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(solution) I'm not sure how to do the trial balance sheet, or basically the


I'm not sure how to do the trial balance sheet, or basically the whole project..


Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________ BUA 201 ? Fall 2015

 

Final Project (70 pts)

 

Dr. Henri Akono Notice: You are required to submit your solution in hardcopy, handwritten form in class on the

 

due date: Wednesday December 9th, 2015. I will not accept any project submitted after this date. Instructor?s comment: ________________________________________________ 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________ "On my honor, as a student of The University of Maine, I will uphold the highest standards

 

of academic integrity and personal accountability for the advancement of the dignity and

 

the reputation of our university and myself.? Student Signature _____________________________________________ 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

General Information

 

Introduction

 

Jones Widget Company (JWC) incorporated at the beginning of 2014. Below is the post closing trial balance as of

 

12/31/14.

 

Account Title

 

Balance

 

Cash

 

10,700

 

Accounts Receivable

 

12,300

 

Allowance for Doubtful Account

 

(685)

 

Inventory

 

12,300

 

Prepaid Rent

 

1,500

 

Equipment

 

25,000

 

Accumulated Depreciation-Equipment

 

(2,400)

 

Total assets

 

58,715

 

Sales Tax payable

 

800

 

FICA Taxes Payable

 

600

 

FIT (i.e., Federal Income) Taxes Payable

 

500

 

Wages Payable

 

1,600

 

Unearned Revenue

 

6,500

 

Interest Payable

 

440

 

Notes Payable

 

22,000

 

Common Stock

 

23,100

 

Retained Earning

 

3,175

 

Total liabilities + stockholders? equity 58,715 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________ Additional Information: JWC establishes a policy that it will sell inventory at $130 per unit. Sales taxes are 5%.

 

JWC will use the FIFO method and record COGS on a perpetual basis. Employee wages are $4,000 per month, the federal income taxes (FIT) withheld are $500 and the FICA

 

taxes are $300 per month payable on the first (1st) and sixteenth (16th) of the month. The Beginning inventory of $12,300 consists of 200 units. The Prepaid Rent balance is for the month of January. The equipment was purchased on July 1, 2014. It has a residual value of $1,000 and an expected life of

 

five years. It is being depreciated using the straight line method. Unearned Revenue is for 50 units ordered by two customers in late December. One order will be filled in January, the remainder in early February. The Notes payable represents a $22,000 bank loan received on November 1 at 12% annual interest. State unemployment taxes amount to $200 and Federal unemployment taxes amount to $250 per

 

month. Common stock includes 4,260 shares at $5 par value. Round all transactions to the nearest dollar. 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

Below are transactions for January 2015

 

Jan 1: A $100,000 6% six year bond is issued at 105.074. The market rate at issue of the bond is 5%.

 

Jan 1: A truck (record as Truck) is purchased for $10,000 cash. It is estimated the truck will be used for

 

50,000 miles and will have no salvage value. The truck will be depreciated using the units-ofproduction method.

 

Jan 2: Machinery (record as Furniture) is purchased for $120,000 cash. The machinery will be used for 8

 

years, has a salvage value of $8,000, and will be depreciated using the double-declining balance

 

method.

 

Jan 3: Paid December 31 payroll (?wages payable?) on Jan 1.

 

Jan 4: Payroll taxes withheld (FIT payable & FICA payable) during December are remitted to the IRS.

 

Jan 5: A $500 customer account is written off as uncollectible.

 

Jan 6: Sales on account of 180 units of inventory occurred during January.

 

Jan 8: Sales taxes collected in December 2014 are remitted to the local tax collector.

 

Jan 10: An additional 70 units of inventory were purchased on account for $4,410.

 

Jan 11: Sold 50 units of merchandise inventory for cash totaling $6,825, which includes 5% sales taxes.

 

Jan 12: The equipment purchased in 2013 for $25,000 is sold for $24,500. No additional depreciation is

 

recorded for January.

 

Jan 14: Having sold the equipment, JWC paid off the equipment loan received on November 1 in full.

 

The amount paid was $22,550, which included interest through Jan 14.

 

Jan 15: A portion of the advance order from December (30 units) is delivered. There is no sales tax on

 

this order.

 

Jan 16: (a) Paid employee payroll (in cash).

 

Jan 16: (b) Record the employer?s payroll tax expense.

 

Jan 17: Collections from sales on account totaled $5,000.

 

Jan 18: JWC issued 2,500 shares of $3.60 par value common stock for cash at $8 per share.

 

Jan 19: JWC issued 300 shares of $12 par-value preferred stock for cash at $102 per share.

 

Jan 21: JWC Purchased 4,000 shares of its common stock for the treasury at a cost of $16,000.

 

Jan 25: JWC issued a second bond with a face value of $250,000, a stated rate of 10% (used to calculate

 

interest payments), with a maturity of 4 years. At the time of issuance, the market rate (used to

 

calculate the present values) for bonds of similar characteristics was 12%.

