Clear Images Lid. has been in operation for several years. It purchases, customizes, and sells studio...
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Clear Images Lid. has been in operation for several years. It purchases, customizes, and sells studio sets for its clients. The company's post-dosing trial balance at July 31, 2015, the end of its fiscal year, is presented below: CLEAR IMAGES LTD. Post-Closing Trial Balance July 31, 2015 Credit Debit S 170,000 2,700,000 Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Equipment Accumulated depreciation-equipment Accounts payable Bank loan payable Common shares Retained carnings $ 300,000 500,000 194,000 73,669 1,009,000 350,000 300,000 1,531.331 $3,564,000 $3,564,000 The company had a limited amount of business activity in August 2015 because of holidays for both the company and its major customers. You have been hired on a temporary basis to update the company's records for August. The August transactions and adjustments are presented below: 1 Paid $20,000 for office expenses and $3,600 for the August rent. 2 Accepted a six-month, 8% note in exchange for Chen Enterprises' overdue account receivable of $100,000. 3 Sale on account to Chavier Lid. for as00,000, terma 2/10, n/30. Cost of goods sold, $270,000, The company uses a perpetual inventory system. 8 Determined that an account recelvable from Densmore Ltd. of $70,000 is uncollectible. 9 A S300,000 partial payment on account was received from Chavier (see August 3 transaction). 10 Old equipment was sold for $6,00. The equipment's original cost was 544,000; accumulated depre- clation to the date of disposal was $36,169. 14 Paid a $10,000 income tax instalment. Aug. 21 Purchased a patent for $24,000 cash. The estimated useful life of the patent is five years; the legal life, 20 years. 31 Recorded bank credit card sales from sales of digital library images for the month, $75.000. The cost of goods sold is $35,000. 31 The monthly bank statement revealed the following unrecorded items: interest on bank loan, $1,500, and bank service charges, $1,130 which included credit card and other bank fees. 31 Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubt- ful accounts totalled $320,000 at month end. 31 Recorded depreciation for the month on the remaining equipment that cost $150,000 and is still in use. Useful life of all equipment is estimated to be four years with no residual value. The straight- line method of depreciation is used and depreciation is calculated to the nearest month. 31 Recorded and paid salaries for the month of $100,000. 31 Accrued interest on the Chen Enterprises' note receivable (see August 2 transaction). 31 Recorded amortization on the patent (see August 21 transaction). A full month's amortization is recorded on any intangible assets acquired during the month. Instructions (a) Prepare T accounts and enter the July 31 balances. (b) Record the August transactions and adjustments. (c) Post the journal entries from part (b) to the T accounts. (d) Prepare an adjusted trial balance at August 31. (e) Prepare an (1) income statement, (2) statement of changes in equity, and (3) statement of financial position at August 31. Clear Images Lid. has been in operation for several years. It purchases, customizes, and sells studio sets for its clients. The company's post-dosing trial balance at July 31, 2015, the end of its fiscal year, is presented below: CLEAR IMAGES LTD. Post-Closing Trial Balance July 31, 2015 Credit Debit S 170,000 2,700,000 Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Equipment Accumulated depreciation-equipment Accounts payable Bank loan payable Common shares Retained carnings $ 300,000 500,000 194,000 73,669 1,009,000 350,000 300,000 1,531.331 $3,564,000 $3,564,000 The company had a limited amount of business activity in August 2015 because of holidays for both the company and its major customers. You have been hired on a temporary basis to update the company's records for August. The August transactions and adjustments are presented below: 1 Paid $20,000 for office expenses and $3,600 for the August rent. 2 Accepted a six-month, 8% note in exchange for Chen Enterprises' overdue account receivable of $100,000. 3 Sale on account to Chavier Lid. for as00,000, terma 2/10, n/30. Cost of goods sold, $270,000, The company uses a perpetual inventory system. 8 Determined that an account recelvable from Densmore Ltd. of $70,000 is uncollectible. 9 A S300,000 partial payment on account was received from Chavier (see August 3 transaction). 10 Old equipment was sold for $6,00. The equipment's original cost was 544,000; accumulated depre- clation to the date of disposal was $36,169. 14 Paid a $10,000 income tax instalment. Aug. 21 Purchased a patent for $24,000 cash. The estimated useful life of the patent is five years; the legal life, 20 years. 31 Recorded bank credit card sales from sales of digital library images for the month, $75.000. The cost of goods sold is $35,000. 31 The monthly bank statement revealed the following unrecorded items: interest on bank loan, $1,500, and bank service charges, $1,130 which included credit card and other bank fees. 31 Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubt- ful accounts totalled $320,000 at month end. 31 Recorded depreciation for the month on the remaining equipment that cost $150,000 and is still in use. Useful life of all equipment is estimated to be four years with no residual value. The straight- line method of depreciation is used and depreciation is calculated to the nearest month. 31 Recorded and paid salaries for the month of $100,000. 31 Accrued interest on the Chen Enterprises' note receivable (see August 2 transaction). 31 Recorded amortization on the patent (see August 21 transaction). A full month's amortization is recorded on any intangible assets acquired during the month. Instructions (a) Prepare T accounts and enter the July 31 balances. (b) Record the August transactions and adjustments. (c) Post the journal entries from part (b) to the T accounts. (d) Prepare an adjusted trial balance at August 31. (e) Prepare an (1) income statement, (2) statement of changes in equity, and (3) statement of financial position at August 31.
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Answer rating: 100% (QA)
Answer Solution a Aug 1 Office Expense 20000 Cash 20000 Rent Expense 3600 Cash 3600 2 Notes Receivable 100000 Accounts Receivable 100000 3 Accounts Receivable 500000 Sales 500000 Cost of Goods Sold 27... View the full answer
Related Book For
Service Management Operations Strategy Information Technology
ISBN: 978-0077841201
8th edition
Authors: James Fitzsimmons, Mona Fitzsimmons, Sanjeev Bordoloi
Posted Date:
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