Reference no: EM13489047
Assignmentt
Partially completed problems will earn no credit-that means all requirements must be FULLY completed. If you complete all items as requested. The remaining points are dependent upon the accuracy of your answers!
Rudolf Konknosed Reindeer, Inc. balance sheet at 12/31/11 is presented below.
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Rudolf Konknosed Reindeer Inc. |
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Balance Sheet |
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12/31/2011 |
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| Cash |
$ 12,400 |
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Accounts payable |
$ 23,600 |
| Merchandise Inventory |
21,800 |
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Common stock ($1 par) |
10,000 |
| Prepaid Insurance |
1,800 |
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Paid in capital in excess of par |
60,000 |
| Equipment |
150,000 |
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Retained earnings |
50,400 |
| Accumulated depreciation |
(42,000) |
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$ 144,000 |
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$ 144,000 |
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During 2012, the following transactions occurred:
1. Purchased $129,500 inventory on account. Rudolf Konknosed Reindeer Inc. uses the perpetual method for valuing inventory.
2. $200,000 in sales, plus 5.6% sales tax, were made to customers on account. Cost of the goods sold were $115,600.
3. Received $13,000 cash down payment for orders that will be shipped next year.
4. Issued 10 year, $40,000 face value, 8% bonds on 7/1/11 at 106. The bonds pay interest every 1/1 and 7/1.
5. Collected $155,000 on account.
6. Paid other operating expenses of $28,700.
7. Paid $121,030 on account.
8. Paid $10,000 to the state for a portion of the sales tax collected from customers.
9. On 1/1/12 sold equipment with an original cost of $25,000 for $5,000 cash. The equipment's accumulated depreciation is $8,500.
10. Issued 1,200 shares of $125 par 8% preferred stock for $180,000 cash.
11. Purchased equipment on 7/1/12 for $95,000 cash.
12. Purchased 500 shares of Rudolf Konknosed Reindeer Inc. common stock from a disgruntled shareholder for $35 per share.
13. Recorded wage and payroll taxes. Employee gross wages were $40,000, FICA tax was withheld at a 7.65% rate, federal income taxes (FIT) of $1,800 were withheld, and state income taxes (SIT) of $600 were withheld. Additionally, the Federal unemployment tax (FUTA) rate is 0.9% and the state unemployment (SUTA) rate is 3.5%. The net wage checks were cut and immediately given to employees. The payroll taxes are not due to be remitted until after year end.
Requirement A:
i - Journalize 1 - 13 above
ii - Post to the ledger
iii - Prepare an unadjusted trial balance which will be used as the first 2 columns of a worksheet.
(See Requirement B.)
***Four Optional solution templates have been prepared to assist you. They can be accessed by clicking on the tabs below. Use of Microsoft Excel is optional. Hand prepared solutions are also acceptable.
Requirement B:
Using the unadjusted trial balance prepared in requirement A-iii above and the following data for adjusting entries, prepare a 10 column worksheet similar to the one in chapter 4 appendix of your text.
(a) Straight-line depreciation, with a 5-year useful life and no salvage value is used for equipment purchased in previous years. For the 2012 purchase (#11 above) use double declining balance with a useful life of 10 years, and $15,000 salvage value.
(b) Accrue bond interest payable and amortize bond premium as well.
(c) The prepaid insurance relates to a policy purchased last year that expires at a rate of $80 per month.
(d) The company estimates that all accounts receivable are collectible--in other words, don't worry about bad debts.
Requirement C:
Prepare a Statement of Cash Flows.
Hints: In operating activities subtract gains and premium amortization.