ACC 310F Study Guide - Quiz Guide: Promissory Note, Cash Register, Historical Cost
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Sanford Company
The Sanford Company had the following balance sheet as ofDecember 31, 20x2. The transactions for the first three months of20x3 are also presented along with other information about specificaccounts.
Sanford Company
Balance Sheet
December 31, 20x2
ASSETS | LIABILITIES | |||
Cash | $ 57,000 | Accounts Payable | $ 34,000 | |
Marketable Securities | 8,000 | Wages Payable | 11,200 | |
Accounts Receivable | 75,000 | Taxes Payable | 8,000 | |
Uncollectible Accounts | -2,000 | Short-Term Notes Payable | 12,000 | |
Inventory | 84,000 | Interest Payable | 800 | |
Supplies | 7,000 | Unearned Revenue | 13,000 | |
Prepaid Insurance | 6,000 | |||
Total Current Assets | $235,000 | Total Current Liabilities | $ 79,000 | |
Land | $114,000 | Long-Term Notes Payable | $ 20,000 | |
Equipment | 227,000 | Bonds Payable | 100,000 | |
Accumulated Depreciation | -87,000 | Mortgage Payable | 320,000 | |
Building | 560,000 | Total Long-Term Liabilities | $440,000 | |
Accumulated Depreciation | -130,000 | |||
Intangible Assets | 70,000 | STOCKHOLDER EQUITY | ||
Total Long-Term Assets | $754,000 | Capital Stock | $100,000 | |
Paid in Capital | 250,000 | |||
Retained Earnings | 120,000 | |||
Total Stockholders Equity | $470,000 | |||
Total Assets | $989,000 | Total Liabilities & Equity | $989,000 |
Additional Information
Accounts Receivable
The following table indicates the historical breakout ofaccounts receivable
Days | Current | 30 to 60 | 60 to 90 | Over 90 |
Percent of Balance | 50% | 30% | 15% | 5% |
Percent Collectible | 95% | 90% | 80% | 60% |
The company uses the gross method of recording all sales onaccounts.
Marketable Securities
The interest rate earned on marketable securities is 6.0%.
Inventory
In 20x2, the company had used the gross method to recordinventory purchases on account. As of January 1, 20x3, the companyis using the net method to record inventory purchases onaccount.
Prepaid Insurance
A three-year insurance policy in the amount of $7,200 waspurchased on July 1, 20x2.
Equipment
Equipment is depreciated at an average amount of $3,000 permonth.
Building
The current building was purchased on January 1, ten years agoand has an expected 40-year life at which time its salvage valuewill be $40,000.
Intangible Assets
Intangible assets were initially valued at $80,000 and are beingdepreciated over 40 years at $2,000 per year.
Short-Term Notes Payable
The one-year short-term notes payable are due on March 1, 20x3.The interest rate is 8.0% which is payable at maturity.
Long-Term Notes Payable
The long-term notes payable are due in ten years. The interestrate on the notes is 7.5%.
Bonds Payable
The bonds payable mature in twenty years. The interest rate onthe bonds is 7.0%.
Mortgage Payable
The following amortization schedule can be used for the January,20x3 mortgage payment on the 10.0%, 30- year mortgage.
Month | Payment | Interest | Principal | Balance |
January | $3,500 | $2,667 | $833 | $320,000 $319,167 |
Capital Stock
The capital stock is common stock at $10 par value with 50,000shares authorized, and 10,000 shares issued and outstanding.
Journal Entries
Jan 1 Equipment with a historical cost of $10,000 and anaccumulated depreciation of $3,000 was sold for $6,000
Jan 2 Equipment with a historical cost of $20,000and an accumulated depreciation of $18,000 was disposed of with anadditional disposal cost of $1,300.
Jan 2 Sanford Company borrowed $24,000 on ashort-term discounted 90 day, 9.0% noninterest-bearing notepayable.
Jan 3 Sanford Company paid $18,000 in advance for the 6 monthrental of a warehouse.
Jan 3 Equipment with a historical cost of $50,000 and anaccumulated depreciation of $40,000 was traded for new similarequipment valued at $75,000. Sanford Company received $14,500 as atrade in for the old equipment, paid $7,500 and established a 7.5%long-term note payable for the balance due.
