GeneralProducts Inc is incorporated in Nevada, USA on Jan 1,2013 to takeover a local retail chain. The objective of the company is to supply goods of every day use to customers at the most competitive prices. GeneralProducts has chain of stores throughout USA. The retial operations of the company are so designed that customers can shop seamlessly in stores and online.

Balance Sheet of GeneralProducts Inc. on Dec 31, 2015
		Assets						$
		Current Assets
		Cash and cash equivalent					11,980
		Accounts Receivables					20,520
		Inventory					317,060
		Inventory of Premiums ( @$1.10 per premium)					660
		Total Current Assets						350,220
		Long Term Assets
		Investments					66,775
		Property Plant and Equipment				750,000
		Less Accumulated Depreciation				90,000	660,000
		Total Long Term Assets						726,775
		Intangible Assets
		Trade Marks						190,000
		Total Assets						1,266,995
		Liabilities and Shareholders' Equity
		Current Liabilities
		Accounts Payable					50,722
		Liability for Premiums and Coupons					550
		5% Short Term Notes Payable due on March 31,2016					8,000
		Accrued Interest on 6% Bonds Payable					3,000
		Total Current Liabilities						62,272
		6% Bonds Payable due 2020					100,000
		Unamortized Discount on Bonds Payable					6,732	93,268
		Total Liabilities						155,540
		Stockholder's Equity
		Common Stock
		125,000 shares, par value $1 authorized
		100,000 shares issued and outstanding					130,000
		Paid inCapital in Excess of Par					946,000
		Retained Earnings					35,455
		total nStockholders' Equity						1,111,455
		Total Liabilities and Stockholders' Equity						1,266,995

GeneralProducts provides us financial and business related data for 2016 below.

1 Trades Marks were acquired for $200,000 in 2015.Estimated useful at the time of acquisition was 20years

There was a litiagation brought out by a competitor against the Trade Mark. GeneralProduct could successfully

defended this litigation at a cost of $ 45,000. New useful life of Trade Mark is estimated to be 25 years from the date of acquisition.

2 All sales are on credit and totalled $ 940,560. COGS are $780,650.

3Included in the total sales of $940,560 are the sales of GeneralProducts brand 6000 soap powder boxes

GeneralProducts includes one coupon in every soap powder box. Customers can redeem 4 coupons for one

Kitchen untensil. Based on past experience 60% of the coupons are redeemed by customers.

3 During 2016 3,400 coupons were redeemed. Purchase of premiums during 2016 totalled 1,000 premiums @ $1.10 each on credit.

46% Bonds Payable are issued on Jan 1 2015 to yield 8% interest. Interest is paid semiannualy on Jan 1st and June 30th.

General Products can redeem these Bonds any time after June 30,2016 @ 101.

4 5To take advantage of lower interst rates and to finance the redemption of 6% Bonds, on Sept.1st 2016, GeneralProducts issued 5%Bonds in the face value of $100,000 to yield 6%

5 The maturity period of these 5% Bonds is 10 years and interest is paid semiannually on 1st Jan and 30th June.

The proceeds from the issue of 5% Bonds are used to redeem 6% Bonds Payable @ 101 on Sept.1st 2016.

6 Selling Administrative Expenses excluding depreciation are $87,345. PP&E is depreciated on Striaght Line Method over 25 years of life.

7 Cash collected from customers totalled $906,450

8 Cash paid to suppliers for credit purchases totalled $728,254

9 Purcahses of inventory totalled $ 689,525.All purchases are on credit.

10 GeneralProducts purchased Land for $30,000 for construction of building

Requirements
1 Record the necessary journal entries for 2016

2 Prepare Income Statement and Retained Earnings Statement for the year 2016 (Net Income is $18,200)

3 Prepare Balance Sheet on December 31,2016 (total Asset is $1,238,692)

Answer rating: 100% (QA)

The maturity period of these 5 Bonds is 10 years and interest is paid semiannually on 1st Jan and 30th June The proceeds from the issue of 5 Bonds are used to redeem 6 Bonds Payable 101 on Sept1st 201... View the full answer