19,890) | |
Depreciation expense | (2,100) | |
Wages expense | (11,000) | |
Other operating expenses | (1,000) | |
Bond interest expense | (410) | |
Dividend revenue | 820 | |
Gain on sale of investments | 700 | |
Loss on sale of equipment | (200) | |
Income tax expense | (2,050) | |
Net income | $ 4,800 |
Dividends declared and paid totaled $700.
On January 1, 2016, convertible preferred stock that had originally been issued at par value were converted into 500 shares of common stock. The book value method was used to account for the conversion.
Long-term nonmarketable investments that cost $1,600 were sold for $2,300.
The long-term note payable was paid by issuing 250 shares of common stock at the beginning of the year.
Equipment with a cost of $2,000 and a book value of $300 was sold for $100. The company uses one Accumulated Depreciation account for all depreciable assets.
Equipment was purchased at a cost of $16,200.
The 12% bonds payable were issued on August 31, 2016, at 97. They mature on August 31, 2026. The company uses the straight-line method to amortize the discount.
Taxable income was less than pretax accounting income, resulting in a $396 increase in deferred taxes payable.
Short-term marketable securities were purchased at a cost of $1,300. The portfolio was increased by $300 to a $3,800 fair value at year-end by adjusting the related allowance account.
Prepare the statement of cash flows.
LAMBERSON COMPANY Statement of Cash Flows For Year Ended December 31, 2016 |
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Operating Activities:
Prepare the statement of cash flows.
___________________ ____________
Adjustment for noncash income items:
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
Adjustments for cash flow effects from working capital items:
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
Net cash provided by operating activities ______________
Investing Activities:
___________________ ____________
___________________ ____________
___________________ ____________
___________________ ____________
Net cash used for investing activities ____________
Financing Activities:
___________________ ____________
___________________ ____________
Net cash provided by financing activites ____________
Cash, january 1, 2016 _____________
Cash, december 31, 2016 ____________
Compute the cash flow from operations to sales ratio and the profit margin ratio for 2016. Round your answers to one decimal place.
Cash flows from operations ratio ________:%
Profit margin:___________ %
FNEC 1600
Comprehensive Problem â Due Date: December 1, 2017
Fall 2017
Your score on the following problem will carry a weight of 13% in determining your overall course grade. A hard copy of your solution must be submitted by December 1st. Any submission after the beginning of class on that date is subject to a 10 point per day late point reduction.
Description:
You have been charged with preparing year-end adjusting entries along with a multiple-step income statement and a classified balance sheet for Fat Tire, Inc., a wholesaler of bicycles and bicycle parts. The financial statements will cover the year ended December 31, 2016. A December 31 bank reconciliation, an unadjusted trial balance, and other information to help with the adjusting entries follow.
Fat Tire, Inc. | ||||||
Bank Reconciliation | ||||||
31-Dec-16 | ||||||
Balance per Bank Statement | $297,000 | |||||
Deposits in Transit | $4,500 | |||||
Bank Error (See note 1 below) | 1,200 | |||||
Outstanding Checks | (2,000) | 3,700 | ||||
Adjusted Balance | $300,700 | |||||
Balance per Fat Tire's Books | $300,000 | |||||
Interest Earned per bank statement | $450 | |||||
Book Error (See note 2 below) | 1,170 | |||||
NSF Check (See note 3 below) | (500) | |||||
December bank service charges | (420) | 700 | ||||
Adjusted Balance | $300,700 | |||||
note 1: The bank incorrectly charged Fat Tire's account for a fee | ||||||
that belonged to another client of the bank. | ||||||
note 2: A check for $130 to pay a cash miscellaneous operating | ||||||
expense was incorrectly recorded as $1,300 on Fat Tire's | ||||||
note 3: The bank returned a bad check deposited by Fat Tire | ||||||
that represented a receipt of payment from one of Fat Tire's | ||||||
customers. | ||||||
Fat Tire, Inc. | ||||||
Unadjusted Trial Balance | ||||||
December 31, 2016 | ||||||
Debit | Credit | |||||
Accounts Payable | 50,000 | |||||
Accounts Receivable | 425,700 | |||||
Accumulated Depreciation (Equip) | 4,305 | |||||
Accumulated Depreciation (F & F) | 23,600 | |||||
Advertising Expense | 18,000 | |||||
Allowance for Doubtful Accounts | $1,500 | |||||
Cash | $300,000 | |||||
Common Stock | 180,000 | |||||
Cost of Goods Sold | 2,613,000 | |||||
Depreciation Expense | 6,455 | |||||
Equipment | 10,000 | |||||
Furniture & Fixtures | 50,000 | |||||
Income Tax Expense | 228,323 | |||||
Insurance Expense | 7,500 | |||||
Interest Revenue | 5,200 | |||||
Inventory | 325,000 | |||||
Miscellaneous Operating Expense | 2,500 | |||||
Note Payable | 35,000 | |||||
Payroll Tax Expense | 23,680 | |||||
Prepaid Insurance | 10,500 | |||||
Rent Expense | 168,000 | |||||
Rent Revenue | 4,000 | |||||
Retained Earnings | 242,553 | |||||
Salary Expense | 264,500 | |||||
Sales Discounts | 42,000 | |||||
Sales Returns | 30,000 | |||||
Sales Revenue | 4,020,000 | |||||
Supplies | 2,000 | |||||
Supplies Expense | 17,000 | |||||
Unearned Rent | 2,000 | |||||
Utilities Expense | 24,000 | |||||
Totals | 4,568,158 | 4,568,158 | ||||
Information related to adjusting entries:
No entries have been made for the December 31 bank reconciliation. Use the bank reconciliation provided to prepare the necessary entries.
