MIDWAY TRADERSPRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2020Debit (R)Credit (R)Balance sheet accounts section1 656 600СapitalDrawingsLand and buildingsVehicles at cost134 2001 254 900945 000Equipment at cost650 000Accumulated depreciation on vehiclesAccumulated depreciation on equipment528 000365 200Fixed deposit: Pep Bank (8% p.a.)Trading inventoryDebtors control198 000155 000176 600Provision for bad debts9 900Bank137 800Creditors controlMortgage loan: Pep Bank (20% p.a.)184 800330 000Nominal accounts sectionSalesCost of salesSales returnsSalaries and wagesBad debtsStationery2 070 000794 00013 000587 00018 00030 00058 00032 00023 000Rates and taxesMotor expensesAdvertisingTelephoneElectricity and waterBank charges44 00066 0008 00010 000InsuranceInterest on fixed depositRent income14 000176 0005 334 5005 334 500 ADJUSTMENTS AND ADDITIONAL INFORMATION1.Physical stocktaking on 29 February 2020 showed the following inventories:1.1Trading inventory R150 000;1.2Stationery R3 000.2.Write off the account of debtor, R. Smith, R2 000.3.The provision for bad debts must be increased by R1 000.4.Rent income amounts to R16 000 per month. Make the necessary adjustment.5.The water and electricity account for February 2020 was due to be paid on 02 March 2020,R11 000.6.Rates and taxes include an amount of R15 000 that was paid for the period01 January 2020 to 31 March 2020.7.An amount of R800 appeared in the February 2020 bank statement for bank charges. Thistransaction was not recorded.8.The investment in fixed deposit was made on 01 March 2019 and matures on31 August 2020. Make the necessary adjustment for the interest.9.The loan from Pep Bank was obtained on 01 February 2020. Provide for the outstandinginterest. Interest is not capitalised. Note: Loan repayments during the next financial year areexpected to total R50 000.10.Provide for depreciation as follows:10.1 On equipment at 10% p.a. on cost.10.2 On vehicles at 20% p.a. using the diminishing balance method.11.The net profit, according to the Statement of Comprehensive Income for the year endedFebruary 2020, amounted to R429 140the above adjustments and additionalinformation were taken into account.TOTAL: 204

The income statement shows how much Gross profit, net profit earned by the business entity. In the…

MIDWAY TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2020 Debit (R) Credit (R) Balance sheet accounts section Сapital Drawings Land and buildings Vehicles at cost Equipment at cost Accumulated depreciation on vehicles Accumulated depreciation on equipment Fixed deposit: Pep Bank (8% p.a.) Trading inventory Debtors control 1 656 600 134 200 1 254 900 945 000 650 000 528 000 365 200 198 000 155 000 176 600 Provision for bad debts 9 900 137 800 Bank Creditors control Mortgage loan: Pep Bank (20% p.a.) 184 800 330 000 Nominal accounts section Sales 2 070 000 Cost of sales Sales retums Salaries and wages Bad debts Stationery Rates and taxes 794 000 13 000 587 000 18 000 2 30 000 58 000 32 000 23 000 Motor expenses Advertising Telephone Electricity and water Bank charges Insurance Interest on fixed deposit 44 000 66 000 8 000 10 000 14 000 176 000 5 334 500 Rent income 5 334 500

MIDWAY TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2020 Debit (R) Credit (R) Balance sheet accounts section Сapital Drawings Land and buildings Vehicles at cost Equipment at cost Accumulated depreciation on vehicles Accumulated depreciation on equipment Fixed deposit: Pep Bank (8% p.a.) Trading inventory Debtors control 1 656 600 134 200 1 254 900 945 000 650 000 528 000 365 200 198 000 155 000 176 600 Provision for bad debts 9 900 137 800 Bank Creditors control Mortgage loan: Pep Bank (20% p.a.) 184 800 330 000 Nominal accounts section Sales 2 070 000 Cost of sales Sales retums Salaries and wages Bad debts Stationery Rates and taxes 794 000 13 000 587 000 18 000 2 30 000 58 000 32 000 23 000 Motor expenses Advertising Telephone Electricity and water Bank charges Insurance Interest on fixed deposit 44 000 66 000 8 000 10 000 14 000 176 000 5 334 500 Rent income 5 334 500

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter22: End-of-fiscal-period Work For A Corporation

