Based on the following selected data, journalize the adjusting entries as of December 31 of the current year. If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. Estimated uncollectible accounts at December 31, $16,000, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $2,000 (debit). Date Description Debit Credit Dec. 31 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 b. The physical inventory on December 31 indicated an inventory shrinkage of $3,300. Date Description Debit Credit Dec. 31 fill in the blank 8 fill in the blank 9 fill in the blank 11 fill in the blank 12 c. Prepaid insurance expired during the year, $22,820. Date Description Debit Credit Dec. 31 fill in the blank 14 fill in the blank 15 fill in the blank 17
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Comprehensive Problem 3
Part 4:
Note: You must complete parts 1, 2, and 3 before completing part 4 of this comprehensive problem.
Based on the following selected data, journalize the
If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. If an amount box does not require an entry, leave it blank.
a. Estimated uncollectible accounts at December 31, $16,000, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $2,000 (debit).
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 2 | fill in the blank 3 | |
| fill in the blank 5 | fill in the blank 6 |
b. The physical inventory on December 31 indicated an inventory shrinkage of $3,300.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 8 | fill in the blank 9 | |
| fill in the blank 11 | fill in the blank 12 |
c. Prepaid insurance expired during the year, $22,820.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 14 | fill in the blank 15 | |
| fill in the blank 17 | fill in the blank 18 |
d. Office supplies used during the year, $3,920.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 20 | fill in the blank 21 | |
| fill in the blank 23 | fill in the blank 24 |
e.
| Asset | Cost | Residual Value |
Acquisition Date |
Useful Life in Years |
Depreciation Method Used |
||||||
| Buildings | $900,000 | $ 0 | January 2 | 50 | Double-declining-balance | ||||||
| Office Equip. | 246,000 | 26,000 | January 3 | 5 | Straight-line | ||||||
| Store Equip. | 112,000 | 12,000 | July 1 | 10 | Straight-line |
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 26 | fill in the blank 27 | |
| fill in the blank 29 | fill in the blank 30 | ||
| fill in the blank 32 | fill in the blank 33 | ||
| fill in the blank 35 | fill in the blank 36 | ||
| fill in the blank 38 | fill in the blank 39 | ||
| fill in the blank 41 | fill in the blank 42 |
f. A patent costing $48,000 when acquired on January 2 has a remaining legal life of 10 years and is expected to have value for 8 years.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 44 | fill in the blank 45 | |
| fill in the blank 47 | fill in the blank 48 |
g. The cost of mineral rights was $546,000. Of the estimated deposit of 910,000 tons of ore, 50,000 tons were mined and sold during the year.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 50 | fill in the blank 51 | |
| fill in the blank 53 | fill in the blank 54 |
h. Vacation pay expense for December, $10,500.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 56 | fill in the blank 57 | |
| fill in the blank 59 | fill in the blank 60 |
i. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 4% of sales, which totaled $1,900,000 in December.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 62 | fill in the blank 63 | |
| fill in the blank 65 | fill in the blank 66 |
j. Interest was accrued on the note receivable received on October 17 ($100,000, 90-day, 9% note). Assume 360 days per year.
| Date | Description | Debit | Credit |
|---|---|---|---|
| Dec. 31 | fill in the blank 68 | fill in the blank 69 | |
| fill in the blank 71 | fill in the blank 72 |
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