Complete a closing trial balance, recording the following activities and transactions within the trial balance provided which
Question:
Complete a closing trial balance, recording the following activities and transactions within the trial balance provided which has the beginning trial balance for the company.
Cash 500,000
Accounts Receivable 2,500,000
Inventory 3,700,000
Property, Plant, Equipment (net) 10,000,000
Accounts Payable (4,500,000)
Interest Payable
Current Portion of LT Debt (200,000)
Long-Term Debt (1,800,000)
Common Stock, $5 par (50,000)
Additional Paid in Capital (3,050,000)
Retained Earnings (7,100,000)
Sales
Cost of Goods Sold
Operations Expense
Depreciation
Sales, General & Administrative
Interest Expense
Taxes
Total
Accounts Receivable 500,000
Inventory 1,200,000
Property, Plant, Equipment (net) 3,000,000
Accounts Payable 200,000
Current Portion of LT Debt 100,000
LT Debt 400,000
Operational Activities
Collects all beginning Accounts Receivable.
Purchases $7.1 million of Inventory on account (credit).
Sells $13 million to customers on credit at Inventory cost of $7.8 million.
Collects $10 million of Accounts Receivable from current year sales.
Pays all beginning Accounts Payable.
Pays all beginning Current Portion of Long-term Debt.
Incurs and pays $1 million in operational expense and $500,000 in Sales, General, and Administrative expenses.
Adjusting Entries
Record Depreciation Expense of $100,000
Accrue Interest Expense of $120,000
Reclassify $200,000 of Long-term Debt into Current portion of Long-term Debt
Record (and pay in cash) taxes at 40% of current year Income before Taxes
Merger
Able Company purchases Beta Company for $4 million cash in a merger transaction.
Beta Company has the following balances at the time of the merger (book values and fair values are the same):
Accounts Receivable $500,000
Inventory $1.2 million
Property, Plant, Equipment (net) $3 million
Accounts Payable $200,000
Current Portion of Long-term Debt $100,000
Long-term Debt $400,000
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng