Trial Balance

December 31, 2014

Account Debit Credit

Cash $43,500

Accounts Receivable 54,500

Allowance for Doubtful Accounts 500

Notes Receivable 30,000

Merchandise Inventory 55,000

Land 20,000

Building 150,000

Accumulated Depreciation, Building $15,000

Equipment 50,000

Accumulated Depreciation, Equipment 21,000

Goodwill 26,000

Accounts Payable 25,000

Long Term Notes Payable 75,000

Common Stock, $10 par, 2,000 shares authorized &

outstanding 20,000

Retained Earnings 147,000

Sales Revenue 700,000

Salaries Expense 150,000

Utilities Expense 3,500

Cost of Goods Sold 350,000

Administrative Expenses 55,000

Sales Expenses 15,000 _______

Totals $1,003,000 $1,003,000

Flip is a small company and records adjusting entries & closing entries only at

fiscal (calendar) year end. Correcting and adjusting entries have not been recorded.

 

Additional Information:

a. Notes Receivable is a 3-months, 6% note accepted on December 1, 2014.

b. Long Term Notes Payable is a 5-year, 5% note, that was signed on July 1,

2014. Interest is payable annually.

c. Building is depreciated at 3% per year. There is no salvage value.

d. Equipment is depreciated at 15% year. There is no salvage value.

e. Flip discovered, on December 30th, that the inexperienced bookkeeper recorded

in the general journal and general ledger that day’s $1,500 cash sales as a debit to

Accounts Receivable and a credit to Sales Revenue.

f. The year-end physical count for Merchandise Inventory reflected a value of

$52,500. Any difference in value will not be considered theft or loss.

g. Salaries for the last half of December, payable in January, amount to $6,500.

h. Flip estimates that of the Accounts Receivable 5% will not be collectable.

 

a. Prepare in journal form, any required correcting entries

b. Prepare in journal form, all end-of-the period adjusting entries

c. Prepare a December adjusted trial balance

d. Prepare a classified balance sheet for the year ended December 31, 2014

e. Prepare in journal form, the closing entries for the year ended December 31,

2014

 

uses the period method and had the following inventory events during January:

Date

Units

Purchased

Unit Cost Date Units Sold

Unit Sales

 

Price

Jan. 1 150 $7.00 Jan. 2 100 $10.00

Jan. 5 225 7.25 Jan. 7 125 10.00

Jan. 10 100 7.50 Jan. 12 75 12.00

Jan. 15 150 7.50 Jan. 17 200 12.00

Jan. 20 200 7.75 Jan. 24 150 15.00

Jan. 25 150 8.00

Jan. 30 75 8.25

Note: January 1 amount was the beginning inventory and unit value.

 

 

Required:

a. Calculate cost of goods available for sale.

b. Calculate the dollar value of sales.

c. Calculate the value of Ending Inventory and Cost of Good Sold under the following

independent assumptions:

1) LIFO method

2) FIFO method

 

Required: Prepare Flip’s Supply Co. general journal entries for the following

transactions:

Jan. 1 Accepted Flop’s 120 days, 10% note, as settlement of an outstanding

$15,000 account receivable for goods sold last year

Jan. 15 Purchased $10,000 Equipment from Floozy, signing a 9 month, 12% note

Jan. 25 Loaned Flam Co. $30,000 cash, accepting a 90 days, 10% note

Jan. 31 Prepared accrual adjusting entry for any interest revenue

Apr. 25 Received payment in full from Flam Co. for outstanding note & interest

May 1 Received payment in full from Flop Co. for outstanding note & interest

Oct. 15 Paid in full.

 

Purchased a refrigerated delivery truck for $65,000 on April 1, 2016. The

plan is to use the truck for 4 years and then replace it. At the end of it’s useful life the

truck is expected to have a salvage value of $10,000.

a. Prepare the depreciation table for Flip’s truck assuming that the company uses

the straight-line method for depreciation.

b. Prepare the depreciation table for Flip’s truck assuming that the truck was

purchased on January 1, 2016 and the company uses the double-declining-balance

depreciation method.

c. Compute the depreciation expense for 2016 for Flip’s truck assuming the truck

has an expected life of 200,000 miles and during 2016 the truck was driven

24,540 miles. Round your depreciation expense per mile to three decimal places.

 

 

Flip Company has a January 15 mid-month gross salaries expense of $25,000. All is

subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%)

and federal income tax (15%) withholdings. Additionally, all is subject to employer taxes

to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest

penny.)

Required:

a. Prepare the general journal entry to record the employer’s payroll liability.

b. Prepare the general journal entry to record the employer’s payroll tax liability.

c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a)

and (b) on January 22.

 

 

Flip Company at the end of the fiscal 2014 year has the following information: Credit

Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000

and Allowance for Doubtful Accounts with a debit o $1,500.

 

a. Prepare the general journal entry to record the end of the year adjusting entry if

Flip uses 0.5% of Net Credit Sales as the basis for determining Bad Debt Expense.

b. Prepare the general journal entry to record the end of the year adjusting entry if

Flip uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense.