Reference no: EM13572837

Recording the journal entries for the fiscal year 2012 (Jan 1- Dec 31) use the journal entry number for the journal entry reference. (please see attachment) Balance Sheet as of December 31st Assets 2011 2010 Cash $785,000 $675,000 Short term investments in cash equivalents $75,000 $15,000 Accounts Rec. $455,000 $525,000 Allowance for Bad Debt $(25,000) $(105,000) Inventory$975,000 $775,000 Current Assets$2,265,000 $1,885,000 Equipment $5,000,000 $5,000,000 Accum.Deprectation $(2,000,000) $(1,500,000) LT Notes Receivable $285,000 $- Land $1,450,000 $1,450,000 Non-Current Assets $4,735,000 $4,950,000 Total Assets $7,000,000 $6,835,000 Liabilities Accounts Payable $450,000 $570,000 Wages Payable $150,000 $185,000 Dividends Payable $155,000 $135,000 Current Liabilities $755,000$890,000 LT Notes Payable$1,250,000 $1,250,000 Total Liabilities $2,005,000$2,140,000 Stockholders Equity Contributed Capital $3,000,000 $3,000,000 Retained Earnings $1,995,000 $1,695,000 Total Liabilities and Equity $7,000,000 $6,835,000 Prior year's income statement account balances 2011 2010 Sales,

net $2,435,000 $2,500,000 COGS $850,000 $780,000 Wages Expense $565,000 $785,000 Interest Income $52,000 $56,000 Interest Expense $56,250 $56,250 Bad Debt Expense$60,750 $45,000 Depreciation Expense$500,000 $500,000 2012 information (the following events occurred during 2012) 1. The company sells ‘/2 of its land for $2,000,000. 2. The company collected $425,000 from customers related to last year's credit sales. 3. The company paid the outstanding accounts payable balance. 4. The company purchased additional inventory at a cost of $1,000,000 with terms 2/10, n/30. Subsequently, the company paid half within the discount period and the remainder was outstanding as the end of the year (12/31/2012). The company accounts for discounts using the gross method. 5. Customers purchased your products throughout the year. Total sales for the year were $2,950,000. This cost of this inventory, was $1,500,000 and you use a perpetual inventory system. i. Customers paid you 45% in cash and the remainder was on account. ii. The credit sales were sold with term 2/10/, n/30 and payment was received within the discount period for 50 percent of these credit sales. The remainder was outstanding as of the end of the year. The company accounts for discounts using the gross method. 6. Wage expenses for the year, thru Dec. 15th were $550,000. This amount was paid in full as was the outstanding Wages Payable balance from the beginning of the year. 7. Wages earned between Dec. l5t and Dec 31st were $75,000.

The company wifi pay this amount on Jan 7t,h ,2013. 8. A customer that previously bought your product on account has filed for bankruptcy. He owed you $10,000. You expect to collect $0. 9. To calculate depreciation expense for the year, assume that the equipment was purchased 5 years ago (i.e., this is the fifth year that your company has used the equipment). Your company uses straight-line depreciation. Calculate and record Depreciation Expense. (hint: you can figure out the amount even without the salvage value). 10. The company purchased a new manufacturing plant (property) for $650,000 cash. Management estimates the salvage value to be $20,000 and that the plant will have a useful life of 10 years. During acquisition and disposition years the company takes 1/2 year's depreciation. 11. Outstanding dividends payable from the beginning of the year were paid with cash. 12. A customer pays you $1,250,000 for work that you will start in Jan ‘13. 13. The long-term Notes Receivable of $285,000 pays 8 percent interest annually on 12/31. 14. You declare dividends of$100,000 to be paid next year. 15. You pay the interest owed for the long-term note payable (hint: you can figure out the amount). 16. On April 1, 2012, you contract with Built In a Hurry, Inc. to have new headquarters constructed (a building for your own use, not for resale). Construction begins on May 1, 2012 and it is estimated that the project would be completed on April 1, 2013. The building will be constructed on land you already own. The estimated cost of construction of the new building is $4,500,000 and Built In A Hurry, Inc. requires payments on the following dates:

Date Payment Amount May 1, 2012 450,000 August 1, 2012 800,000 November 1, 2012 1,500,000 Ajjril 1, 2013 1,750,000 In order to finance the project, on April 1, 2012, you sign a 2-year construction loan for $2,000,000 at 12% interest paid annu3lly on April 1S The loan is issued at par (no discount or premium). (hint: this is an interest capitalization problem). 17.During 2012, you made $100,000 of installment sales, which are appropriately accounted for using the installment sales method. The cost of the installment sales was $75,000. During 2012, you collected $20,000 related to these installment sales (this is in addition to amount collected from customers indicated in items 2 and 4 from above). 18.Your company signs a 3-year, $4,000,000 contract with a customer to build a supper widget! The CFO of the company estimates that the total costs of building the widget will be $3,200,000 and determines that the percentage of completion method is appropriate for this transaction.

Details of the contract for 2012 are provided below. 2012 Costs incurred during the year $800,000 Customer Billings during the year $750,000 Payments from custome $500,000 Estimited costs to complete $2,400,000 19.At the end of the year, the executive team is concerned that the plant purchased early in the year for $650,000 might be impaired. At the time the plant was purchased management thought that the products produced in the plant would be in high demand. Subsequently it was learned that the products themselves cause bizarre mood swings and result in uncontrollable laughter, which has severely decreased the demand for the products. The executive team now estimates that total cash flows to be generated by selling the products manufactured in the plant(not discounted to present value) are $350,000 and the fair value of the plant is $200,000. 20An Aging of schedule for A/R prepared at the end of 2012 indicates that management expects that $35,000 of outstanding A/R will ultimately not be collected.