It is your first day on the job as a trainee for an entry position in the accounting department of Alimex Inc., a merchandising company. The company controller provides you with the following unadjusted trial balance as at December 31, 2014, with accounts listed in alphabetical order:
Additional information is as follows:
a. Wages owed to employees totalled $ 8,000 as at December 31, 2014.
b. The note receivable was obtained by Alimex on September 1, 2014. The note carries an annual interest rate of = percent, payable to Alimex at maturity only.
c. The balance in prepaid rent represents a payment August 1, 2014, for 12 months of rent, beginning on that date.
d. The equipment has a useful life of 20 years. Depreciation expense for 2014 was estimated at $ 3,000.
e. Cash dividends of $ 1 per share were declared on December 31, 2014, payable on January 25, 2015.
f. The company is subject to an income tax rate of 20 percent. Income taxes are due March 15, 2015. Journal entries related to these transactions have not been recorded yet.
1. Prepare in proper form the adjusting journal entries as at December 31, 2014, for items (a) through (f) above. Create new accounts, if necessary.
2. Show the effects (direction and amount) of the adjusting entries on net earnings and cash.
3. Prepare a multiple- step statement of earnings for the year ended December 31, 2014. Alimex did not issue or repurchase any shares during 2014.
4. Prepare a classified statement of financial position as at December 31, 2014.
5. Prepare the closing entries at December 31, 2014.
6. Compute the net profit margin ratio and total asset turnover for 2014, and explain the meaning of each ratio. Total assets equalled $ 200,000 at January 1, 2014.

  • CreatedAugust 04, 2015
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