# Accounting help | Accounting homework help

Problem 1:

The QEC Company owns and operates an amusement park. The following are selected accounts from the QEC Company’s trial balance as of December 31:

 Debit Credit Equipment \$973,400 Accumulated Depreciation – Equipment \$304,200 Notes Payables 456,300 Admissions Revenue 1,926,600 Advertising Expense 69,400 Salaries Expense 292,000 Interest Expense 7,100

The following information is also available:

1.    The equipment is depreciated using the straight-line method over its estimated life of 17 years.  The equipment has an estimated salvage value of \$202,800

2.    The note payable carries a 8% interest rate.  It was given to the First National Bank on September17 and is due to be repaid in 270 days after that date.  (Note: Assume a 365 day year in any computations.)

3.    During the Christmas holiday season, QEC Company ran a promotion for park admission tickets valid during the next year.  In total, they sold 4,980 tickets at a price of \$15 each.  The sales amount was credited to Admissions Revenue.

4.    Included in the Advertising Expense account balance is a \$5,580 prepayment of advertising that will be aired on local radio stations during the first quarter of the next year.

5.    As of December 31, there was \$23,830 in salaries that had been earned but not recorded.

6.    QEC Company ends its accounting year on December 31.

Instructions:

1.    Prepare the annual adjusting journal entries necessary as of December 31.

2.    Compute the amount of the following account balances that should be shown on the income statement for the year:

a.    Interest Expense

d.    Salaries Expense

Problem 2:

The following is the trial balance of the RRV Company as of December 31:

 RRV Company Trial Balance December 31 Debit Credit Cash \$121,600 Accounts Receivable 276,000 Allowance for Doubtful Accounts \$4,600 Inventory, December 31 525,700 Prepaid Insurance 33,500 Equipment 552,000 Accumulated Depreciation – Equipment 230,000 Notes Payable 184,000 Common Stock 529,600 Retained Earnings 65,700 Sales 3,942,600 Cost of Goods Sold 2,615,300 Sales Salaries Expense 328,600 Advertising Expense 44,000 Administrative Salaries Expense 427,100 Office Expense 32,700 \$4,956,500 \$4,956,500

1.    Estimated bad debt expense for the year is \$9,200.

2.    Equipment is depreciated using the straight-line method over the estimated life of 12 years with zero estimated salvage value.

3.    During the year, \$16,750 of the prepaid insurance expired.

4.    During the year, \$22,080 of interest on the notes payable accrued.

5.    \$15,770 of sales salaries were earned towards the end of the year but not recorded.

6.    The company paid \$4,600 for advertising in advance which will be used during the next year.

7.    At the end of the year, \$9,810 of office supplies was on hand.  All purchases of office supplies are charged to Office Expense when purchased.

8.    The company ends its accounting year on December 31.

Instructions:

1.    Prepare the annual adjusting journal entries necessary as of December 31.

2.    Prepare the annual closing journal entries necessary to close the books for the year.

E4-6

(Multiple-Step and Single-Step) The accountant of Weatherspoon Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2012.

 Rent revenue  \$29,000 Interest expense  18,000 18,000 Market appreciation on land above cost  31,000 31,000 Salaries and wages expense (sales)  114,000 114,800 Supplies (sales)  17,600 17,600 Income tax  30,600 30,600 Salaries and wages expense (administrative) \$135,900 135,900 Other administrative expenses  51,700 51,700 Cost of goods sold  516,000 516,000 Net sales  980,000 980,000 Depreciation on plant assets (70% selling, 30% administrative) \$65,000 65,000 Cash dividends declared 16,000 16,000

There were 20,000 shares of common stock outstanding during the year.

Instructions

1.          Prepare a multiple-step income statement.

2.          Prepare a single-step income statement.

3.          Which format do you prefer? Discuss. (As a short essay.)

E4-16

(Various Reporting Formats) The following information was taken from the records of Gibson Inc. for the year 2012: income tax applicable to income from continuing operations \$119,000; income tax applicable to loss on discontinued operations \$25,500; income tax applicable to extraordinary gain \$32,300; income tax applicable to extraordinary loss \$20,400; and unrealized holding gain on available-for-sale securities \$15,000.

 Extraordinary gain \$ 95,000 Cash dividends declared \$ 150,000 Loss on discontinued operations 75,000 Retained earnings January 1, 2012 600,000 Administrative expenses 240,000 Cost of goods sold 850,000 Rent revenue 40,000 Selling expenses 300,000 Extraordinary loss 60,000 Sales revenue 1,700,000

Shares outstanding during 2012 were 100,000.

Instructions

4.          Prepare a single-step income statement for 2012.

5.          Prepare a retained earnings statement for 2012.

6.          Show how comprehensive income is reported using the second income statement format.

E18-12

(Recognition of Profit on Long-Term Contracts) During 2012, Nilsen Company started a construction job with a contract price of \$1,600,000. The job was completed in 2014. The following information is available.

 2012 2013 2014 Costs incurred to date \$400,000 \$825,000 \$1,070,000 Estimated costs to complete 600,000 275,000 –0– Billings to date 300,000 900,000 1,600,000 Collections to date 270,000 810,000 1,425,000

Instructions

a. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

b.  Prepare all necessary journal entries for 2013.

c.   Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.

E18-13

(Analysis of Percentage-of-Completion Financial Statements) In 2012, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was \$1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2012, are shown on the next page.

 Balance Sheet Accounts receivable—construction contract billings \$18,000 Construction in process \$65,000 Less: Contract billings 61,500 Cost of uncompleted contract in excess of billings 3,500 Income Statement Income (before tax) on the contract recognized in 2012 \$19,500

Instructions

7.          How much cash was collected in 2012 on this contract?

8.          What was the initial estimated total income before tax on this contract?

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