Pare in the Glass Company (Pane) is a glass manufacturer based out of California. They produce...

   
 
 
 

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Pare in the Glass Company (Pane) is a glass manufacturer based out of California. They produce a number of glass products including car windows and windshields, windows for houses, stained glass windows, and a number of other specialty products. The following information pertains to the fiscal year ending December 31, 2018: At the beginning of the 2018, the company's 1/1/2018 trial balance was as follows: Number Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 200 Accounts Payable 300 Common Stock 310 Additional Paid In Capital 340 Retained Earnngs Debit $ $ s s (2) SSSS $ $ $ 450,000,000 33,000,000 12,345,000 105,000,000 1,000,000 2,567,000 80,000 Credit $ S $ sssssssss $ S S $ 603,992,000 $ 1,240,000 72,422,000 50,000 70,050,000 120,000,000 267,000,000 73,230,000 603,992,000 Other assumptions for the year a. Depreciation and amortization are computed using the straight line method. b. Pane uses a perpetual system to track their inventory. c. Pane uses the percentage of receivables method to estimate their bad debt expense d. Pane has a year end of December 31, 2018 As the accountant for Pane in the Glass company, you have been asked to do the following: 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 3. Prepare the adjusting journal entries in the "Journal Entries" tab 4. Post the adjusting journal entries to the appropriate t-accounts in the "T-Accounts" tab 5. Prepare the income statement using the "Adjusted Trial Balance" tab 6. Prepare your closing journal entries in the "Journal Entries- Closing" tab 7. Post the closing entries into the appropriate accounts on the "T-Accounts- Closing" tab 8. Use the Post Closing trial balance to prepare the Balance Sheet Account Number 100 110 115 120 130 135 140 160 170 180 185 190 195 200 205 210 230 300 310 340 400 405 410 415 500 510 518 520 540 560 570 599 600 Chart of Accounts Cash Accounts Receivable Allowance For Bad Debts Inventory Notes Receivable Account Title Accumulated Depreciation Equipment Buildings Land Patents Accumulated Amortization Interest Receivable Prepaid Insurance Expense Accounts Payable Unearned Rent Revenue Salaries Payable Dividends Payable Common Stock Additional Paid in Capital Retained Earnings Sales Revenue Rent Revenue Interest Revenue Loss on Sale of Equipment Cost of Goods Sold Depreciation Expense Amortization Expense Bad Debt Expense Salaries Expense Insurance Expense Interest Expense Income Tax Expense Dividends Transaction No. Transaction A B C D E F G Instructions: 1. Prepare the journal entries for transactions A-T below and record them on the "Journal Entries" tab. 2. Once you have created the journal entries, post them to the "T-Accounts" tab. 3. Prepare journal entries for adjusting journal entries 1-6. 4. Post the adjusting entries to the correct T-Accounts in the "T-Accounts" tab. H January 1: Pane purchases inventory on account to make stained glass windows. The contract has terms of 2/10, n/30. The goods were purchased under the shipping terms of FOB destination. Inventory Purchased Shipping Cost January 3: Pane receives rent for the 2 years from a tenant who rents one of their empty warehouses. Total Rent Paid Insurance Policy January 5: Pane pays for the inventory purchased in transaction A. February 12: Pane purchased a one year insurance policy on account with coverage beginning on March 1. $9,750,000 $5,050 Inventory Purchased Shipping Cost $63,000 March 1: Pane purchases additional inventory on account to make stained glass windows. The goods were purchased under the shipping terms of FOB shipping point. Cash Sales Sales on account Cost of Goods Sold $20,000 $12,325,000 $9,000 May 31: Pane sells window panes to customers. Some customers paid in cash, others purchased their goods on account. Pane uses the perpetual method to track their inventory. 