To practice making necessary correcting and adjusting entries and using them to create an adjusted trial...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
To practice making necessary correcting and adjusting entries and using them to create an adjusted trial balance. (See Topie Guides AC 6, 11, 12, 14). Information: The table on the next page reports Terry's account balances on December 31 for the current and prior years. The following entries have not yet been made for the current year: • During the year the sales department wrote off $968,000 of accounts receivable (already included in the current account balances). They have now decided that 9% of their ending A/R balance is uncollectible. Terry uses the Percentage of A/R method for recognizing bad debt expense. • During the year the board declared and paid a $930,000 dividend. • On December 1st, a year's premiums on a new insurance policy was prepaid for $180,000. The original payment was recorded as a debit to Insurance Expense. No other entries have been made for this contract since that time. Terry's reported income tax expense (see below) includes an estimate for this year's taxes. Only the three adjustments mentioned above have not yet been included in this tax estimate. Because of this, you will need to record any tax effeets from the transactions throughout this case (starting with the tax effects, if any, of these three entries). Since another tax payment will not be made until April, these adjustments should be accounted for in Income Tax Expense and Income Tax Payable. Terry's tax rate is 30%. Assignment: Caleulations 1. Make the appropriate journal entries, if any, to account for the adjustments mentioned above (including any necessary changes to income tax expense). 2. Create Terry's Year 2 adjusted trial balance. Hint: Trial balances need to be in a specific order and they are only for the current year! Critical Thinking 3. Do you think it's a problem that Terry is still making these changes, even when all of their other numbers are set? What do these last minute corrections suggest about the company's accounting department? As of 12/31/Year 2 Year 1 Year 2 $4,356.000 A/R $4,114,000 Accounts Payable $453,895 $7,744,000 $2,904,000 Accumulated Depreciation $4,840,000 Additional Paid-In Capital Advertising Expense $1,452,000 $1,452,000 $907.500 $150,000 Allowance for Bad Debts $242,000 $1,210,000 Building $3,872,000 $3,872,000 Cash $2,904.000 $2.420,000 Common Stock $5,600,000 $5,600,000 ($1 par, 5,000,000 authorized, 5,600,000 outstanding) $30,250 Consulting and Legal Fee Expense $15,000 Cost of Goods Sold $26.492,163 $4.400.000 $242,000 Current Portion of Loan Payable Depreciation Expense $242,000 $2,904,000 $180,000 Equipment Executive Salaries Expense $13,552,000 $6,292,000 $2,117,500 $500,000 Expansion Fund Income Tax Expense $1,452.000 $1.452,000 $2,460,559 $847,000 $450,000 Income Tax Payable Insurance Expense $484,000 $417,450 $45,000 Interest Expense $308,550 $50.000 Inventory $5,808,000 $6,776,000 Land $5,324,000 $3,388,000 Loan Payable $1,210,000 $1,452,000 Loans to other businesses $1,936,000 $1,936,000 Miscellaneous Admin. Expenses $23,898 $8.000 Miscellaneous Selling Expenses Notes Payable $235,950 $6,776,000 $40,000 $3,872,000 Office Supplies Expense $187,550 $726,000 $75,000 Patents $726,000 Prepaid Insurance Prepaid Rent $363,000 $605,000 $726,000 $484,000 Rent Revenue $151,250 $19,000 Retained Earnings ??? $8,799,000 Sales Discounts $580,800 $50,000 Sales Force Salaries Expense $665,500 $155,000 $500,000 Sales Returns $2,299,000 Sales Revenue $48,400,000 $8,000,000 Selling Commissions Expense $2,420,000 $40,000 Shipping Expense $396,275 $100,000 Unearned Revenue $1,210,000 $726,000 Ubilities Expense $363,000 $80,000 Wages Payable $580,800 $605,000 To practice making necessary correcting and adjusting entries and using them to create an adjusted trial balance. (See Topie Guides AC 6, 11, 12, 14). Information: The table on the next page reports Terry's account balances