Fat Tire pays employees and all payroll related liabilities semi-monthly. Each payment of payroll related liabilities is for the previous pay period. Thus, Fat Tire needs to accrue salaries and payroll related expenses for the December 16th-31st pay period. The following information was obtained for the last pay period of the year.
Gross Pay = $12,000
Federal Income Tax withholding rate = 20%
FICA rate for employees and employers = 8%
State unemployment taxes for the pay period = $250
Federal unemployment taxes for the pay period = $75
Fat Tire maintains a liability account for federal income tax withheld from employees and a separate liability account for its own corporate income taxes.
Based on a count taken on December 31st, the amount of supplies that remain on hand is $500.
Unbilled sales as of December 31 totaled $5,000. The cost of those bikes sold was $2,000.
The Allowance for Doubtful accounts is adjusted at the end of each year using the percentage of sales method. Fat Tires estimates that 1% of adjusted net sales will go uncollected.
The Prepaid Insurance balance represents an $18,000 one-year policy that began on July 1. The company adjusts any prepaid items on a monthly basis.
Fat Tire decided to sublease some of its rental space. On October 1, the company received $6,000 in advance from a neighboring business for 3 monthâs rent. The lease period began on October 1. Fat Tire adjusts rent related accounts on a monthly basis.
Furniture and Fixtures were acquired on January 2, 2012 at a cost of $50,000. Management selected a 10 year life and a $2,000 residual value. Fat Tire depreciates Furniture and Fixtures on a monthly basis using the straight-line method of depreciation.
The Equipment was purchased on January 2, 2015 at a cost of $10,000. Management selected a productive life of 6,000 hours and a $1,000 residual value. Fat Tire depreciates Equipment on a monthly basis using the units-of-production method. The equipment was used 200 hours in December.
The Note Payable was issued on December 1, 2016. The terms of the note state that the principal and interest is to be paid two years from the issuance date. The interest rate stated on the note is 6 percent.
Accrued advertising expenses incurred but not yet paid totaled $1,000 on December 31.
Fat Tire makes quarterly payments for its income taxes. No entry has been made for the fourth quarter income taxes of 2016 which will be paid in 2017. To make this entry, you will have to determine the Income Before Tax for the year. One-fourth of that amount represents income earned in the fourth quarter. Fat Tireâs corporate tax rate is 40%.
Required:
Prepared the adjusting journal entries required on December 31, 2016.
Prepared a multiple-step income statement for the year ended December 31, 2016. Make sure your operating expenses are listed in descending order. Use the Income statement example that I provided as supplemental notes to chapter 6 as a guide.
Prepare a classified balance sheet as of December 31, 2016. List your current assets in order of liquidity.
Note: If it helps, prepare a supplemental schedule like we completed in problem 4.6A. It may help organize your data prior to preparing the financial statements.
Appropriate Use of Office Hours:
Office hours are held so that students can ask questions about assignments and/or concepts. For assignments that are to be submitted for a grade, it is unreasonable for you to ask âis my assignment correctâ or âcan you find my mistakesâ. That is why the assignments are graded. A reasonable request is to ask âhow toâ questions if you are stuck on a step or âcan you help me understand this data or this requirementâ. We (Iâm speaking for the TAs as well) want to help, but we are not there to complete your assignments for you.
Print Formats: Be sure to use the print preview feature in Excel and adjust your spreadsheets so that they can be easily read. Points will be deducted if I have to work just to read your printouts. Use normal size fonts and make sure that when reading left to right, you do not have sheets starting on one page and finishing on another. In other words, pretend Iâm your client.