Jan 4 Equipment with a historical cost of $35,000 and anaccumulated depreciation of $20,000 was traded for new dissimilarequipment valued at $60,000. The salvage value of the old equipmentwas $5,000 and the trade in value was $7,000. Sanford paid $4,000for the equipment and established a 7.5% long-term note payable forthe balance due.
Jan 5 Sanford Company declared a dividend of $2.00 per sharepayable on February 10, 20x3 to all shareholders of record onJanuary 20, 20x3.
Jan 6 The amount in wages payable and taxes payable was paid infull.
Jan 8 Sanford Company paid a total of $18,000 on accountspayable and was able to take advantage of $1,500 in purchasediscounts for early payment. The original inventory purchase wasrecorded at the full amount (gross method).
Jan 15 Cash sales for two weeks equaled $22,000. The cost ofinventory sold equaled $12,000.
Jan 20 Supplies in the amount of $4,200 were purchased forcash.
Jan 21 A customer who owed $10,000 on an account receivable,agreed to sign a 60-day note receivable with an interest rate of8.0%. The interest earned on the note will be paid at the maturitydate of the note receivable.
Jan 29 The balance of $14,500 in accounts payable was paid.
Jan 30 The company purchased $45,000 of inventory on accountwith the terms 2/10, net 30. The company has decided to switch tothe net method for all inventory purchases on account beginning in20x3.
Jan 31 Cash sales for two weeks equaled $24,000. The cost ofinventory sold equaled $13,000.
Jan 31 Sales on account for the month of January totaled $55,000with the terms 2/10, net 30. The cost of inventory sold equaled$26,000.
Jan 31 The unearned revenue represented the rental of specialequipment that was used by another company on weekends. $4,000 ofthe revenue was earned in January.
Jan 31 Collected cash of $48,000 from the accounts receivable,plus there was a total sales discount of $1,000 for the payment ofreceivables within the ten day discount period.
Jan 31 Salary expenses in the amount of $14,000 and tax expensesin the amount of $8,000 were paid.
Jan 31 The utility bill of $2,500 was paid.
Jan 31 A bill in the amount of $3,600 for advertising expensesincurred during the month of January was received.
Jan 31 The monthly payment for January of the mortgage payablewas made.
Feb 1 The Sanford Company made a new issue of 5,000 shares ofcommon stock for cash. The market price of the stock was $40 pershare.
Feb 2 A petty cash fund in the amount of $500 wasestablished.
Feb 3 The Sanford Company bought back 1,000 shares of its owncommon stock for $40 per share.
Feb 8 The purchase of inventory on account on Jan 30th was paidin full.
Feb 10 Sanford Company sold the note receivable from Jan 21st tothe bank, which discounted the note at 12.0%.
Feb 15 Cash sales for two weeks equaled $20,000. The cost ofinventory sold equaled $11,000.
Feb 20 The company purchases $20,000 of inventory on accountwith the terms 2/10, net 30.
Feb 27 The company paid an advertising bill for $5,600 whichincluded the February advertising expense of $2,000 plus thebalance due from January.
Feb 28 Cash sales for two weeks equaled $25,000. The cost ofinventory sold equaled $14,000.
Feb 28 The monthly payment for February of the mortgage payablewas made.
Feb 28 The company collected cash of $59,000 from the accountsreceivable, plus there was a total sales discount of $1,100 for thepayment of receivables within the ten day discount period.
Feb 28 Salary expenses in the amount of $21,000 and tax expensesin the amount of $9,000 were paid.
Feb 28 The utility bill of $2,100 was paid.
Feb 28 Sales on account for the month of February totaled$60,000 with the terms 2/10, net 30. The cost of inventory soldequaled $30,000.
Mar 1 The short-term note payable that was due on March 1st plusall appropriate interest was paid.
Mar 3 The amount of the petty cash fund was increased by$200.
Mar 10 Supplies in the amount of $2,700 were purchased forcash.
Mar 15 Cash sales for two weeks equaled $27,000. The cost ofinventory sold equaled $15,000.
Mar 20 Sanford Company reissued 300 shares of its own stock for$42 per share.
