Module 5 Algorithmic Gold Run Snowmobile

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Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 1 Algorithmic Gold Run Snowmobile 1 st Algorithmic Edition Adjusting Entries and Closing Entries for the Quarter Ended December 31 and the Final Project Evaluation

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 2 ADJUSTING ENTRIES FOR THE QUARTER Using a copy of the December 31 Unadjusted Trial Balance (printed after the bank reconciliation entries) as well as the information and financial data shown below, record the adjusting entries for Gold Run Snowmobile, Inc. Be sure to click on the Adjusting JE button on the tool bar. Adjusting entries must not be entered using the Daily JE option. Any corrections to adjusting entries must also be entered using the Adjusting JE option . Adjusting entries will not require documentation entries. Where necessary in the calculations, round all totals to the nearest cent. ALL ENTRIES MUST BE RECORDED AS OF DECEMBER 31, THE END OF THE FOURTH QUARTER! A. The credit card fees charges on the balance of Accounts Receivable, Credit Card Company is 2% of the December 31 account balance. This accrual entry will decrease the Accounts Receivable, Credit Card Companies account ( be sure to round to the nearest cent ) and correctly state the credit card expense for the quarter. B. Eighty percent ( 80% ) of the December 31 balance of the Store and Shop Supplies account has been consumed. C. Twenty percent ( 20% ) of the balance of the Advertising Expense account represents prepaid adverting for the next accounting period. D. All of the balance of Prepaid Property Tax account is an expense for this quarter ended December 31. E. The quarterly adjusting entry for the beginning balance of Prepaid Insurance is $1,320.00. The purchase of the insurance policy on December 26 is for insurance coverage that begins January 1 of the following accounting period. F. Wages accrued total 12 hours worked at $9.50 per hour . G. Straight-line depreciation of the store equipment is $2,125 for the quarter. H. Depreciation of the shop equipment is $860 for the quarter .

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 3 I. Gold Run Snowmobile, Inc. has three trucks. The new truck acquired on December 22 will not be depreciated this quarter. One of the trucks is fully depreciated. The third truck was acquired at a cost of $20,000.00 , with a salvage value of $6,000.00 , is depreciated on a miles driven basis ( units of production depreciation ), and has an estimated service life of 100,000 miles . The truck was driven 3,200 miles during the fourth quarter. J. Accrue the interest on the three short-term notes receivable . Calculate the interest on each note to the nearest cent. Use the 360-day banker's year for all interest computations . Interest receivable has not been accrued on any of the notes. Make a single journal entry for the total accrued interest receivable on the three notes. Note One: $4,600.00, 8%, 90-day note, dated November 16. Note Two: $10,000.00, 14%, 90-day note, dated December 23 Note Three: $25,000, 12%, 60-day note, dated December 28 K. Record the interest expense on the short-term notes payable . Interest expense has not been accrued on any of the notes. Record the interest expense for each note separately. Note One : On November 16, $2,000.00 was borrowed for 90 days at 9% interest. Note Two: On December 26, $30,000.00 was borrowed for 60 days on a discounted basis (discount rate 12.0% ) and $600.00 was debited to the Discount on Notes Payable account. Record the five days of accrued interest on this note payable. The Discount on Notes Payable account will be credited for this adjusting entry. L. Eighty percent ( 80% ) of the balance of the Unearned Storage Fees has been earned this quarter. M. Additional income taxes expense for the period total $2,052.00 . N. Based on an aging of the accounts receivable, the estimated total of uncollectible accounts for the quarter is expected to be $1,865.00. Reminder: Gold Run Snowmobile uses the “allowance method” for recording expected losses from uncollectible accounts.

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Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 4 In the past, Gold Run Snowmobile has experienced small shortages (shrinkage) in merchandise inventory when the perpetual inventory total maintained on the computerized accounting system was compared to the actual physical inventory count taken at the end of the accounting period. When this shrinkage occurred, the Cost of Goods Sold account was debited and the Merchandise Inventory account was credited for the total value of the inventory shortage. The entry was followed by an update of the specific merchandise items where the quantities were not correct. At the end of the current quarter the physical count of merchandise on hand matches the perpetual inventory for each item in stock. As a result of the satisfactory inventory control system that is in place, no losses have occurred and no adjusting entry for inventory shrinkage is required for this quarter. ______________________________________________________________________________ End of Module Procedures Now that you have completed entering the adjusting entries for the quarter it is time to check the accuracy of your work. 1. Move the pointer to Check Figures in the Menu Bar, move down to Weekly Check Figures ,and click. 2. Select the After Adjustments check figures and print them. 3. Move the pointer to Journal/Ledgers/Statements, move down to General Ledger, and click. 4. Print a copy of the Adjusted Trial Balance for December 31. 5. Move the pointer to Journal/Ledgers/Statements, move down to Subsidiary Ledgers, move to Accounts Receivable Ledger, and click. 6. Print a copy of the Schedule of Accounts Receivable. 7. Move the pointer to Journal/Ledgers/Statements, move down to Subsidiary Ledgers, move to Accounts Payable Ledger and click. 8. Print a copy of the Schedule of Accounts Payable. 9. Move the pointer to Journal/Ledgers/Statements, move down to General Journal, and click. 10. Print a copy of the General Journal for Adjusting Entries.

