HAMPTON CORPORATION Balance Sheet December 31, 2011 Cash $ 24,600 Accounts payab

Question

HAMPTON CORPORATION
Balance Sheet
December 31, 2011
Cash $ 24,600 Accounts payable $ 25,600
Accounts receivable 45,500 Common stock ($10 par) 80,000
Allowance for doubtful Retained earnings 127,400
accounts (1,500)
$233,000
Supplies 4,400
Land 40,000
Buildings 142,000
Accumulated depreciationâ€â€
buildings (22,000)
$233,000

During 2012, the following transactions occurred.
1. On January 1, 2012, Hampton issued 1,200 shares of $40 par, 7% preferred stock for
$49,200.
2. On January 1, 2012, Hampton also issued 900 shares of the $10 par value common
stock for $21,000.
3. Hampton performed services for $320,000 on account.
4. On April 1, 2012, Hampton collected fees of $36,000 in advance for services to be performed from April 1, 2012, to March 31, 2013.
5. Hampton collected $276,000 from customers on account.
6. Hampton bought $35,100 of supplies on account.
7. Hampton paid $32,200 on accounts payable.
8. Hampton reacquired 400 shares of its common stock on June 1, 2012, for $28 per share.
9. Paid other operating expenses of $188,200.
10. On December 31, 2012, Hampton declared the annual preferred stock dividend and a

Adjustment data:
1. A count of supplies indicates that $5,900 of supplies remain unused at year-end.
2. Recorded revenue earned from item 4 above.
3. The allowance for doubtful accounts should have a balance of $3,500 at year end.
4. Depreciation is recorded on the building on a straight-line basis based on a 30-year
life and a salvage value of $10,000.
5. The income tax rate is 30%. (Hint: Prepare the income statement up to income before
taxes and multiply by 30% to compute the amount.)

a.) Journalize Transactions and Adjustment Data

Explanation / Answer

DR Cash 49,200 CR Preferred Stock 48,000 CR Paid In Capital in excess of par-preferred stock 1,200 DR Cash 21,000 CR Common Stock 9,000 CR Paid in capital in excess of par-common stock 12,000 DR Accounts Receivable 320,000 CR Service Revenue 320,000 DR Cash 36,000 CR Unearned Revenue 36,000 DR Cash 276,000 CR Accounts Receivable 276,000 DR Supplies 35,100 CR Accounts Payable 35,100 DR Accounts Payable 32,200 CR Cash 32,200 DR Treasury Stock 11,200 CR Cash 11,200 DR Other operating expenses 188,200 CR Cash 188,200 DR Dividends 3,360 CR Cash 3,360 DR Supplies Expense 33,600 CR Supplies 33,600 DR Unearned revenue 36,000 CR Service revenue 36,000 DR Depreciation expense 4,400 CR Accumulated depreciation 4,400 (Post the income statement as another question and I'll do it).

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