Mar 21 The bank notified Sanford Company that the notereceivable from January 21st had not been paid. The bank collectedthe amount of the note plus the interest due and a $20 protest feefrom Sanford Company. Sanford Company charged the full amount ofthe note receivable plus related fees against the customerâsaccount receivable balance.
Mar 25 The company purchased $50,000 of inventory on accountwith the terms 2/10, net 30.
Mar 28 The purchase of inventory on account on Feb 20th was paidin full.
Mar 29 The petty cash fund had $150 in cash and receipts intotal amounts for the following expense categories:entertainment$160, travel $170, postage $90, and supplies $115. Thepetty cash fund was replenished.
Mar 30 Cash sales for two weeks equaled $20,000. The cost ofinventory sold equaled $11,000.
Mar 30 The unearned revenue represented the rental of specialequipment that was used by another company on weekends. $9,000 ofthe revenue was earned in March.
Mar 31 Sales on account for the month of March totaled $67,000with the terms 2/10, net 30. The cost of inventory sold equaled$36,000.
Mar 31 Salary expenses in the amount of $16,000 and tax expensesin the amount of $7,000 were paid.
Mar 31 Collected cash of $70,000 from the accounts receivable,plus there was a total sales discount of $1,200 for the payment ofreceivables within the ten day discount period.
Mar 31 A warehouse building was acquired for $250,000. Closingcosts on the acquisition equaled $7,000, and there were costs of$10,300 to get the building into an operational condition to beused by Sanford Company. Employee salaries specifically related tothe building renovation were an additional $5,400. This salaryexpense was part of the normal monthly expenses and would have beenincurred regardless of whether the employees worked on thewarehouse or did other activities within the company. SanfordCompany paid $100,000 in cash as a down payment with the balancedue being added to the mortgage payable account.
Mar 31 The utility bill of $3,000 was paid.
Mar 31 Sanford Company repaid the 90 day discounted note payablefrom January 2nd in full.
Mar 31 The equipment depreciation entry for the three months of20x3 was completed.
Mar 31 The depreciation entry for the building for the months ofJanuary, February, and March was entered.
Mar 31 The amortization of intangible assets for the threemonths of 20x3 was completed.
Mar 31 The bad debt expense based on the aging schedule foraccounts receivable was determined for the three month period.Note: The total balance in accounts receivable should be$76,853.
Mar 31 Salary expenses incurred during the month of March butnot yet paid equaled $8,400 and tax expenses equaled $2,800.
Mar 31 A physical inventory of supplies indicated a total amountof $5,000 of supplies still on hand.
Mar 31 A customer sent an advance payment of $10,000 for the useof special equipment in April and May.
Mar 31 The amount of rent expense for the warehouse for thefirst three months of 20x3 was recognized.
Mar 31 Sanford Company provided services to a customer in theamount of $3,000 during March but a bill has not been sent.
Mar 31 The amount of insurance expense for the first threemonths of 20x3 was recognized.
Mar 31 The amount of interest earned on marketable securitiesfor the three months of 20x3 was recognized.
Mar 31 The amount of interest expense for the total long-termnotes payable for the first three months of 20x3 wasrecognized.
Mar 31 The amount of interest expense for the bonds payable forthe three months of 20x3 was recognized.
Mar 31 The monthly payment for March of the mortgage payable wasmade.
1. Develop a balance sheet in good form as of March 31, 20x3 forSanford Company. (Please with exact answers)
Hello, I needed the answers for the general journal posts from 1Feb - 1 Mar.
Thank you.
Sanford Company
The Sanford Company had the following balance sheet as ofDecember 31, 20x2. The transactions for the first three months of20x3 are also presented along with other information about specificaccounts.
