Below is review of the books and records at December 31 for East West College. The...
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Below is review of the books and records at December 31 for East West College. The review has identified the matters that may need addressing. Record any adjustments required to complete the year end on General Journal. Additional documents are on the next page. Cash A stale dated cheque (stop payment in reality) for $10500 recorded as Miscellaneous Expenses. The fee related to an exempt for GST purposes Key Man Life Insurance Policy. Term Deposit One-month interest has been earned but not received Accounts Receivable $3,000 on ACCUTAX Consultants may be uncollectable $6,300 on REAL AMUSEMENT Ltd. May be uncollectable pending bankruptcy Inventory 225 booklets SAGE 50 & 160 texts OF QUICKBOOKS Verified by Count on December 18 and reconciled on contractor Payments used to prepare staff and contractor payments. Valuation basis used last year was FIFO Deposit This remaining deposit was for a new car for the Company but ARIF C. has instead decided to pay the remaining balance and keep the car for herself. Prepaid Memberships and insurance (see G/L) need to be reviewed. Round each to the nearest month. Building Record 11 months depreciation of $12,736 (5% declining balance) (300,000-22,125) X 5%X11/12=12736 Computer Computer erroneously recorded in Furniture & Equipment (Account 160) Computer Record Depreciation for Computer (50% straight-Line) Record Depreciation (20% Declining Balance) for the prior year and (1/2 X20% Declining Balance) for the current year. Furniture & Equipment Leasehold Amortize Leasehold Improvements for December 20XX 1 month of 5 Year lease Improvements Properly record the 2 transactions recording any related fees as Professional Fees. Note the lawyer paid out the mortgage payable (a small amount of interest was also occurred). The entire investment of $80,000.00 was disposed of. Gain on Sale Professional Fees Accrue accounting fees as per memo #125 Record the deferred revenue for classes paid but untaught (see Pages 15 and 16). See current invoicing for pricing Deferred Revenue Move $200 late fee to bank charges & interest Corporate Taxes Record $79,300 for taxes for the current year Income Taxes (P/S: ACCOUNTING STUDENTS ONLY) 47 Accounting o: EAST WEST COLLEGE 3880 29 St NE Calgary, AB T1Y 6B6 FOLIO: 1130-20 November30, 20XX STATEMENT OF ADJUSMENTS Cheque received from Purchaser's Lawyer Adjustments Legal Fees GST thereon Principal & Interest to closing date $2000 $ 100 $1,103,300 $ 101,200 $2,100 Total Disbursements Net Balance from Trust Balance -Cheque Attached $ 103,300 $ 1,000,000 STOCK BROKER ALBERTA TO: EAST WEST COLLEGE 3880 29 St NE Calgary, AB T1Y 6B6 STATEMENT OF ADJUSTMENTS Proceeds from Sale of Investment Less: Brokerage Costs (Preferred Rate) Including GST Balance from Trust Balance -Cheque Attached $ 54,200.00 $ 4,200.00 $ 50,000.00 SERVING UTOPIA FOR OVER 50 YEARS MEMORANDUM TO: BILL BUGNAY FROM: ARIF CHOWDHURY MEMO #125 December 18, 20XX Estimated Professional fees (complete the accounting & do the tax return) are $2,000 Thanks ARIF NAME: 48 GENERAL JOURNAL- PAGE 230 DATE Account Title and Explanation REF DEBIT CREDIT 20 XX 49 EAST WEST COLLEGE INC. INCOME STATEMENT For the year ending December 31, 20XX Training Income Customized General Total Income Cost of Service Provided Instructional Materials Contract Instructors Travel Total Cost of Services Provided Gross Margin Expenses Advertising & Promotion Amortization Bad Debts Bank Charges & Interest Donations Insurance Interest on L/T Debt Meals & Entertainment Memberships Occupancy Costs Professional Fees Repairs & Maintenance Wages and Benefits Total Expenses Net Income from operations Non-Operating Income Interest income Gain/Loss on Disposal Total Non-Operating Income Net Income before Income Taxes Income Taxes Net Income for the year 51 NAME: EAST WEST COLLEGE INC. BALANCE SHEET As of December 31, 20XX Assets: Current Cash & Equivalents Accounting