on December 31 for the current and prior years. The following entries have not yet been made for the current year: • During the year the sales department wrote off $968,000 of accounts receivable (already included in the current account balances). They have now decided that 9% of their ending A/R balance is uncollectible. Terry uses the Percentage of A/R method for recognizing bad debt expense. • During the year the board declared and paid a $930,000 dividend. • On December 1st, a year's premiums on a new insurance policy was prepaid for $180,000. The original payment was recorded as a debit to Insurance Expense. No other entries have been made for this contract since that time. Terry's reported income tax expense (see below) includes an estimate for this year's taxes. Only the three adjustments mentioned above have not yet been included in this tax estimate. Because of this, you will need to record any tax effeets from the transactions throughout this case (starting with the tax effects, if any, of these three entries). Since another tax payment will not be made until April, these adjustments should be accounted for in Income Tax Expense and Income Tax Payable. Terry's tax rate is 30%. Assignment: Caleulations 1. Make the appropriate journal entries, if any, to account for the adjustments mentioned above (including any necessary changes to income tax expense). 2. Create Terry's Year 2 adjusted trial balance. Hint: Trial balances need to be in a specific order and they are only for the current year! Critical Thinking 3. Do you think it's a problem that Terry is still making these changes, even when all of their other numbers are set? What do these last minute corrections suggest about the company's accounting department? As of 12/31/Year 2 Year 1 Year 2 $4,356.000 A/R $4,114,000 Accounts Payable $453,895 $7,744,000 $2,904,000 Accumulated Depreciation $4,840,000 Additional Paid-In Capital Advertising Expense $1,452,000 $1,452,000 $907.500 $150,000 Allowance for Bad Debts $242,000 $1,210,000 Building $3,872,000 $3,872,000 Cash $2,904.000 $2.420,000 Common Stock $5,600,000 $5,600,000 ($1 par, 5,000,000 authorized, 5,600,000 outstanding) $30,250 Consulting and Legal Fee Expense $15,000 Cost of Goods Sold $26.492,163 $4.400.000 $242,000 Current Portion of Loan Payable Depreciation Expense $242,000 $2,904,000 $180,000 Equipment Executive Salaries Expense $13,552,000 $6,292,000 $2,117,500 $500,000 Expansion Fund Income Tax Expense $1,452.000 $1.452,000 $2,460,559 $847,000 $450,000 Income Tax Payable Insurance Expense $484,000 $417,450 $45,000 Interest Expense $308,550 $50.000 Inventory $5,808,000 $6,776,000 Land $5,324,000 $3,388,000 Loan Payable $1,210,000 $1,452,000 Loans to other businesses $1,936,000 $1,936,000 Miscellaneous Admin. Expenses $23,898 $8.000 Miscellaneous Selling Expenses Notes Payable $235,950 $6,776,000 $40,000 $3,872,000 Office Supplies Expense $187,550 $726,000 $75,000 Patents $726,000 Prepaid Insurance Prepaid Rent $363,000 $605,000 $726,000 $484,000 Rent Revenue $151,250 $19,000 Retained Earnings ??? $8,799,000 Sales Discounts $580,800 $50,000 Sales Force Salaries Expense $665,500 $155,000 $500,000 Sales Returns $2,299,000 Sales Revenue $48,400,000 $8,000,000 Selling Commissions Expense $2,420,000 $40,000 Shipping Expense $396,275 $100,000 Unearned Revenue $1,210,000 $726,000 Ubilities Expense $363,000 $80,000 Wages Payable $580,800 $605,000
Expert Answer:
Answer rating: 100% (QA)
1 Appropriate journal entries a Retained Earnings 300000 Dividend payable 300000 b Dividend Payable 300000 Cash 300000 To record dividend declared and ... View the full answer
Related Book For
Business Statistics in Practice
ISBN: 978-0077404741
6th edition
Authors: Bruce Bowerman, Richard O'Connell
Posted Date:
Students also viewed these accounting questions
-
The table on the next page gives a frequency distribution describing the number of errors found in 30 l,000-line samples of computer code. Suppose that we wish to determine whether the number of...