Sanford Company
Balance Sheet
December 31, 20x2
ASSETS | LIABILITIES | |||
Cash | $ 57,000 | Accounts Payable | $ 34,000 | |
Marketable Securities | 8,000 | Wages Payable | 11,200 | |
Accounts Receivable | 75,000 | Taxes Payable | 8,000 | |
Uncollectible Accounts | -2,000 | Short-Term Notes Payable | 12,000 | |
Inventory | 84,000 | Interest Payable | 800 | |
Supplies | 7,000 | Unearned Revenue | 13,000 | |
Prepaid Insurance | 6,000 | |||
Total Current Assets | $235,000 | Total Current Liabilities | $ 79,000 | |
Land | $114,000 | Long-Term Notes Payable | $ 20,000 | |
Equipment | 227,000 | Bonds Payable | 100,000 | |
Accumulated Depreciation | -87,000 | Mortgage Payable | 320,000 | |
Building | 560,000 | Total Long-Term Liabilities | $440,000 | |
Accumulated Depreciation | -130,000 | |||
Intangible Assets | 70,000 | STOCKHOLDER EQUITY | ||
Total Long-Term Assets | $754,000 | Capital Stock | $100,000 | |
Paid in Capital | 250,000 | |||
Retained Earnings | 120,000 | |||
Total Stockholders Equity | $470,000 | |||
Total Assets | $989,000 | Total Liabilities & Equity | $989,000 |
Additional Information
Accounts Receivable
The following table indicates the historical breakout ofaccounts receivable
Days | Current | 30 to 60 | 60 to 90 | Over 90 |
Percent of Balance | 50% | 30% | 15% | 5% |
Percent Collectible | 95% | 90% | 80% | 60% |
The company uses the gross method of recording all sales onaccounts.
Marketable Securities
The interest rate earned on marketable securities is 6.0%.
Inventory
In 20x2, the company had used the gross method to recordinventory purchases on account. As of January 1, 20x3, the companyis using the net method to record inventory purchases onaccount.
Prepaid Insurance
A three-year insurance policy in the amount of $7,200 waspurchased on July 1, 20x2.
Equipment
Equipment is depreciated at an average amount of $3,000 permonth.
Building
The current building was purchased on January 1, ten years agoand has an expected 40-year life at which time its salvage valuewill be $40,000.
Intangible Assets
Intangible assets were initially valued at $80,000 and are beingdepreciated over 40 years at $2,000 per year.
Short-Term Notes Payable
The one-year short-term notes payable are due on March 1, 20x3.The interest rate is 8.0% which is payable at maturity.
Long-Term Notes Payable
The long-term notes payable are due in ten years. The interestrate on the notes is 7.5%.
Bonds Payable
The bonds payable mature in twenty years. The interest rate onthe bonds is 7.0%.
Mortgage Payable
The following amortization schedule can be used for the January,20x3 mortgage payment on the 10.0%, 30- year mortgage.
Month | Payment | Interest | Principal | Balance |
January | $3,500 | $2,667 | $833 | $320,000 $319,167 |
Capital Stock
The capital stock is common stock at $10 par value with 50,000shares authorized, and 10,000 shares issued and outstanding.
Journal Entries
Jan 1 Equipment with a historical cost of $10,000 and anaccumulated depreciation of $3,000 was sold for $6,000
Jan 2 Equipment with a historical cost of $20,000and an accumulated depreciation of $18,000 was disposed of with anadditional disposal cost of $1,300.
Jan 2 Sanford Company borrowed $24,000 on ashort-term discounted 90 day, 9.0% noninterest-bearing notepayable.
Jan 3 Sanford Company paid $18,000 in advance for the 6 monthrental of a warehouse.
Jan 3 Equipment with a historical cost of $50,000 and anaccumulated depreciation of $40,000 was traded for new similarequipment valued at $75,000. Sanford Company received $14,500 as atrade in for the old equipment, paid $7,500 and established a 7.5%long-term note payable for the balance due.
Jan 4 Equipment with a historical cost of $35,000 and anaccumulated depreciation of $20,000 was traded for new dissimilarequipment valued at $60,000. The salvage value of the old equipmentwas $5,000 and the trade in value was $7,000. Sanford paid $4,000for the equipment and established a 7.5% long-term note payable forthe balance due.
Jan 5 Sanford Company declared a dividend of $2.00 per sharepayable on February 10, 20x3 to all shareholders of record onJanuary 20, 20x3.
Jan 6 The amount in wages payable and taxes payable was paid infull.
