FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 2, Problem 2.1ADIE
To determine
Assets: These are the resources owned and controlled by business and used to produce benefits for the company. Assets are classified on the
To prepare: Assets section of balance sheet for Corporation C as at December 31, 2017
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The following balances were extracted from the books of accounts of Thomas as at 31 May 2021: RM RM Capital Account – Thomas 72,700 Furniture and fittings 10,000 Accumulated depreciation - furniture and fittings 2,300 Purchases 200,800 Sales 310,000 Inventory at 1 June 2020 19,000 Trade Receivables 16,600 Trade Payables 21,000 Machinery 40,000 Accumulated depreciation – machinery 5,000 Carriage inwards 345 General expenses 44,567 Rent 5,200 Allowance for doubtful debts 350 Bad debts 1,030 Discount received 550 Salaries 13,333 Insurance 450 Drawings – Thomas 7,575 Bank 60,000 Loan from bank 10,000 Interest on loan 3,000 421,900 421,900 Additional information: RM 1. Inventory as at 31 May 2021 15,200 2. Salaries outstanding at 31 May 2021 1,500 3. The allowance for doubtful debts is to be maintained at 300 4. The machinery is to be depreciated using the reducing balance method at the rate of 25% 5. Depreciation is to be provided on the cost of furniture at 10% 6. Rent prepaid for the…
Chapter 2 Solutions
FINANCIAL ACCOUNTING>IC<
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- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next. According to the problem, cash increased from 39,600 to 67,210 during the year. This is a 27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to 67,210, its proper balance. Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here. The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree. The next account balance that changed is accounts receivable. It increased by 9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to 121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows Net income as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important. All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them. The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one. You will be done with your analysis when: a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data. b. The transaction column totals are equal (cells D60 and F60). c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59). When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), 860,460.arrow_forwardThe comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. You have been asked to prepare a statement of cash flows for Prime Sports Gear for 2013. Review the worksheet called CASHFLOW that has been provided to assist you in preparing the statement. The worksheet has been designed so that as you make entries in columns D and F, column G will be automatically updated. For example, FORMULA1 should be entered as =B17+D17F17. Columns C and E are to be used to enter letter references for each of the debit and credit entries on the worksheet.arrow_forwardThe following information is taken from French Corporation’s financial statements: December 31 2018 2017 Cash $63,000 $ 27,000 Accounts receivable 102,000 80,000 Allowance for doubtful accounts (4,500) (3,100) Inventory 160,000 175,000 Prepaid expenses 7,500…arrow_forward
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- The following data has been taken from the Shine Machinery Inc., income statement and balance sheet: Dec. 31, Jan. 2012 Jan. 1, 2013 Income statement: Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . .$375,000 Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 115,000 Amortization of Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,000 Gain on Sale of Plant Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ….. 91,000 Loss on Sale of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …. . 34,000 Balance sheet: Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...$345,000…arrow_forwardGiven below are the balances taken from Amber’s ledger accounts on 31st December 2017. £ Fittings 10,950 Accumulated depreciation – fittings at 01/01/2017 3,750 Buildings 45,000 Accumulated depreciation – buildings at 01/01/2017 9,000 Inventory at 01/01/2017 22,500 Trade receivables 15,000 Allowance for doubtful debts 01/01/2017 1,200 Cash in hand 75 Cash at bank 1,875 Trade payables 27,000 Capital 28,575 Drawings 7,125 Purchases 120,000 Revenue 180,000 Wages 18,000 Advertising 300 Rates 6,000 Bank charges 2,700 The following information is also available: i. The value of inventory as at 31st December 2017 was £31,500 ii. Fittings are to be depreciated at 12% on reducing balance basis and buildings have a 40-year life and depreciated at cost. iii. Of the rates payments, £540 is for the next accounting period iv. Amber has just been notified that a debt of £850 is irrecoverable. As the economy is in recession it is expected that debtors may struggle to pay so an additional allowance of…arrow_forwardThe following are ledger balances extracted from the books of Forte Enterprise at 31 December 2019. RM Capital 200,000 Office furniture and equipment at cost 89,000 Provision for depreciation - office equipment 34,500 Bad debts 1,450 Purchases 480,000 Sales 645,000 Returns outwards 5,600 Return inwards 12,500 Carriage inwards 48,500 Carriage outwards 23,400 Salaries and wages 96,200 Stationery and printing 4,200 Lighting and heating charges 8,400 Telephone charges 7,200 Inventory 1 January 2019 62,000 Provision for doubtful debts - 1 January 2019 2,200 Drawings 25,000 Sales commission 12,900 Advertising charges 9,600 Office rent 33,000 Accounts receivable 72,500 Accounts payable 42,800 Bank overdraft 53,750 Additional information: Inventory at 31 December 2019: RM84, 000. Office furniture and equipment are to be depreciated at 10% per annum on cost. A trade debtor with an outstanding balance of RM3, 500 was declared bankrupt on 31…arrow_forward
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