5,367,000 40,054,000 13,250,000 June 1: Pane pays for the inventory purchased in transaction E. July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and Chapter 6 6 4 6 6 6 9 H K L July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and other marine vehicles called "T-Panes". Cost of Patent Remaining legal life of patent (in years) July 28: Pane issued shares of common stock Number of shares Par Value Price Per Share Cost of Land Survey Fees August 6: Pane purchases land with cash. At the time of purchase, Pane also had to pay for survey fees related to the land. Principal Interest Rate Maturity Date November 15: Pane sales additional goods to customers on account. $90,000 November 1: Pane lends one of their employees $200,000 in exchange for a note receivable. The employee is required to pay Pane back for the principal and interest on September 1, 2019. Sales on account Cost of Goods Sold $200,000 9% 9/1/2019 9 5,230 $2 $124 $124,000 $600 $20,000,000 $6,350,000 9 11 9 8 7,8 M N 0 P November 15: Pane sales additional goods to customers on account. Sales on account Cost of Goods Sold December 1: Pane puchases a piece of machinery with cash that will assist in making "T-Panes" Cost of Machinery Installation Fees Transportation Costs December 10: Pane collects a portion of their accounts receivable Amount collected December 18: Pane sold a piece of their equipment for $10,000 in exchange for cash. Sale Price Equipment Historical Cost Accumulated Depreciation for this equipment December 31: Pane paid the IRS their 2018 income tax. Income Tax Paid $20,000,000 $6,350,000 $890,000 $4,250 $1,030 $43,758,000 $10,000 $55,000 $38,000 $2,000,000 7,8 8 9 Q 5 T 1 STOP: Post each of the preceding journal entries to the appropriate T-Accounts before preparing the adjusting journal entries. 2 Year-End Adjusting Entries: 3 4 The payroll information for the year is shown below. All salaries and wages were previously paid for in cash, however this activity has not been recorded on Pane's books. 5 Number of Employees 200 Employee payment (daily) $175 250 Days worked in the current year On December 31, Pane was notified that their one of their customers filed bankruptcy and would not be able to pay off their $3,000 6 On December 31, Pane paid cash dividends of $8,000 to its shareholders. Recognize the revenue earned from the rent paid in transaction A. Recognize the expiration of the prepaid insurance policy, purchased in transaction D. Recognize the interest earned on the note receivable issued in transaction K Record the bad debt expense for the year, assuming uses 3% of accounts receivable to estimate their uncollectible accounts. Depreciation Expense for the year is 2,556,000 Amortization Expense for the year is 3,000 Post each of the adjusting journal entries to the appropriate T-Accounts- DO NOT prepare closing journal entries yet 9 00 11 4 4 4,8 00 9 9 Pare in the Glass Company (Pane) is a glass manufacturer based out of California. They produce a number of glass products including car windows and windshields, windows for houses, stained glass windows, and a number of other specialty products. The following information pertains to the fiscal year ending December 31, 2018: At the beginning of the 2018, the company's 1/1/2018 trial balance was as follows: Number Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 200 Accounts Payable 300 Common Stock 310 Additional Paid In Capital 340 Retained Earnngs Debit $ $ s s (2) SSSS $ $ $ 450,000,000 33,000,000 12,345,000 105,000,000 1,000,000 2,567,000 80,000 Credit $ S $ sssssssss $ S S $ 603,992,000 $ 1,240,000 72,422,000 50,000 70,050,000 120,000,000 267,000,000 73,230,000 603,992,000 Other assumptions for the year a. Depreciation and amortization are computed using the straight line method. b. Pane uses a perpetual system to track their inventory. c. Pane uses the percentage of receivables method to estimate their bad debt expense d. Pane has a year end of December 31, 2018 As the accountant for Pane in the Glass company, you have been asked to do the following: 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 1. Evaluate the following information and transactions listed on the "Transactions" tab and make the necessary journal entries in the "Journal Entries" tab. You should only use the accounts listed on the "Chart of Accounts" tab in your journal entries. 2. Post the journal entries into the appropriate t-accounts in the "T-Accounts" tab 3. Prepare the adjusting journal entries in the "Journal Entries" tab 4. Post the adjusting journal entries to the appropriate t-accounts in the "T-Accounts" tab 5. Prepare the income statement using the "Adjusted Trial Balance" tab 6. Prepare your closing journal entries in the "Journal Entries- Closing" tab 7. Post the closing entries into the appropriate accounts on the "T-Accounts- Closing" tab 8. Use the Post Closing trial balance to prepare the Balance Sheet Account Number 100 110 115 120 130 135 140 160 170 180 185 190 195 200 205 210 230 300 310 340 400 405 410 415 500 510 518 520 540 560 570 599 600 Chart of Accounts Cash Accounts Receivable Allowance For Bad Debts Inventory Notes Receivable Account Title Accumulated Depreciation Equipment Buildings Land Patents Accumulated Amortization Interest Receivable Prepaid Insurance Expense Accounts Payable Unearned Rent Revenue Salaries Payable Dividends Payable Common Stock Additional Paid in Capital Retained Earnings Sales Revenue Rent Revenue Interest Revenue Loss on Sale of Equipment Cost of Goods Sold Depreciation Expense Amortization Expense Bad Debt Expense Salaries Expense Insurance Expense Interest Expense Income Tax Expense Dividends Transaction No. Transaction A B C D E F G Instructions: 1. Prepare the journal entries for transactions A-T below and record them on the "Journal Entries" tab. 2. Once you have created the journal entries, post them to the "T-Accounts" tab. 3. Prepare journal entries for adjusting journal entries 1-6. 