On December 31, 2016, Price Company recorded the journal entries required for items #1-14 below. The entries record either: (a) annual adjusting entries at year-end or (b) transactionsthat occurredon December 31, 2016. Show all computations. Round any amounts to the nearest dollar.

1. The December 31, 2016, balance in Rent Revenue before adjusting entries is $36,000. This amount was received on July 1, 2016, for an 18-month lease beginning on that date.

2. On December 31, 2016, Price recorded an adjusting entry related to a 10%, $500,000 note payable. The annual interest payment on the note is due on January 1, 2017; the note is due January 1, 2019.

3. On December 31, 2016, Price received $9,000 for an annual interest payment on Williams Company bonds that mature in 4 years. The 6% bonds have a face value of $150,000 were purchased to yield 8%. The current balance in the Discount on bond investment account is $7,731. Price classified this investment as held-to-maturity and used the effective interest method. The fair value of the bonds at year-end was $170,000. Note: Itis not necessary to compute the price/present value of the bond investment.

4. On December 31, 2016, Price received $47,000 from the sale of 100 tablet devices. Each tablet came with 6-months of tech support and service beginning on January 1, 2017. The stand-alone selling prices are: tablet,$450 per device; tech support, $50 per tablet. COGS related to this sale is included in item #7.

5. On December 31, 2016, Price recorded bad debt expense using the allowance method. At the beginning of2016, the balances in Accounts Receivable and Allowance for Uncollectible Accounts were $1,000,000 and $50,000 (credit), respectively. In 2016, Price recorded net credit sales of $5,000,000 and cash collections of $4,700,000. Actual uncollectible accounts receivable written off in 2016 were $100,000. Price estimated uncollectible accounts to be 5% of year-end Accounts Receivable.

6. On December 31, 2016, Price recorded interest on a 3-year, $100,000 noninterest-bearing note using the effective interest method. Price received the note from a customer on January 1, 2016. The effective interest rate was 10%. (Assume the sales revenue recorded on January 1 is included in the 2016 preliminary net income in part 2).

7. On December 31, 2016, Price the cost of goods sold entry for the periodic recordkeeping system. Price used the FIFO inventory method and had 6,000 units left in ending inventory. The following inventory information was available:

Jan. 1, 2016, beginning inventory3,000 units at $100 = $300,000

March purchases8,000 units at $120 =960,000

September purchases5,000 units at $130 =650,000

8. On December 31, 2016, the net realizable value of Price's inventory was $750,000. Price records LCNRV write-downs as separate losses.

9. On December 31, 2016, the balance in the Building account was $6,000,000, the cost of construction of a new building that was completed at the end of the year and will be placed in service in 2017. The average accumulated expenditures for this project were $3,200,000. On January 1, 2016, Price borrowed $4,000,000on a 5-year, 9% note to finance construction. The interest on this note is due January 1, 2017; Price has not recorded any interest related to this note in 2016.

10. During 2016, Price saw demand for one of its products decline and is concerned about whether the manufacturing machinery may have suffered a permanent decline in value. On December 31, 2016, the balances in the Machinery and Accumulated Depreciation accounts were $1,100,000 and $400,000,respectively. At this time, Price estimated the future cash flows from the machinery to be $650,000 and the fair value to be $570,000. (Assume 2016 depreciation has already been recorded.)

11. At the end of 2016, Price revised the estimated useful life of the company's corporate jet. The jet was purchased on January 1, 2015, for $2,000,000. At that time, Price adopted straight-line depreciation and estimated the jet's useful life to be 15 years and residual value to be $500,000. However, in 2016, Price dramatically reduced its use of the jet due to shareholders' scrutiny of benefits granted to corporate executives. At the end of 2016, the company expected that the jet will be sold at the end of 2018 at an estimated price of $1,000,000. 2016 depreciation has not yet been recorded on the jet.

12. In 2016, Price had investments in debt and equity securities classified as available-for-sale and trading.The following information is available on December 31, 2016 before the year-end fair value adjustment is recorded:

Available-for-sale securitiesTrading securities

Balance in Investment account $2,500,000(AFS) $1,350,000(TS)

Fair Value Adj. account, 1-1-16 100,000 credit(AFS)

Accumulated OCI, 1-1-16 100,000 debit(AFS)

Fair value, 12-31-16 2,700,000 (AFS) 800,000(TS)

13. Price owns 25% of the common stock of Harvey Company. At the beginning of 2016, the balance in theInvestment in Harvey stock was $9,000,000. On December 31, 2016, Price received $250,000 in cash dividends from Harvey and was notified that Harvey's 2016 net income was $3,000,000. At the time, the fair value of Price's investment in Harvey was $8,700,000. No transactions have been recorded in 2016 related to the Harvey Co. investment.

14. On December 31, 2016, Price declared dividends of $30,000 that will be paid to common shareholders on January 15, 2017.

Answer rating: 100% (QA)

Here are the journal entries for items 114 1 Rent Revenue 18000 Unearned Rent Revenue 1... View the full answer