receivable & accrued Less: Allowance for doubtful Inventory Prepaid Amounts Total Current Assets Fixed: Furniture & Equipment Less: Amortization Leasehold Improvements Less: Amortization Total Fixed Assets Liabilities: Current Accounts payable Deferred Revenue Shareholder Loans Total Current Liabilities Shareholders' Equity Share Capital Common Preferred Total Share Capital Retained Earnings Beginning of Period Add: Net Income Less: Dividends End of Period Total Shareholders' Equity 52 NAME: ACCOUNTS RECEIVABLE SUSIDIARY LEDGER Limerick CORPORATION DATE EXPLANATION Nov 30 Carried Forward REF DEBIT ACCOUNT NO. B4 CREDIT DR/CR BALANCE C/F DR 000 Zara INC. DATE ACCOUNT NO. D1 EXPLANATION Carried Forward Nov 30 REF DEBIT CREDIT DR/CR BALANCE 0 00 C/F DR New Gen LIMITED ACCOUNT NO. H2 DATE EXPLANATION REF DEBIT DR/CR BALANCE 0| 00 CREDIT Nov 1 Carried Forward C/F DR AccuTAX CONSULTANTS ACCOUNT NO. L3 DATE EXPLANATION REF DEBIT CREDIT DR/CR BALANCE Nov 30 Carried Forward C/F DR 8,400 00 ACCOUNT NO. M5 Sleep Well BEDDING CORP DATE DR/CR BALANCE 0 00 EXPLANATION REF DEBIT CREDIT Nov 30 Carried Forward C/F DR ACCOUNT NO. R8 Real Amusements LTD. REF DEBIT CREDIT DR/CR BALANCE DATE EXPLANATION C/F DR 6,300 00 Nov 30 Carried Forward ACCOUNTS PAYABLE SUSIDIARY LEDGER Oncolytic Biotech Ltd. DATE EXPLANATION REF DEBIT ACCOUNT NO. EE9 Nov 30 Carried Forward CREDIT DR/CR BALANCE C/F CR 0 00 D2C CORPORATION ACCOUNT NO. LL7 DR/CR BALANCE 12,600 00 DATE EXPLANATION REF DEBIT CREDIT Nov 30 Carried Forward C/F CR High Arctic LIMITED ACCOUNT NO. MM2 DR/CR BALANCE 0 00 DATE EXPLANATION Carried Forward REF DEBIT CREDIT Nov 1 C/F CR HR ACCOUNTANT LTD. ACCOUNT NO. PP3 EXPLANATION Carried Forward DATE REF DEBIT CREDIT DR/CR BALANCE Nov 30 C/F CR 0 00 Enbridge INC. DATE ACCOUNT NO. RR6 DR/CR BALANCE 0 00 EXPLANATION REF DEBIT CREDIT Nov 30 Carried Forward C/F CR ACCOUNT NO. WW2 Mercer INC. DR/CR BALANCE 320 00 REF DEBIT CREDIT EXPLANATION Carried Forward DATE CR C/F Nov 30 46 Below is review of the books and records at December 31 for East West College. The review has identified the matters that may need addressing. Record any adjustments required to complete the year end on General Journal. Additional documents are on the next page. Cash A stale dated cheque (stop payment in reality) for $10500 recorded as Miscellaneous Expenses. The fee related to an exempt for GST purposes Key Man Life Insurance Policy. Term Deposit One-month interest has been earned but not received Accounts Receivable $3,000 on ACCUTAX Consultants may be uncollectable $6,300 on REAL AMUSEMENT Ltd. May be uncollectable pending bankruptcy Inventory 225 booklets SAGE 50 & 160 texts OF QUICKBOOKS Verified by Count on December 18 and reconciled on contractor Payments used to prepare staff and contractor payments. Valuation basis used last year was FIFO Deposit This remaining deposit was for a new car for the Company but ARIF C. has instead decided to pay the remaining balance and keep the car for herself. Prepaid Memberships and insurance (see G/L) need to be reviewed. Round each to the nearest month. Building Record 11 months depreciation of $12,736 (5% declining balance) (300,000-22,125) X 5%X11/12=12736 Computer Computer erroneously recorded in Furniture & Equipment (Account 160) Computer Record Depreciation for Computer (50% straight-Line) Record Depreciation (20% Declining Balance) for the prior year and (1/2 X20% Declining Balance) for the current year. Furniture & Equipment Leasehold Amortize Leasehold Improvements for December 20XX 1 month of 5 Year lease Improvements Properly record the 2 transactions recording any related fees as Professional Fees. Note the lawyer paid out the mortgage payable (a small amount of interest was also occurred). The entire investment of $80,000.00 was disposed of. Gain on Sale Professional Fees Accrue accounting fees as per memo #125 Record the deferred revenue for classes paid but untaught (see Pages 15 and 16). See current invoicing for pricing Deferred Revenue Move $200 late fee to bank charges & interest Corporate Taxes Record $79,300 for taxes for the current year Income Taxes (P/S: ACCOUNTING STUDENTS ONLY) 47 Accounting o: EAST WEST COLLEGE 3880 29 St NE Calgary, AB T1Y 6B6 FOLIO: 1130-20 November30, 20XX STATEMENT OF ADJUSMENTS Cheque received from Purchaser's Lawyer Adjustments Legal Fees GST thereon Principal & Interest to closing date $2000 $ 100 $1,103,300 $ 101,200 $2,100 Total Disbursements Net Balance from Trust Balance -Cheque Attached $ 103,300 $ 1,000,000 STOCK BROKER ALBERTA TO: EAST WEST COLLEGE 3880 29 St NE Calgary, AB T1Y 6B6 STATEMENT OF ADJUSTMENTS Proceeds from Sale of Investment Less: Brokerage Costs (Preferred Rate) Including GST Balance from Trust Balance -Cheque Attached $ 54,200.00 $ 4,200.00 $ 50,000.00 SERVING UTOPIA FOR OVER 50 YEARS MEMORANDUM TO: BILL BUGNAY FROM: ARIF CHOWDHURY MEMO #125 December 18, 20XX Estimated Professional fees (complete the accounting & do the tax return) are $2,000 Thanks ARIF NAME: 48 GENERAL JOURNAL- PAGE 230 DATE Account Title and Explanation REF DEBIT CREDIT 20 XX 49 EAST WEST COLLEGE INC. INCOME STATEMENT For the year ending December 31, 20XX Training Income Customized General Total Income Cost of Service Provided Instructional Materials Contract Instructors Travel Total Cost of Services Provided Gross Margin Expenses Advertising & Promotion Amortization Bad Debts Bank Charges & Interest Donations Insurance Interest on L/T Debt Meals & Entertainment Memberships Occupancy Costs Professional Fees Repairs & Maintenance Wages and Benefits Total Expenses Net Income from operations Non-Operating Income Interest income Gain/Loss on Disposal Total Non-Operating Income Net Income before Income Taxes Income Taxes Net Income for the year 51 NAME: EAST WEST COLLEGE INC. BALANCE SHEET As of December 31, 20XX Assets: Current Cash & Equivalents Accounting receivable & accrued Less: Allowance for doubtful Inventory Prepaid Amounts Total Current Assets Fixed: Furniture & Equipment Less: Amortization Leasehold Improvements Less: Amortization Total Fixed Assets Liabilities: Current Accounts payable Deferred Revenue Shareholder Loans Total Current Liabilities Shareholders' Equity Share Capital Common Preferred Total Share Capital Retained Earnings Beginning of Period Add: Net Income Less: Dividends End of Period Total Shareholders' Equity 52 NAME: ACCOUNTS RECEIVABLE SUSIDIARY LEDGER Limerick CORPORATION DATE EXPLANATION Nov 30 Carried Forward REF DEBIT ACCOUNT NO. B4 CREDIT DR/CR BALANCE C/F DR 000 Zara INC. DATE ACCOUNT NO. D1 EXPLANATION Carried Forward Nov 30 REF DEBIT CREDIT DR/CR BALANCE 0 00 C/F DR New Gen LIMITED ACCOUNT NO. H2 DATE EXPLANATION REF DEBIT DR/CR BALANCE 0| 00 CREDIT Nov 1 Carried Forward C/F DR AccuTAX CONSULTANTS ACCOUNT NO. L3 DATE EXPLANATION REF DEBIT CREDIT DR/CR BALANCE Nov 30 Carried Forward C/F DR 8,400 00 ACCOUNT NO. M5 Sleep Well BEDDING CORP DATE DR/CR BALANCE 0 00 EXPLANATION REF DEBIT CREDIT Nov 30 Carried Forward C/F DR ACCOUNT NO. R8 Real Amusements LTD. REF DEBIT CREDIT DR/CR BALANCE DATE EXPLANATION C/F DR 6,300 00 Nov 30 Carried Forward ACCOUNTS PAYABLE SUSIDIARY LEDGER Oncolytic Biotech Ltd. DATE EXPLANATION REF DEBIT ACCOUNT NO. EE9 Nov 30 Carried Forward CREDIT DR/CR BALANCE C/F CR 0 00 D2C CORPORATION ACCOUNT NO. LL7 DR/CR BALANCE 12,600 00 DATE EXPLANATION REF DEBIT CREDIT Nov 30 Carried Forward C/F CR High Arctic LIMITED ACCOUNT NO. MM2 DR/CR BALANCE 0 00 DATE EXPLANATION Carried Forward REF DEBIT CREDIT Nov 1 C/F CR HR ACCOUNTANT LTD. ACCOUNT NO. PP3 EXPLANATION Carried Forward DATE REF DEBIT CREDIT DR/CR BALANCE Nov 30 C/F CR 0 00 Enbridge INC. DATE ACCOUNT NO. RR6 DR/CR BALANCE 0 00 EXPLANATION REF DEBIT CREDIT Nov 30 Carried Forward C/F CR ACCOUNT NO. WW2 Mercer INC. DR/CR BALANCE 320 00 REF DEBIT CREDIT EXPLANATION Carried Forward DATE CR C/F Nov 30 46
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Fundamentals of Financial Accounting
ISBN: 978-0078025914
5th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby
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