4. Post the adjusting entries to the correct T-Accounts in the "T-Accounts" tab. H January 1: Pane purchases inventory on account to make stained glass windows. The contract has terms of 2/10, n/30. The goods were purchased under the shipping terms of FOB destination. Inventory Purchased Shipping Cost January 3: Pane receives rent for the 2 years from a tenant who rents one of their empty warehouses. Total Rent Paid Insurance Policy January 5: Pane pays for the inventory purchased in transaction A. February 12: Pane purchased a one year insurance policy on account with coverage beginning on March 1. $9,750,000 $5,050 Inventory Purchased Shipping Cost $63,000 March 1: Pane purchases additional inventory on account to make stained glass windows. The goods were purchased under the shipping terms of FOB shipping point. Cash Sales Sales on account Cost of Goods Sold $20,000 $12,325,000 $9,000 May 31: Pane sells window panes to customers. Some customers paid in cash, others purchased their goods on account. Pane uses the perpetual method to track their inventory. 5,367,000 40,054,000 13,250,000 June 1: Pane pays for the inventory purchased in transaction E. July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and Chapter 6 6 4 6 6 6 9 H K L July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and other marine vehicles called "T-Panes". Cost of Patent Remaining legal life of patent (in years) July 28: Pane issued shares of common stock Number of shares Par Value Price Per Share Cost of Land Survey Fees August 6: Pane purchases land with cash. At the time of purchase, Pane also had to pay for survey fees related to the land. Principal Interest Rate Maturity Date November 15: Pane sales additional goods to customers on account. $90,000 November 1: Pane lends one of their employees $200,000 in exchange for a note receivable. The employee is required to pay Pane back for the principal and interest on September 1, 2019. Sales on account Cost of Goods Sold $200,000 9% 9/1/2019 9 5,230 $2 $124 $124,000 $600 $20,000,000 $6,350,000 9 11 9 8 7,8 M N 0 P November 15: Pane sales additional goods to customers on account. Sales on account Cost of Goods Sold December 1: Pane puchases a piece of machinery with cash that will assist in making "T-Panes" Cost of Machinery Installation Fees Transportation Costs December 10: Pane collects a portion of their accounts receivable Amount collected December 18: Pane sold a piece of their equipment for $10,000 in exchange for cash. Sale Price Equipment Historical Cost Accumulated Depreciation for this equipment December 31: Pane paid the IRS their 2018 income tax. Income Tax Paid $20,000,000 $6,350,000 $890,000 $4,250 $1,030 $43,758,000 $10,000 $55,000 $38,000 $2,000,000 7,8 8 9 Q 5 T 1 STOP: Post each of the preceding journal entries to the appropriate T-Accounts before preparing the adjusting journal entries. 2 Year-End Adjusting Entries: 3 4 The payroll information for the year is shown below. All salaries and wages were previously paid for in cash, however this activity has not been recorded on Pane's books. 5 Number of Employees 200 Employee payment (daily) $175 250 Days worked in the current year On December 31, Pane was notified that their one of their customers filed bankruptcy and would not be able to pay off their $3,000 6 On December 31, Pane paid cash dividends of $8,000 to its shareholders. Recognize the revenue earned from the rent paid in transaction A. Recognize the expiration of the prepaid insurance policy, purchased in transaction D. Recognize the interest earned on the note receivable issued in transaction K Record the bad debt expense for the year, assuming uses 3% of accounts receivable to estimate their uncollectible accounts. Depreciation Expense for the year is 2,556,000 Amortization Expense for the year is 3,000 Post each of the adjusting journal entries to the appropriate T-Accounts- DO NOT prepare closing journal entries yet 9 00 11 4 4 4,8 00 9 9

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