-
The data in the table on the next page were collected for a random sample of 26 households in Washington, DC An economist wants to relate household food consumption, y. to household income, x1, and...
-
The table on the next page shows the top 10 films of all time through July 2015, measured by box office receipts in the United States, as well as several other notable films farther down the list....
-
Midge is a 10% limited partner in Wild Catter, an oil and gas drilling partnership. She received her partnership interest in exchange for a $10,000 investment in the partnership. The balance in her...
-
In problem, use formula (1) for simple interest to find each of the indicated quantities. I = $28; P = $700; t = 13 weeks ; r = ?
-
a. Green light shines through a 100-mm-diameter hole and is observed on a screen. If the hole diameter is increased by 20%, does the circular spot of light on the screen decrease in diameter,...
-
What is the difference between object-oriented languages and UML?
-
Frontera Companys output for the current period results in a $ 20,000 unfavorable direct labor rate variance and a $10,000 unfavorable direct labor efficiency variance. Production for the current...
-
Image transcription text Wind tunnel measurements of the pressure and skin friction around a NACA 2415 airfoil at 8 degrees angle of attack resulted in the following data of pressure and skin...
-
Jerry tested 30 laptop computers owned by classmates enrolled in a large computer-science class and discovered that 22 were infected with keystroke-tracking spyware. Is it appropriate for Jerry to...
-
A centrifugal pump has outlet diameter 175 mm, outlet width 50 mm and outlet angle 29. The head characteristics are given by H = 43.5+ 258Q -3770 Q where Q is in m/s and H is in m. The mechanical...
-
From the following September 2022 transactions for K Pullen, you are required to: process the transactions in the accounting equation format enter next to each amount whether it is a debit or a...
-
You are required to process the following transactions for January made by D Brad in the accounting equation format. Note next to each transaction the alphabetical prefix and next to each amount...
-
You are required to prepare a trial balance as at 13 September 2022, using the general ledger for P Barrack prepared in answering question 4.9, where periodic inventory applied. Question 4.9 Refer...
-
From the following September 2022 transactions for K Pullen you are required to: a prepare general journals using the comparative general journal format in the Workbook for both perpetual and...
-
You are required to prepare a trial balance as at 13 September 2022, using the general ledger for P Barrack prepared in answering question 4.8, where perpetual inventory was used. Question 4.8 Refer...
-
It is often the case that marketers want to know what products and services their target customers are planning to buy. This is almost always measured by surveys which are given to respondents simply...
-
What are the two components of a company's income tax provision? What does each component represent about a company's income tax provision?
-
Use the Kruskal-Wallis H test to compare golf ball brands Alpha. Best. Century, and Divot using the data in Table 18.11. Use = .01 and the Excel add-in (MegaStat) output on the right side of Table...
-
A drug company wishes to compare the effects of three different drugs (X, Y, and Z) that are being developed to reduce cholesterol levels. Each drug is administered to six patients at the recommended...
-
A human resources director wishes to assess the benefits of sending a company's managers to an innovative management course. Twelve of the company's managers are randomly selected to attend the...
-
Maribel Ortiz is puzzled. Her company had a profit margin of 10% in 2025. She feels that this is an indication that the company is doing well. Gordon Liddy, her accountant, says that more information...
-
At December 31, 2025, the fair value of non-trading securities is 41,300 and the cost is 39,800. At January 1, 2025, there was a credit balance of 900 in the Fair Value Adjustment Non-Trading...
-
On January 1, 2025, Lennon Enterprises acquires 100% of Ono Ltd. for 220,000 in cash. The condensed statements of financial position of the two companies immediately following the acquisition are as...
Study smarter with the SolutionInn App