Peter Maxwell is the owner of the Maxwell shop, which is specialize in selling car's tires....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Peter Maxwell is the owner of the Maxwell shop, which is specialize in selling car's tires. The shop has as October 31st fiscal year end. It uses a perpetual FIFO inventory system as a method of accounting for inventory. September 30th, 2021, the company had the following balances in its general ledger: Accounts Cash Accounts Receivable Allowance for Doubtful Debts Prepaid Insurance (12-month insurance) Inventory (1,000 tyres @ $300) Building Accumulated Depreciation - Building Equipment Accumulated Depreciation - Equipment Land Goodwill Patents Accumulated Amortization - Patents Accounts Payable Unearned Revenue Note payable Share Capital ($10 par) Retained Earnings Sales Sales Returns & Allowances Sales Discount Amortization Expense Costs of goods sold Depreciation Expense - Building Depreciation Expense - Equipment Maxwell Ltd Trial Balance September 30, 2021 Interest Expense Insurance Expense Rent Expense Utility Expense Salaries Expense Total Debit 255,000 375,000 125,000 300,000 675,000 315,000 775,000 160,000 155,000 100,000 95,000 475,000 700,000 115,000 101,500 97,250 83,650 103,600 85,825 195,000 5,286.825 S Credit 95,000 125,000 120,000 79,000 402,000 100,000 435,000 1,035,000 37,505 2,458,320 5,286.825 During October, the last month of the fiscal year, the company had the following transactions: Oct. 1 Paid $18,000 for October's rent. 1 Building purchased for $100,000 with a 20-year estimated useful life and no scrap value. The building has been available for use. For all fixed assets, the Maxwell Ltd uses the straight-line depreciation method. 1 Office supplies purchased on account having cost of $9,000. 1 Maxwell purchased a 1-year bond for $500,000 that pays the interest at 12% interest. Maxwell sold on account 300 tires @ $340 to Hella Company with a credit terms of 2/20, n/60. Sold equipment with an original cost of $65,000 for $20,000. The original estimated useful life of it was 5 years with no scrap value and it had been used for 18 months. Paid for the office supplies purchased on account on October 1st. 4 5 5 10 Purchased 200 tyres @280 on account from Orange Line Co., FOB shipping point. 11 Maxwell Ltd sold the 800 tires for $350 each on cash. 12 Received an invoice of 100$ from Public Freight Company for freight charges related to the purchase on October 10th 16 Hella Company returned 100 tires which was purchased on October 4th. The scrap value of returned goods is $10,000. 17 Paid salaries, $35,000 in cash. 19 Paid Orange Line Co. For half of the merchandise purchased on October 10th. 21 Paid postage $1,000, Miscellaneous $500, Entertainment $400 in cash. 23 Hella Company paid the amount owing from the transaction on October 4th 24 P. Maxwell took out $3,800 cash for personal use. 25 Collected $1,400 from past accounts receivable. 28 Paid $5,200 for advertising in cash. 30 Wrote off uncollectible account $3,700. Instructions: (a) Create T-accounts for each of the above accounts and enter the October 1st balances (b) Prepare Journal entries for the October transactions (c) Post the transactions (transfer from journal to the T-accounts) (d) Prepare a Trial Balance at October 31st (e) Journalize and post the following adjusting entries: 1. Four months of the 12-month insurance policy have expired on Oct 31st 2. The depreciation/amortization expense for the month as follows: $11,700 for building, except for the new building purchased on Oct 1st $6,400 for equipment. $2,900 for patents 3. The note payable has an annual interest rate of 6,0%. Two months of interest have accrued (added up) on October 31" 4. The company will pay the principal and interest related to the 1-year bond at the end of the bond's term. 5. Salaries accrued but not paid at October 31st total $40,000 6. The application of the aging method results in an estimated uncollectible accounts receivable amount of $21,100. (1) Prepare an Adjusted Trial Balance at October 31st. (g) Prepare a Multi-stage Income Statement, Statement of Owner's Equity, and Classified Balance Sheet (Note: account balances in the T-accounts will change after step (e)) (h) Record and post-closing entries (i) Prepare a post-closing trial balance on October 31st Peter Maxwell is the owner of the Maxwell shop, which is specialize in selling car's tires. The shop has as October 31st fiscal year end. It uses a perpetual FIFO inventory system as a method of accounting for inventory. September 30th, 2021, the company had the following balances in its general ledger: Accounts Cash Accounts Receivable Allowance for Doubtful Debts Prepaid Insurance (12-month insurance) Inventory (1,000 tyres @ $300) Building Accumulated Depreciation - Building Equipment Accumulated Depreciation - Equipment Land Goodwill Patents Accumulated Amortization - Patents Accounts Payable Unearned Revenue Note payable Share Capital ($10 par) Retained Earnings Sales Sales Returns & Allowances Sales Discount Amortization Expense Costs of goods sold Depreciation Expense - Building Depreciation Expense - Equipment Maxwell Ltd Trial Balance September 30, 2021 Interest Expense Insurance Expense Rent Expense Utility Expense Salaries Expense Total Debit 255,000 375,000 125,000 300,000 675,000 315,000 775,000 160,000 155,000 100,000 95,000 475,000 700,000 115,000 101,500 97,250 83,650 103,600 85,825 195,000 5,286.825 S Credit 95,000 125,000 120,000 79,000 402,000 100,000 435,000 1,035,000 37,505 2,458,320 5,286.825 During October, the last month of the fiscal year, the company had the following transactions: Oct. 1 Paid $18,000 for October's rent. 1 Building purchased for $100,000 with a 20-year estimated useful life and no scrap value. The building has been available for use. For all fixed assets, the Maxwell Ltd uses the straight-line depreciation method. 1 Office supplies purchased on account having cost of $9,000. 1 Maxwell purchased a 1-year bond for $500,000 that pays the interest at 12% interest. Maxwell sold on account 300 tires @ $340 to Hella Company with a credit terms of 2/20, n/60. Sold equipment with an original cost of $65,000 for $20,000. The original estimated useful life of it was 5 years with no scrap value and it had been used for 18 months. Paid for the office supplies purchased on account on October 1st. 4 5 5 10 Purchased 200 tyres @280 on account from Orange Line Co., FOB shipping point. 11 Maxwell Ltd sold the 800 tires for $350 each on cash. 12 Received an invoice of 100$ from Public Freight Company for freight charges related to the purchase on October 10th 16 Hella Company returned 100 tires which was purchased on October 4th. The scrap value of returned goods is $10,000. 17 Paid salaries, $35,000 in cash. 19 Paid Orange Line Co. For half of the merchandise purchased on October 10th. 21 Paid postage $1,000, Miscellaneous $500, Entertainment $400 in cash. 23 Hella Company paid the amount owing from the transaction on October 4th 24 P. Maxwell took out $3,800 cash for personal use. 25 Collected $1,400 from past accounts receivable. 28 Paid $5,200 for advertising in cash. 30 Wrote off uncollectible account $3,700. Instructions: (a) Create T-accounts for each of the above accounts and enter the October 1st balances (b) Prepare Journal entries for the October transactions (c) Post the transactions (transfer from journal to the T-accounts) (d) Prepare a Trial Balance at October 31st (e) Journalize and post the following adjusting entries: 1. Four months of the 12-month insurance policy have expired on Oct 31st 2. The depreciation/amortization expense for the month as follows: $11,700 for building, except for the new building purchased on Oct 1st $6,400 for equipment. $2,900 for patents 3. The note payable has an annual interest rate of 6,0%. Two months of interest have accrued (added up) on October 31" 4. The company will pay the principal and interest related to the 1-year bond at the end of the bond's term. 5. Salaries accrued but not paid at October 31st total $40,000 6. The application of the aging method results in an estimated uncollectible accounts receivable amount of $21,100. (1) Prepare an Adjusted Trial Balance at October 31st. (g) Prepare a Multi-stage Income Statement, Statement of Owner's Equity, and Classified Balance Sheet (Note: account balances in the T-accounts will change after step (e)) (h) Record and post-closing entries (i) Prepare a post-closing trial balance on October 31st
Expert Answer:
Answer rating: 100% (QA)
Sure I can help you with this Here are the Taccounts for each of the accounts listed in the image with the October 31 balances Cash Debit Credit Balance Oct 1 18000 Oct 5 9000 Oct 11 280000 Oct 12 100 ... View the full answer
Related Book For
Taxation Of Individuals And Business Entities 2023 Edition
ISBN: 9781265790295
14th Edition
Authors: Brian Spilker, Benjamin Ayers, John Barrick, Troy Lewis, John Robinson, Connie Weaver, Ronald Worsham
Posted Date:
Students also viewed these accounting questions
-
On January 1, 20x1, Entity A received land with fair of 200,000 from the government conditioned on the construction of a building on the lot. Entity A started immediately the construction and it was...
