ACC 255 Comprehensive Problem 2 (Chapters 2, 5, 6, 8)

Page 124 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) COMPREHENSIVE PROBLEM 2 REQUIREMENTS (1) Prepare journal entries to record the merchandising transactions below for August 2019, assuming that the perpetual inventory system is used: Check figure: Total Debits $82,970. (2) Prepare journal entries to record additional transactions (a) and (b) on the following page for Accounts Receivable related to uncollectible accounts. (3) Baseball Express, Inc.'s fiscal year ends on December 31. Using the December 31, 2019 Adjusted Trial Balance (accounts listed in alphabetical order).prepare in good form, the 2019 fiscal year financial statements: (a) Detailed, Multistep Income Statement (include earnings per share there were 600,000 shares of common stock outstanding throughout the year): Check fiqure: Net Income = $130,710, (b) Retained Earnings Statement: Check figure Retained Earnings, December 31, 2019 = $385,710, (c) Classified Balance Sheet: Check figure: Total Assets = $1,912,670. (4) Calculate liquidity, profitability, & solvency measures show all calculations and use the proper notation for each answer (%, times, $). Round your final answer to at least one decimal place (6.9. for a ratio stated as a percentage, show an amount calculated to be 10463 as 10.5%). TRANSACTIONS FOR REQUIREMENT (1): Presented below are selected inventory transactions for Baseball Express, Inc. during August 2019, Aug. 2 Purchased $25,750 of merchandise on credit from Wilson Sporting Goods, terms 2/10, net 30, FOB Shipping Point Paid $240 of shipping cost to USPS for the merchandise purchased on August 2. Sold $5,500 of merchandise to Red Stitches Baseball Academy, terms 3/10, net 30, FOB Destination. Cost of merchandise was $2,200. Paid $180 of shipping cost to FedEx for the merchandise sold on August 7 Returned for credit on account $5,200 of merchandise purchased from Wilson Sporting Goods on August 2 Paid Wilson Sporting Goods the balance due from the August 2 purchase less the August 9 return (hint: payment is within discount period). Sold $7,800 of merchandise for cash, FOB Shipping Point, Cost of merchandise was $3,150. 14 Red Stitches Baseball Academy returned $1,500 of merchandise sold on August 7 for credit on account. Cost of merchandise returned, $600. 17 Received payment in full from Red Stitches Baseball Academy for the balance due from the August 7 sale less the August 14 return (hint: within the discount period). Purchased merchandise from Easton Diamond Sports, Inc. $6,300 cash, COMPREHENSIVE PROBLEM 2 CHAPTERS 2, 5, 6, 8) TRANSACTIONS FOR REQUIREMENT : Page 125 Assume that Baseball Express, te has a beaning of the year balance Allowance for Doubtful Accounts of $1.675. On December 31, the following events occurred related to accounts receivables (a) Record the write-off of $1 200 of uncollectible accounts receivable due from customers Irrr After recording (a) above, management provides the following cong schedule of accounts receivable Prepare the year-end adjusting journal entry for bed debts using the allowance method. estimated using the percentage of receivables basis from the aging schedule. Estimated Percentage Uncollectible Estimated Uncollectible Accounts Receivable $ 32,500 8.700 5% Current Accounts 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Totals 3.750 2,340 1.200 $ 48.490 10% 25% 60% INFORMATION FOR REQUIREMENT (3) After the transactions from requirements (1) and (2), as well as other transactions for the year were posted to the accounts, Baseball Express, Inc.'s December 31, 2019 fiscal year-end adjusted trial balance (occounts are listed in alphabetical order) is as follows: DEBIT CREDIT $ 39,850 $ 48,490 175,000 356,250 2,440 BASEBALL EXPRESS, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, 2019 ACCOUNT TITLES Accounts Payable Accounts Receivable Accumulated Depreciation - Equipment Accumulated Depreciation - Warehouse Allowance for Doubtful Accounts Bad Debt Expense Cash Common Stock (600,000 shares outstanding) Cost of Goods Sold Depreciation Expense Dividends 1,965 88,520 600 000 836,000 106,250 90,000 Page 126 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) CREDIT ACCOUNT TITLES DEBIT 245,000 14,935 25 BOO 95,000 46,830 Equipment Freight-Out Expense Goin on Sale of Lond Goodwill