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 5 11. Compare the balances of the accounts shown in the Check Figures for After Adjustments to the balances of the same accounts in the Adjusted Trail Balance. If any of your account balances DO NOT match the check figures, you must correct the unmatched balances before completing the practice set. The most efficient method of locating and correcting the error(s) is to print a copy of the Adjusted Trial Balance and a copy of the Adjusting Entries from the General Journal. For accuracy, efficiency and a clear audit trail, use the detailed error correction procedures explained in Correcting Entries under Support on the Menu Bar. Note: When correcting adjusting entries use the Adjusting JE option. ______________________________________________________________________________ Completing the Gold Run Snowmobile Practice Set 1. From the Journal/Ledger/Statements option click on Financial Statements. Select and print a copy of the Income Statement, the Retained Earnings Statement, and the Balance Sheet. 2. On the Menu Bar move the pointer to Check Figures and click on Check Figures for Financial Statements. Compare these check figures to the balances shown on your Income Statement and Balance Sheet. If your previous check figures, including After Adjustments, were in agreement then the check figures should match. If the Check Figures for Financial Statements do not agree with your financial statements, review your previous check figures and the After Adjustments check figures to find the error before continuing. 3. From the Journal/Ledgers/Statements option, click on Subsidiary Ledgers, select Accounts Receivable, and print the Schedule of Accounts Receivable. 4. Click on the All Customers button and print the Accounts Receivable Subsidiary Ledger. 5. From the Journal/Ledgers/Statements option, click on Subsidiary Ledgers, select Accounts Payable, and print the Schedule of Accounts Payable.

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 6 6. Click on the All Vendors button and print the Accounts Payable Subsidiary Ledger. 7. From the Journal/Ledgers/Statements option, click on Subsidiary Ledgers, select Inventory, and print the Inventory Analysis statement. 8. Click on the Inventory Items button and print the following inventory ledger cards: T1500 T3000 SW60 SD200 9. The closing entry process in the Gold Run Snowmobile accounting system is an automatic function. The program will close all of the temporary accounts. Move the pointer to the Closing JE button and click. All of the temporary accounts of the business will be closed. 10. Click on General Ledger, click on the Trial Balance button, and print a copy of the Post- Closing Trial Balance. 11. Click on the Ledger Card button and the Cash account (101) will appear on the screen. Print a copy of the Cash account. 12. Using the pull-down screen, select, show, and print the following additional General Ledger accounts: 105 Accounts Receivable 107 Accounts Receivable, Credit Card Companies 115 Merchandise Inventory 201 Accounts Payable 305 Retained Earnings 401 Snowmobile & Accessories Sales 411 Service Fees Earned 501 Cost of Goods Sold 607 Credit Card Expense 711 Interest Earned 901 Income Summary When you have finished the printing all of the required documents, exit the Gold Run Snowmobile accounting program. Using your printed documents, carefully answer the Final Evaluation questions. The questions and several of the end-of-the-quarter required documents may be collected by your instructor.

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Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 7 ______________________________________________________________________________ Error Correction after Closing the Ledger If, after closing the books, you discover an error or wish to print a corrected copy of any of the financial statements, move the pointer to Support, then click on Restore to Adjusted Balances. To properly complete and verify the restoration process, from the Journal/Ledger/Statements option select, General Ledger and the Adjusted Trial Balance will reappear on the monitor screen. Make sure that this is the reinstated Adjusted Trial balance. Then make the required correction entries using the Daily JE or Adjusting JE data entry modes as required. Print the required corrected documents, close the books, and print a new Post-Closing Trial Balance. When you have completed your work for this session, click on Logout from the Menu Bar.