-
O An hair dryer is basically a duct with a fan that draws cool air from the atmosphere at one end, forces it on an electrical resistor (where the air is heated up) and discharges it at the other end....
-
A Ferris wheel with radius 14.0 m is turning about a horizontal axis through its center (Fig. 3.42). The linear speed of a passenger on the rim is constant and equal to 7.00 m/s. What are the...
-
Prove that a is a cluster point for some E X if and only if there is a sequence xn E \ {a} such that xn a as n .
-
Outline the general strategy used in metagenomics.
-
The condensed comparative income statement and balance sheets to Tola Corporation appear below and on the next page. All figures are given in thousands of dollars, except earnings per share....
-
3) The cost and revenue function in dollar terms for a fast-food joint is given as follows: C(x)=200x+200 and R(x) = 50x X + 4 If x is measured in hundreds of units, what is the break-even point for...
-
Show the contents in hexadecimal of registers PC, AR, DR, IR, and SC of the basic computer when an ISZ indirect instruction is fetched from memory and executed. The initial content of PC is 7FF. The...
-
Choose two (2) set of financial statements of two companies of UAE for the same latest financial year from similar industries, which are publicly available (online), and: 1. Recognize and describe...
-
Suppose the price of X is $5 and the price of Y is $10 and a hypothetical household has $500 to spend per month on goods X and Y. a. Sketch the household budget constraint. b. Assume that the...
-
What does a net present value profile tell you, and how is it constructed?
-
On 2 October 2002, the Securities and Exchange Commission (SEC) filed a civil enforcement action against Andrew S. Fastow, the former Chief Financial Officer of Enron Corp., for alleged fraud. The...
-
The To Complete Performance Index (TCPI) is a measure of the cost performance required in order to finish the outstanding work within the remaining budget. The formula for this index is...
-
The following is a production function. a. Draw a graph of marginal product as a function of output. b. Does this graph exhibit diminishing returns? Explain your answer.
-
Compute for the equivalent production in each of the following using: (1) FIFO, and (2) weighted average. 1. Even application of cost In process, Jan. 1.... Started in process... In process, Jan....
-
Compare and contrast debt financing and equity financing as ways of starting a new business. Does one have an overall advantage over the other? What situation is more favorable to the use of debt...
-
Yesenia is a lawyer who uses the cash method of accounting. Last year Yesenia provided a client with legal services worth $55,000, but the client could not pay the fee. This year Yesenia requested...
-
Henrich is a single taxpayer. In 2022, his taxable income is $480,000. What are his income tax and net investment income tax liability in each of the following alternative scenarios? a) All of his...
-
What is the savers credit, and who is eligible to receive it?
-
A summary of the Balgreen Bowling Club's cash book is shown below. From it, and the additional information, you are to construct an income and expenditure account for the year ending 31 December...
-
Why do you think non-profit-oriented organizations prepare receipts and payments accounts when they have all this information in the cash book already?
-
The following trial balance of the Grampian Golf Club was extracted from the books as on 31 December 2016: (1) Bar purchases and sales were on a cash basis. Bar inventory at 31 December 2016 was...
Study smarter with the SolutionInn App