Income Tax Expense Income Taxes Povable Insurance Expense Interest Expense Interest Payable Inventory 6.585 18.800 26,400 2 600 Land 93,500 185,000 11,700 76,500 5,200 25,360 800,000 71,000 7,000 6,800 175,000 4.300 Legal & Professional Service Expense Long-Term Investments in Stock Loss on Sale of Equipment Marketing Expense Mortgage Payable ($60,000 due within one year) Notes Payable (due in 2 years) Notes Receivable (due in 18 months) Prepaid Insurance Retained Earnings (January 1, 2019) Salaries & Wages Expense Salaries & Wages Payable Sales Discounts Sales Returns & Allowances Sales Revenue Short-Term Debt Investments Supplies Supplies Expense Trademarks Unearned Sales Revenue Utilities Expense Warehouse 33,250 82,750 1,520,000 15,000 2,600 5,850 157,950 2,625 24,800 1,425,000 Totals $ 3.951,450 $3.951.450 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) Page 127 DATE GENERAL JOURNAL ACCOUNT TITLES REQUIREMENT (1) JOURNAL ENTRIES: DEBIT CREDIT 2019 TILLERIE Page 128 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) GENERAL JOURNAL ACCOUNT TITLES DEBIT CREDIT DATE 2019 REQUIREMENT (2) JOURNAL ENTRIES: (a) Dec 31 (b) Dec. 31 Pagal0| COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) INCOME STATEMENT (CONTINUED) rrrr BASEBALL EXPRESS, INC. RETAINED EARNINGS STATEMENT Complete the date line COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) Page 131 BASEBALL EXPRESS, INC. BALANCE SHEET Complete the date line Page 132 COMPREHENSIVE PROBLEM 2 CHAPTERS 2, 5, 6, 8) BALANCE SHEET (CONTINUED) COMPREHENSIVE PROBLEM Z (CHAPTERS 2, 5, 6, 8) Page 133 REQUIREMENT (4) FINANCIAL MEASURES: Show all calculations Refer to page 74 in the course packet for a summary of ratio formulos. Show your answer using the proper notation and round your final answer to one decinal ploce. Place your answers in the spaces provided for each ratio. CALCULATION: ANSWER: MEASURE LIQUIDITY Working Capital Current Ratio Receivable Turnover Ratio (note: beginning net accounts receivable $52,800) (use net sales) Average collection Period Inventory Turnover Ratio (note: beginning inventory = $80,500) Days in Inventory PROFITABILITY Gross Profit Rate Profit Margin SOLVENCY Debt to Assets Page 124 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) COMPREHENSIVE PROBLEM 2 REQUIREMENTS (1) Prepare journal entries to record the merchandising transactions below for August 2019, assuming that the perpetual inventory system is used: Check figure: Total Debits $82,970. (2) Prepare journal entries to record additional transactions (a) and (b) on the following page for Accounts Receivable related to uncollectible accounts. (3) Baseball Express, Inc.'s fiscal year ends on December 31. Using the December 31, 2019 Adjusted Trial Balance (accounts listed in alphabetical order).prepare in good form, the 2019 fiscal year financial statements: (a) Detailed, Multistep Income Statement (include earnings per share there were 600,000 shares of common stock outstanding throughout the year): Check fiqure: Net Income = $130,710, (b) Retained Earnings Statement: Check figure Retained Earnings, December 31, 2019 = $385,710, (c) Classified Balance Sheet: Check figure: Total Assets = $1,912,670. (4) Calculate liquidity, profitability, & solvency measures show all calculations and use the proper notation for each answer (%, times, $). Round your final answer to at least one decimal place (6.9. for a ratio stated as a percentage, show an amount calculated to be 10463 as 10.5%). TRANSACTIONS FOR REQUIREMENT (1): Presented below are selected inventory transactions for Baseball Express, Inc. during August 2019, Aug. 2 Purchased $25,750 of merchandise on credit from Wilson Sporting Goods, terms 2/10, net 30, FOB Shipping Point Paid $240 of shipping cost to USPS for the merchandise purchased on August 2. Sold $5,500 of merchandise to Red Stitches Baseball Academy, terms 3/10, net 30, FOB Destination. Cost of merchandise was $2,200. Paid $180 of shipping cost to FedEx for the merchandise sold on August 7 Returned for credit on account $5,200 of merchandise purchased from Wilson Sporting Goods on August 2 Paid Wilson Sporting Goods the balance due from the August 2 purchase less the August 9 return (hint: payment is within discount period). Sold $7,800 of merchandise for cash, FOB Shipping Point, Cost of merchandise was $3,150. 