loader  Loading... Please wait...

Question(s) / Instruction(s):

Aberkonkie& FitchCorporation prepares quarterly financial statements. The balance sheet at 12/31/12 is presented below.

 

 

Balance Sheet

 

 

 

 

12/31/12

 

 

Cash

 $  24,300

 

Accounts payable

 $  12,370

Accounts receivable

     22,400

 

Common stock

90,000

Allowance for doubtful accounts

     (1,200)

 

Retained earnings

53,130

Equipment

20,000

 

 

 

Accumulated depreciation - equipment

    (15,000)

 

 

 

Land

     20,000

 

 

 

Building

100,000

 

 

 

Accumulated depreciation - building

    (15,000)

 

 

 

 

 $ 155,500

 

 

 $155,500

 

 

During the first quarter of 2013, the following transactions occurred:

 

1. Aberkonkie& Fitchperformed services during the first quarter for $140,000 on account.

 

2. On 2/1/13, Aberkonkie& Fitchcollected fees of $12,000 in advance for $1,000 of services to be performed each month from 2/1/13 to 1/30/14.

 

3. On 2/1/13,  Aberkonkie& Fitchpurchased computer equipment for $9,000 plus sales taxes of $600. $3,000 cash was paid with the rest on account. Check #455 was used.

 

4. Aberkonkie& Fitchcollected $133,000 on 3/5/13 from customers on account.

 

5. Aberkonkie& Fitchpaid $16,370 on accounts payable. Check #456 was used.

 

6. Paid other operating expenses of $97,525. Check #457 was used.

 

7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/13.  Check #458 was used.

 

8. Wrote off a customer receivable of $200 who went bankrupt.

9. On 3/31/13, Aberkonkie& Fitchsold for $1,620 cash equipment which originally cost $11,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of 12/31/12 was $8,000 using the straight line method. Record depreciation on the equipment sold, then record the sale.

 

10. AJE: Record revenue earned from item 2 above.

 

11. AJE: $26,000 of accounts receivable at 3/31/13 are not due yet. The bad debt percentage for these is 4%.The balance of A/R are past due. The bad debt percentage for these is 23.75%. Record bad debt expense.

HINT: You will need to compute the balance in accounts receivable before calculating this.

 

12. AJE: Depreciation is recorded on the equipment still owned at 3/31/13. The new equipment purchased in February  is being depreciated on a double declining basis over 5 years and salvage value was estimated at $1,000. The old equipment still owned is being depreciated over a 10 year life using straight line with no salvage value.

13. AJE: Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000.

 

14. AJE: Amortization is recorded on the patent.

 

15. The company reconciles its bank statement every quarter. Information from the 12/31/12 Bank Reconciliation is:

           Deposit in transit:                                   12/30/12          $5,000

           Outstanding Checks                               #440                  3,444

                                                                           #452                    333

                                                                           #453                    865

                                                                           #454                 5,845

The Bank statement received for the quarter ended 3/31/13 is as follows:

Beginning balance per bank                                                                                 $29,787

Deposits: 1/2/13  $5,000, 2/2/13 $12,000, 3/6/13 $133,000                                  150,000

Checks: #452 $333, #453 $865, #456 $16,370, #457 $97,525                            (115,093)

Debit memo: Bank service charge (Record as operating expense)                      (       100)

Ending bank balance$64,594

 

16. AJE: The income tax rate is 30%. This amount will be paid when the tax return is due in April.Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.

 

 

 

 

REQUIRED: Print out the solution pages for the general ledger, journal and worksheet that follow and enter the following transactions. I suggest that you use a pencil.

  1. Enter the transactions 1-9 in the general journal provided on the following pages.
  2. Enter the 12/31/12 balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages.
  3. Post the journal entries to the ledger accounts for items 1 – 9.
  4. Prepare an unadjusted trial balance at March 31 and enter on the worksheet. Then complete the other worksheet columns.(See below.)

Worksheet requirement: Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet similar to the one on page 195 in the chapter 4 appendix of your text.                                                                          

  1. Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE.
  2. Journalize and post all other adjusting entries. (Items 10 - 16)
  3. Prepare an income statement and a retained earnings statement for the quarter ended 3/31/13 and a classified balance sheet at 3/31/13. Use your own paper. (No formatted sheets are supplied as we did for the other items.)

Find Similar Answers by Subject


Student Reviews

Rate and review your solution! (Please rate on a Scale of 1 - 5. Top Rating is 5.)


Expert's Answer
Download Solution:
$4.00

This solution includes:

  • Plain text
  • Cited sources when necessary
  • Attached file(s)
  • Solution Document(s)



Reach Us

408-538-8534

20-3582-4059

39-008-4233

+1-408-904-6494