 

Jan 28: Declared and paid a $0.50 per share cash dividend on 2,400 shares of $5 par value.

 

Jan 30: Purchased a small company and recorded goodwill for $150,000. (Indefinite life ? no record of

 

amortization expense)

 

2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

Below are transactions requiring adjusting entries for January 2015

 

AJE 1: Record depreciation expense for the truck (Truck) purchased on Jan 1 using the units-of-activity

 

method. During January, the truck is driven 800 miles.

 

AJE 2: Record the depreciation expense for the machinery (Furniture) purchased on Jan 1.

 

AJE 3: Record January rent expired.

 

AJE 4: Accrue January 28 payroll, which will be paid on February 1 and the related payroll tax expense.

 

AJE 5: Record the accrual of interest expense on the bonds issued on Jan 1.

 

AJE 6: Record the accrual of interest expense on the bonds issued on Jan 25.

 

AJE 7: Record the accrual of bad debt expense assuming that $941 is the estimate of uncollectible

 

receivables from the aging schedule.

 

AJE 8: Record the accrual of income tax expense assuming that the tax rate is 25% of income before taxes. 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

Special Note:

 

The chart of accounts for JWC, Inc. includes the following CASH

 

ACCOUNTS RECEIVABLE

 

ALLOWANCE FOR DOUBTFUL ACCOUTNS

 

INVENTORY

 

PREPAID RENT

 

EQUIPMENT

 

ACCUMMULATED DEPRECIATION_EQUIPMENT

 

TRUCK

 

ACCUMMULATED DEPRECIATION_TRUCK

 

FURNITURE

 

ACCUMMULATED DEPRECIATION_ FURNITURE

 

GOODWILL

 

ACCOUNTS PAYABLE

 

SALES TAX PAYABLE

 

WAGES PAYABLE

 

FICA TAX PAYABLE

 

FIT TAX PAYABLE

 

UNEARNED REVENUE

 

INTEREST PAYABLE

 

INCOME TAX PAYABLE

 

STATE UNEMPLOYMENT TAX PAYABLE

 

FEDERAL UNEMPLOYMENT TAX PAYABLE

 

NOTES PAYABLE

 

BONDS PAYABLE

 

PREMIUM ON BONDS PAYABLE

 

DISCOUNT ON BONDS PAYABLE

 

DIVIDENDS

 

COMMON STOCK

 

APIC-CS

 

PREFERRED STOCK

 

APIC-PS

 

TREASURY STOCK

 

RETAINED EARNINGS

 

SALES REVENUE

 

COGS

 

WAGES EXPENSE

 

RENT EXPENSE

 

PAYROLL TAX EXPENSE

 

DEPRECIATION EXPENSE

 

BAD DEBT EXPENSE

 

GAIN ON DISPOSAL

 

INTEREST EXPENSE

 

Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 2 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________ INCOME TAX EXPENSE 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

REQUIRED 1: Prepare the debit section of the adjusted trial balance. (17 PTS)

 

JWC, Inc.

 

Trial balance

 

For the period January 1 ? January 31, 2014

 

ACCOUNT NAME DEBIT AMOUNT Total debit = 485,426 ACCOUNT NAME CREDIT AMOUNT Total credit = 485,426

 

2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

REQUIRED 2: Prepare the income statement using the multiple-step format. (15PTS)

 

JWC, Inc.

 

(Multiple-step) Income Statement

 

For the period January 1 ? January 31, 2014

 

SALES REVENUE

 

Less:

 

GROSS PROFIT

 

LESS: OPERATING EXPENSES Total Operating Expenses

 

OPERATING INCOME

 

ADD: Other Revenues & Gains

 

LESS: Other Expenses & Losses

 

INCOME BEFORE TAXES NET INCOME 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

REQUIRED 3: Prepare the Statement of Retained Earnings. (4PTS)

 

JWC, Inc.

 

Statement of Retained Earnings

 

For the period January 1 ? January 31, 2015

 

RETAINED EARNINGS, BEGINNING OF PERIOD

 

ADD:

 

LESS:

 

RETAINED EARNINGS, END OF PERIOD 2 Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 Name ___________________________________ BUA 201 Fall 2015 Project 3 (70 pts) # ___________

 

REQUIRED 4: Prepare a classified balance sheet. (34 PTS)

 

JWC, Inc.

 

Classified Balance Sheet

 

as of January 31, 2015

 

ASSETS (13 pts)

 

CURRENT ASSETS (CL) LIABILITIES (13 pts)

 

CURRENT LIABILITIES (CL) Total CA Total CL

 

PLANT ASSETS (PPE) LONG-TERM LIABILITIES (LT) Total LT

 

Total PPE

 

TOTAL LIABILITIES

 

INTANGIBLE ASSETS (IA) STOCKHOLDERS? EQUITY (SE) Total IA Total SE TOTAL ASSETS (= $416,256) TOTAL LIABILITIES

 

& STOCKHOLDERS? EQUITY Maine Business School_Principles of Financial Accounting | Project #3_Fall 2015 2

 


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