Section: Chapter Questions

Problem 1AP

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Effects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in 2019 appear below. During 2019, Graul discovered that the 2017 ending inventory had been misstated due to the following two transactions being recorded incorrectly. a. A purchase return of inventory costing $42,000 was recorded twice. b. A credit purchase of inventory' made on December 20 for $28,500 was not recorded. The goods were shipped F.O.B. shipping point and were shipped on December 22, 2017. Required: 1. Was ending inventory for 2017 overstated or understated? By how much? 2. Prepare correct income statements for all 3 years. 3. CONCEPTUAL CONNECTION Did the error in 2017 affect cumulative net income for the 3-year period? Explain your response. 4. CONCEPTUAL CONNECTION Why was the 2019 net income unaffected?
At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2 years: Reported net income was 27,000 in 2018 and 35,000 in 2019. The allowance for doubtful accounts had a zero balance at the beginning of 2018. No accounts were written off during 2018 or 2019. Ignore income taxes. Required: 1. What is the correct net income for 2018 and 2019? 2. Prepare the adjusting journal entry in 2020 to correct the errors.
The balance in Ashwood Companys accounts payable account at December 31, 2019, was 1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2019. The invoice cost was 85,000, and the goods were shipped FOB shipping point on December 29, 2019. The goods were received on January 2, 2020. Goods shipped FOB shipping point on December 20, 2019, from a vendor to Ashwood were lost in transit. The invoice cost was 40,000. On January 5, 2020, Ashwood filed a 40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2019, from a vendor to Ashwood were received on January 6, 2020. The invoice cost was 20,000, What amount should Ashwood report as accounts payable on its December 31,2019, balance sheet? a. 1,260,000 b. 1,285,000 c. 1,325,000 d. 1,345,000
Inventory Errors McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020. Early in 2020, McLelland discovers that the December 31, 2019 ending inventory was overstated by $20,000. For simplicity, ignore taxes. Required: 1. What is the correct net income for 2019? For 2020? 2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?
Recording Various Liabilities Glenview Hardware had the following transactions that produced liabilities during 2020: a. Purchased merchandise on credit for $30,000. ( Note: Assume a periodic inventory system.) b. Year-end wages of $10,000 were incurred, but not paid. Related federal income taxes of $1,200, Social Security of $620 (employee portion), and Medicare taxes of $145 were with-held from employees. c. Year-end estimated income taxes payable, but unpaid, for the year were $42,850. d. Sold merchandise on account for $1,262, including state sales taxes of S48. ( Note: Assume a periodic inventory system.) e. Employers share of Social Security and Medicare taxes for the period were $620 and $145, respectively. f. Borrowed cash under a 90-day, 9%, $25,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently).
Refer to RE22-2. Assume the pretax cumulative effect adjustment is 50,000. Prepare the journal entry that Heller Company would make at the beginning of 2020 to record the cumulative effect of the change from LIFO to FIFO. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Here are the accounts in the ledger of Mishas Jewel Box, with the balances as of December 31, the end of its fiscal year. Here are the data for the adjustments. Assume that Mishas Jewel Box uses the perpetual inventory system. a. Merchandise Inventory at December 31, 124,630. b. Insurance expired during the year, 1,294. c. Depreciation of building, 3,300. d. Depreciation of store equipment, 6,470. e. Salaries accrued at December 31, 2,470. f. Store supplies inventory (on hand) at December 31, 1,959. Required 1. Complete the work sheet after entering the account names and balances onto the work sheet. Ignore this step if using CLGL. 2. Journalize the adjusting entries. If using manual working papers, record adjusting entries on journal page 63.
A firm is preparing to make adjusting entries at the end of the accounting period. The balance of the merchandise inventory account is 200,000. If the firm is using the periodic inventory system, what does this balance represent?
A firm is preparing to make adjusting entries at the end of the accounting period. The balance of the merchandise inventory account is 100,000. If the firm is using the perpetual inventory system, what does this balance represent?
On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Instructions 1. Does Simkins Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2019. The merchandise inventory as of June 30, 2019, was 508,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was 33,000. 3. Prepare the closing entries for Simkins Company as of June 30, 2019. 4. What would the net income have been if the perpetual inventory system had been used?
Comprehensive: Income Statement and Supporting Schedules The following s a partial list of the account balances, after adjustments, of Silvoso Company on December 31, 2019: The following information is also available: 1. The company declared and paid a 0.60 per share cash dividend on its common stock. The stock was outstanding the entire year. 2. A physical count determined that the December 31, 2019, ending inventory is 34,100. 3. A tornado destroyed a warehouse, resulting in a pretax loss of 12,000. The last tornado in this area had occurred 10 years earlier. 4. On May 1, 2019, the company sold an unprofitable division (R). From January through April, Division R (a major component of the company) had incurred a pretax operating loss of 8,700. Division R was sold at a pretax gain of 10,000. 5. The company is subject to a 30% income tax rate. Its income tax expense for 2019 totals 4,230. The breakdown is as follows: 6. The company had average shareholders equity of 150,000 during 2019. Required: 1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense. 2. Prepare a 2019 multiple-step income statement for Silvoso. Include any related note to the financial statements. 3. Prepare a 2019 retained earnings statement. 4. Next Level What was Silvosos return on common equity for 2019? What is your evaluation of Silvosos return on common equity if last year it was 10%?
Cost of Goods Sold, Income Statement. and Statement of Comprehensive Income Gaskin Company derives the following items from its adjusted trial balance as of December 31, 2019: The following; additional information is also available. The December 31, 2019, ending inventory is 14,700. During 2019, 4,200 shares of'common stock were outstanding the entire year. The income tax rate 30% on all items of income. Required: 1. As a supporting document for Requirements 2 and 3, prepare a separate schedule for Gaskins cost of goods sold. 2. Prepare a 2019 single-step income statement. 3. Prepare a 2019 multiple-step income statement. 4. Prepare a 2019 statement of comprehensive income.