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

b.    Admissions Revenue

c.    Advertising 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

 

Additional Information:

 

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?

 

(AICPA adapted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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