Part 1
cash
SCF class
investmts
accounts receivable
inventory
operating assets (net)
=
accounts payable
income taxes pay
debt currently due
salaries & wages payable
interest payable
long term debt
+
paid in capital
retained earnings
explaination of change in retainedearnings
B/S 12/31/12
70,000
0
150,000
350,000
360,000
80,000
0
0
60,000
20,000
400,000
150,000
220,000
a.
1,300,000
1,300,000
b.
2,100,000
2,100,000
revenue earned
(1,250,000)
(1,250,000)
cost of goods sold
c.
2,050,000
(2,050,000)
d.
(1,130,000)
(1,130,000)
e.
(640,000)
(60,000)
(580,000)
salary & wage exp.
f.
(22,000)
(22,000)
income taxes
g.
(40,000)
(20,000)
(20,000)
interest exp
h.
(37,500)
(375,000)
not on incme state
i.
j.
(40,000)
(40,000)
Depreciation exp
k.
l.
70,000
(70,000)
salary & wage exp
m.
debt reclass.
B/S 12/31/13
Part 2
cash
SCF class
Prepaid Insurance
=
unearned rent revenue
sales com payable
+
paid in capital
retained earnings
explaination of change in retainedearnings
2. 6/01/2013
3.adjustment
1.in fin stmts
2. 11/1/2013
3.adjustment
1. in fin stmts
2. no entry
3.adjustment
1. in fin stmts
SPECIFIC TRANSACTIONS AND EVENTS
i. On 12/31/13 Behrend purchased 1,000 sharesof IBM stock to be held as a short-term investment for a total cashpayment of $100,000.
ADJUSTING ENTRIES
k. Recognize interest expense incurred but not paid on outstandingdebt.
m. The actual amount of income tax due for 2013 is 20% ofreported income before tax per the income statement. Make theappropriate adjustment by comparing the actual tax due (must becalculated) vs. the $22,000 estimated tax paid (in transaction f)by recognizing a current asset “tax refund receivable” or a currentliability “taxes due,” depending upon whether there was overpaymentor underpayment of tax for 2013.
Part 2:
For each situation, provide the necessary year-end (12/31/13)adjusting entry in accounting equation format for Doran Corp.
On 6/1/13 Doran paid $1,200 for a one year fire insurance policycovering the period 6/1/13-5/31/14. The full amount was initiallyrecorded as “prepaid insurance.”
On 11/1/13 Doran received $6,000 from a tenant that rents somevacant office space. The rent payment was for the three monthperiod 11/1/13-1/31/14. Doran initially recorded the full amount as“rent revenue.”
Doran pays a 3% sales commission on all sales. Commissions arepaid to salesmen in the month following the month of revenuerecognition. The 2013 income statement will include December 2013sales of $50,000. No entry has been made related to the $1,500 insales commissions that will be paid in January 2014.
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