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 8 FINAL PROJECT EVALUATION NAME_______________________________________ GOLD RUN SNOWMOBILE CLASS DAY AND TIME__________DATE________ 1. What has been the amount of decrease in the Accounts Receivable account balance since December 3? $____________ 2. What is the ending balance of the Downieville Dusters (10930) account? $____________ 3. What is the ending balance of the Beverly Kline (11340) account? $____________ 4. What is the amount of the NSF check written by Cheryl Papini (11675)? $____________ 5. What was the amount of the credit memorandum for Mary Bermuda (10400) on December 16? $____________ 6. What was the amount of the sales invoice for Ruth Yates on December 21? $____________ 7. What had been the amount of the increase in the Accounts Payable account balance since December 3? $____________ 8. What is the ending balance of the Morelli Sports Equipment (24850) account? $____________ 9. What was the amount of the debit memorandum to Morrelli Sports Equipment on December 24? $____________ 10. What is the ending balance of the Wind Dancer (29650) account? $____________ 11. What was the beginning balance of Prepaid Insurance account? $____________ 12. What was the amount of the purchase of merchandise from Trail- Traker, Inc. on the 26th of December? $____________ 13. What is the FIFO Value of inventory item Trail-Tracker 1500 (T1500)? $____________ 14. What is the FIFO Value of inventory item Trail-Tracker 3000 (T3000)? $____________

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 9 FINAL PROJECT EVALUATION GOLD RUN SNOWMOBILE 15. What is the FIFO Value of inventory item Swift Enduro (SW660)? $___________ 16. What is the FIFO Value of inventory item Norton Trailer Duo (SD200)? $___________ 17. What has been the amount of increase in the Merchandise Inventory account balance since December 3? $___________ 18. What was the beginning balance of the Cash account? $___________ 19. What is the ending balance of the Cash account? $___________ 20. Check Number 30110 was used to: A. pay salaries. B. pay sales taxes. C. purchase an asset. D. replenish petty cash. ____________ 21. What was the amount received for sales invoice G2999 on December 26? $___________ 22. What was the amount received for sales invoice G3004 on December 31? $___________ 23. How much was the debit to Accounts Receivable from recording the bank reconciliation journal entries? $___________ 24. What is the ending balance of the Accounts Receivable - Credit Card Companies account (107)? $___________ 25. What has been the amount of the increase in the Cost of Goods Sold account balance since December 3? $___________

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Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 10 FINAL PROJECT EVALUATION GOLD RUN SNOWMOBILE 26. What was the amount of the first credit made to the Retained Earnings account (305) during the closing procedure? $___________ 27. What was the amount of the first debit made to the Retained Earnings account (305) during the closing procedure? $___________ 28. What is the balance of the Retained Earnings account in the Post- Closing Trial Balance? $___________ 29. What is the amount of Net Sales? $___________ 30. What is the amount of Total Cost of Goods Sold? $___________ 31. If the transportation-in costs had been reduced to zero through more successful negotiation of merchandise contracts, what would be the corrected Gross Profit From Sales? $___________ 32. The Total Cost of Goods Sold is what percent of Net Sales? Calculate all percents to the nearest hundredth. ____________% 33. Total Selling Expenses are what percent of Total Operating Expenses? ____________% 34. Total Selling Expenses are what percent of Net Sales? ____________% 35. What is the amount of Total Fees Earned? $___________ 36. What is the amount of Total Gross Profit From Sales and Fees Earned? $___________ 37. What is the amount of Income From Operations? $___________ 38. Income Taxes Expense is what percent of Net Income? ____________% 39. Except for the unearned storage fees, how much additional cash is needed in order for Gold Run Snowmobile to pay all of its current liabilities? $___________

Algorithmic Gold Run Snowmobile – Module 5 Copyright © 2012 – 2020 PKL Software, Incorporated. All rights reserved. Last Revised: September 2020 Page 11 FINAL PROJECT EVALUATION GOLD RUN SNOWMOBILE 40. What is the amount of Total Current Assets? $___________ 41. What is the amount of Total Current Liabilities? $___________ 42. What is the amount of working capital? $___________ 43. To the nearest hundredth, what is the current ratio (Current Assets/Current Liabilities)? Example; 3.01. _____________ 44. What is amount of Total Plant and Equipment? $___________ 45. What is the book value of the Shop Equipment? $___________ 46. What is the balance of the Land account? $___________ 47. What is the amount of Total Stockholders' Equity? $___________ 48. What is the amount of Total Liabilities and Stockholders' Equity? $___________ 49. What was the beginning balance of the Retained Earnings account on December 3? $___________ 50. What was the net increase in Retained Earnings? $___________