Prepaid rent- factory was amortized, Accounting Basics

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Create an adjusted trial balance & journal entries

Bank charges of $932.70 were not recorded in the books for 2014. These were credit card fees charged by the bank for Edwards, INC accepting credit cards from their customers. The charges were recorded accurately on the bank reconciliation (use bank charge expense)

70% of the accounts payable balance at 12-31-14 was paid in 1st quarter 2015. The balance will be paid in the 2nd quarter 2015.

A new factory warehouse was purchased on 1-1-14 for $3,475,500. Prior to this time the facilities had been rented. The cost of the warehouse was not recorded on the books when purchased. Company obtained financing on a 15-year note signed on 1-1-14. The payment is $34,945/month (principal $19,308.33 interest of $15,636.67). Assume equal payments each month and a balloon payment at the end of the note. Land of $100,000 is included in the original purchase price. All payments were recorded in the general ledger to the notes payable short term account

The beginning cash balance at 1-1-15 for the cash budget should be the ending cash balance at 12-31-14

The company sold common stock in Aug 2014 for $190,500 (note recorded in 2014)

The company applied the Direct Write-off Method for bad debts. $30,610 was determined to be bad debt in 2014. (not recorded in general ledger)

Payment on 3 year Factory Equipment purchased on 07-13-14 not recorded in 2014. First payment due 8-13-14
Principal $869.38
Interest $712.50
Total $1581.88

Depreciation for the office building for 12-31-14 was $11,392 and not recorded. Depreciation over 39.5 yrs. Use straight line method

Depreciation for new warehouse was 39 yrs. Use straight line method

Unearned revenue of $4960 was earned in 2014

Interest expense of $6200 was paid in each quarter, 2014 was not recorded in the general ledger

Purchased Factory Equipment on 9-1-14 for $11,450 cash. $775 sales tax was included in purchase price. Depreciation 7 yrs. straight line

Sales commissions are applied at the rate 3% of gross sales & have been recorded throughout 2014 - $58,519.05

Dividends declared on Dec 31, 2014: Common $6250, preferred $7000 (not previously recorded)

Purchased factory eq. $29,250 (not including sales tax of $2047.50) on 7-13-14 on a 3 yr note. Depreciate 3 yrs ($4346.88). Not previously recorded. 1st payment due 8-13-14

An advertising invoice for Dec 2014 was not recorded nor paid. The amount of $4500 was paid in January, 2015. (use prepaid advertising)

Unexpired prepaid office insurance at 12-3-14 was $2650

Record all debts affecting CGS to CGS account

The factory water invoice of $4550 for Dec 2014 was not accrued into general ledger

Collections from customers are: 80% collected in quarter of sales & 20% collected in quarter following quarter of sales

Prepaid rent- Factory was amortized at 12-31-14 for full amount

Finished goods inventory, Jan 1, 2014 $177,808.71
Raw materials Inventory, Jan 1, 2014 $21,475
Work in process inventory, Jan 1, 2014 $16,290

Prepaid office supplies on hand Dec 31, 2014 was $764.50

Estimated Labor for 2015 is paid in quarter incurred

fixed & Administrative expenses paid in quarter incurred

Manufacturing overhead expenses paid in quarter incurred

Sales of preferred stock on 4-19-15, $260,500

Line of credit utilized to maintain $55,000 cash balance at the end of each quarter. 5.75% interest rate

Amortized 50% of prepaid advertising at 12-31-2014

Info for ratios:
Beginning A/R (Net) $160,500
Beginning Inventory 1-1-14 $190,500

Use straight line dep, do not consider bonus dep

Company sold preferred stock in September 2014 for $260,500 (not recorded in 2014)


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