Jan 8 Sanford Company paid a total of $18,000 on accountspayable and was able to take advantage of $1,500 in purchasediscounts for early payment. The original inventory purchase wasrecorded at the full amount (gross method).
Jan 15 Cash sales for two weeks equaled $22,000. The cost ofinventory sold equaled $12,000.
Jan 20 Supplies in the amount of $4,200 were purchased forcash.
Jan 21 A customer who owed $10,000 on an account receivable,agreed to sign a 60-day note receivable with an interest rate of8.0%. The interest earned on the note will be paid at the maturitydate of the note receivable.
Jan 29 The balance of $14,500 in accounts payable was paid.
Jan 30 The company purchased $45,000 of inventory on accountwith the terms 2/10, net 30. The company has decided to switch tothe net method for all inventory purchases on account beginning in20x3.
Jan 31 Cash sales for two weeks equaled $24,000. The cost ofinventory sold equaled $13,000.
Jan 31 Sales on account for the month of January totaled $55,000with the terms 2/10, net 30. The cost of inventory sold equaled$26,000.
Jan 31 The unearned revenue represented the rental of specialequipment that was used by another company on weekends. $4,000 ofthe revenue was earned in January.
Jan 31 Collected cash of $48,000 from the accounts receivable,plus there was a total sales discount of $1,000 for the payment ofreceivables within the ten day discount period.
Jan 31 Salary expenses in the amount of $14,000 and tax expensesin the amount of $8,000 were paid.
Jan 31 The utility bill of $2,500 was paid.
Jan 31 A bill in the amount of $3,600 for advertising expensesincurred during the month of January was received.
Jan 31 The monthly payment for January of the mortgage payablewas made.
Feb 1 The Sanford Company made a new issue of 5,000 shares ofcommon stock for cash. The market price of the stock was $40 pershare.
Feb 2 A petty cash fund in the amount of $500 wasestablished.
Feb 3 The Sanford Company bought back 1,000 shares of its owncommon stock for $40 per share.
Feb 8 The purchase of inventory on account on Jan 30th was paidin full.
Feb 10 Sanford Company sold the note receivable from Jan 21st tothe bank, which discounted the note at 12.0%.
Feb 15 Cash sales for two weeks equaled $20,000. The cost ofinventory sold equaled $11,000.
Feb 20 The company purchases $20,000 of inventory on accountwith the terms 2/10, net 30.
Feb 27 The company paid an advertising bill for $5,600 whichincluded the February advertising expense of $2,000 plus thebalance due from January.
Feb 28 Cash sales for two weeks equaled $25,000. The cost ofinventory sold equaled $14,000.
Feb 28 The monthly payment for February of the mortgage payablewas made.
Feb 28 The company collected cash of $59,000 from the accountsreceivable, plus there was a total sales discount of $1,100 for thepayment of receivables within the ten day discount period.
Feb 28 Salary expenses in the amount of $21,000 and tax expensesin the amount of $9,000 were paid.
Feb 28 The utility bill of $2,100 was paid.
Feb 28 Sales on account for the month of February totaled$60,000 with the terms 2/10, net 30. The cost of inventory soldequaled $30,000.
Mar 1 The short-term note payable that was due on March 1st plusall appropriate interest was paid.
Mar 3 The amount of the petty cash fund was increased by$200.
In addition to presenting the computed answers, please also discuss how you arrived at each answers the accounting problem asks. The accounting problem presents a companyâs balance sheet and income statement. The Diamond Gem Cleaning and Maintenance Service Company is in the business of contracting its cleaning and maintenance services to office buildings. The balance sheet and income statement have blank lines. Determine the values that would be appropriate for each blank line. Provide a narrative of how you arrived at each value. In doing so, explain the account being valued and its relationship to the other financial data. For example, if the accounts payable line was missing, explain that you can derive its value based on knowing all the other values of the current liabilities section. Then explain what an account liability is, as well as why it would belong in the current liabilities section of the balance sheet
Please refer to the income statement and balance sheet of the Diamond Gem Cleaning and Maintenance Service Company available down:
Superior papers will mention and explain the following elements when responding to the assignment question:
Provide correct balances for the blank financial account lines.
Provide a narrative about how the values were determined.
Provide a definition and explanation of each account line that was completed
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