14 Red Stitches Baseball Academy returned $1,500 of merchandise sold on August 7 for credit on account. Cost of merchandise returned, $600. 17 Received payment in full from Red Stitches Baseball Academy for the balance due from the August 7 sale less the August 14 return (hint: within the discount period). Purchased merchandise from Easton Diamond Sports, Inc. $6,300 cash, COMPREHENSIVE PROBLEM 2 CHAPTERS 2, 5, 6, 8) TRANSACTIONS FOR REQUIREMENT : Page 125 Assume that Baseball Express, te has a beaning of the year balance Allowance for Doubtful Accounts of $1.675. On December 31, the following events occurred related to accounts receivables (a) Record the write-off of $1 200 of uncollectible accounts receivable due from customers Irrr After recording (a) above, management provides the following cong schedule of accounts receivable Prepare the year-end adjusting journal entry for bed debts using the allowance method. estimated using the percentage of receivables basis from the aging schedule. Estimated Percentage Uncollectible Estimated Uncollectible Accounts Receivable $ 32,500 8.700 5% Current Accounts 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Totals 3.750 2,340 1.200 $ 48.490 10% 25% 60% INFORMATION FOR REQUIREMENT (3) After the transactions from requirements (1) and (2), as well as other transactions for the year were posted to the accounts, Baseball Express, Inc.'s December 31, 2019 fiscal year-end adjusted trial balance (occounts are listed in alphabetical order) is as follows: DEBIT CREDIT $ 39,850 $ 48,490 175,000 356,250 2,440 BASEBALL EXPRESS, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, 2019 ACCOUNT TITLES Accounts Payable Accounts Receivable Accumulated Depreciation - Equipment Accumulated Depreciation - Warehouse Allowance for Doubtful Accounts Bad Debt Expense Cash Common Stock (600,000 shares outstanding) Cost of Goods Sold Depreciation Expense Dividends 1,965 88,520 600 000 836,000 106,250 90,000 Page 126 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) CREDIT ACCOUNT TITLES DEBIT 245,000 14,935 25 BOO 95,000 46,830 Equipment Freight-Out Expense Goin on Sale of Lond Goodwill Income Tax Expense Income Taxes Povable Insurance Expense Interest Expense Interest Payable Inventory 6.585 18.800 26,400 2 600 Land 93,500 185,000 11,700 76,500 5,200 25,360 800,000 71,000 7,000 6,800 175,000 4.300 Legal & Professional Service Expense Long-Term Investments in Stock Loss on Sale of Equipment Marketing Expense Mortgage Payable ($60,000 due within one year) Notes Payable (due in 2 years) Notes Receivable (due in 18 months) Prepaid Insurance Retained Earnings (January 1, 2019) Salaries & Wages Expense Salaries & Wages Payable Sales Discounts Sales Returns & Allowances Sales Revenue Short-Term Debt Investments Supplies Supplies Expense Trademarks Unearned Sales Revenue Utilities Expense Warehouse 33,250 82,750 1,520,000 15,000 2,600 5,850 157,950 2,625 24,800 1,425,000 Totals $ 3.951,450 $3.951.450 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) Page 127 DATE GENERAL JOURNAL ACCOUNT TITLES REQUIREMENT (1) JOURNAL ENTRIES: DEBIT CREDIT 2019 TILLERIE Page 128 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) GENERAL JOURNAL ACCOUNT TITLES DEBIT CREDIT DATE 2019 REQUIREMENT (2) JOURNAL ENTRIES: (a) Dec 31 (b) Dec. 31 Pagal0| COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) INCOME STATEMENT (CONTINUED) rrrr BASEBALL EXPRESS, INC. RETAINED EARNINGS STATEMENT Complete the date line COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) Page 131 BASEBALL EXPRESS, INC. BALANCE SHEET Complete the date line Page 132 COMPREHENSIVE PROBLEM 2 CHAPTERS 2, 5, 6, 8) BALANCE SHEET (CONTINUED) COMPREHENSIVE PROBLEM Z (CHAPTERS 2, 5, 6, 8) Page 133 REQUIREMENT (4) FINANCIAL MEASURES: Show all calculations Refer to page 74 in the course packet for a summary of ratio formulos. Show your answer using the proper notation and round your final answer to one decinal ploce. Place your answers in the spaces provided for each ratio. CALCULATION: ANSWER: MEASURE LIQUIDITY Working Capital Current Ratio Receivable Turnover Ratio (note: beginning net accounts receivable $52,800) (use net sales) Average collection Period Inventory Turnover Ratio (note: beginning inventory = $80,500) Days in Inventory PROFITABILITY Gross Profit Rate Profit Margin SOLVENCY Debt to Assets