Konkweiser Inc. prepares quarterly financial statements. The balance sheet at 12
ID: 2471265 • Letter: K
Question
Konkweiser Inc. prepares quarterly financial statements. The balance sheet at 12/31/15 is presented below.
During the first quarter of 2016, the following transactions occurred:
1. Konkweiser performed services during the first quarter for $140,000 on account.
2. On 2/1/16, Konkweiser collected fees of $12,000 in advance for $1,000 of services to be performed each month from 2/1/16 to 1/30/17.
3. On 2/1/16, Konkweiser purchased computer equipment for $9,000 plus sales taxes of $600. $3,000 cash was paid with the rest on account. Check #455 was used.
4. Konkweiser collected $133,000 on 3/5/16 from customers on account.
5. Konkweiser paid $16,370 on accounts payable. Check #456 was used.
6. Paid other operating expenses of $97,525. Check #457 was used.
7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/16. Check #458 was used.
8. Wrote off a customer receivable of $200 who went bankrupt.
9. On 3/31/16, Konkweiser sold for $1,620 cash equipment which originally cost $11,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of 12/31/15 was $8,000 using the straight line method. Record depreciation on the equipment sold, then record the sale.
10. AJE: Record revenue earned from item 2 above.
11. AJE: $26,000 of accounts receivable at 3/31/16 are not due yet. The bad debt percentage for these is 4%. The balance of A/R are past due. The bad debt percentage for these is 23.75%. Record bad debt expense. HINT: You will need to compute the balance in accounts receivable before calculating this.
12. AJE: Depreciation is recorded on the equipment still owned at 3/31/16. The new equipment purchased in February is being depreciated on a double declining basis over 5 years and salvage value was estimated at $1,000. The old equipment still owned is being depreciated over a 10 year life using straight line with no salvage value.
13. AJE: Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000. 14. AJE: Amortization is recorded on the patent.
15. The company reconciles its bank statement every quarter. Information from the 12/31/15 Bank Reconciliation is:
Deposit in transit: 12/30/15 $5,000
Outstanding Checks #440 3,444
#452 333
#453 865
#454 5,845
The Bank statement received for the quarter ended 3/31/16 is as follows:
Beginning balance per bank $ 29,787
Deposits: 1/2/16 $5,000, 2/2/16 $12,000, 3/6/16 $133,000 150,000
Checks: #452 $333, #453 $865, #456 $16,370, #457 $97,525 (115,093)
Debit memo: Bank service charge (Record as operating expense) ( 100)
Ending bank balance $ 64,594
16. AJE: The income tax rate is 30%. This amount will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.
Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet. Prepare a bank reconciliation in good form. Use your own paper. Record the necessary AJE. Journalize and post all other adjusting entries. Prepare an income statement and a retained earnings statement for the quarter ended 3/31/16 and a classified balance sheet at 3/31/16.
Balance Sheet 12/31/2015 Cash $ 24,300 Accounts payable $12,370 Accounts receivable 22,400 Common stock 90,000 Allowance for doubtful accounts (1,200) Retained earnings 53,130 Equipment 20,000 $155,500 Accumulated depreciation - equipment (15,000) Land 20,000 Building 100,000 Accumulated depreciation - building (15,000) $ 155,500Explanation / Answer
Ans;
Date Accounts Title Dr Cr Account Receivable $140,000 Service Revenue $140,000 (Being services performed on account) 2/1/2016 Cash $12,000 Unearned Service Fees $12,000 (Being fees received in advance) 2/1/2016 Computer Equipment $9,600 Cash 3000 Bank (Check no 455) 6600 (Being equipment purchased, sales tax included paid through check and cash) 3/5/2016 Cash $133,000 Accounts Receivable 133000 (Being cash received) Accounts Payable 16370 Bank 16370 (check no 456 issued) Operating Expenses 97525 Bank 97525 (Being check no 456 issued) Patent Bank 9600 (Being patent purchased check no. 458) 9600 Allowance for Doubtful Debts 200 Accounts receivable 200 (Being customer declared bankrupt) Cash 1620 Loss on sale of equipment (11000-8000-1620) 1380 Accumulated Depreciation 8000 Equipment 11000 (Being sale of equipment at a loss) Unearned Fees $3,000 Service Fees Revenue 3000 (feesr earned for 3 months) Allowance for Doubtful Debts 800 Acconts Receivable 800 (Accounts receivable=22400+140000-133000-200=29200 balance on 26000*4% and balance (29200-26000)*23.75%=1800 already 1200-200=$1000 is credit balance in allowance a/c so $1000more will be credited) Depreciation-Equipment(20000-11000)/10 900 Accumulated Depreciation equipment 900 (Being old equipment depreciated at SLM0 Depreciation-Equipment 860 Accumulated Depreciation equipment 860 (Being double declining method used its double of SLM (9600-1000)/5*200%*3/12 Depreciation-Building (100000-10000)/30 3000 Accumulated Depreciation Building 3000 (Being depreciation recorded) Amortization Expense-Patent 9600/10 960 Accumulataed Amortization Expense 960 Balance as per Bank Statement $64,594 Add;Deposit in Transit $5,000 Less: Outstanding checks 3444+333+865+5845 -10487 Corrected Balance $59,107 Opearting Exepnese 100 Bank 100 Unadjusted Trial balance Adjusting Journal Entries Adjusted Trial Balance Income Statement Balance Sheet Dr Cr Dr Cr Dr Cr Dr Cr Assets Liabilities Cash $54,095 100 53995 53995 Accounts Receivable 29200 29200 29200 Allowance for doubtful debts 1000 800 1800 1800 Land 20000 20000 20000 Equipment (9000+9600) 18600 18600 18600 Accumulated Depreciation - equipment 7000 1760 8760 -8760 Building 100000 100000 100000 Accumulated Depreciation - Building 15000 3000.00 18000 -18000 Patent 9600 9600 9600 Accumulated Depreciation - Patent 960.00 960.000 -960 Accounts Payable (12370-16370) 4000 4000 0 4000 Unearbned Revenue 12000 3000 9000 9000.00 Common Stock 90000 90000 90000.00 Retained Earnings 53130 0 53130 94605 Services Revenue 140000 3000 143000 143000 Depreciation - equipment 1760 1760 1760 Depreciation - Building 3000.00 3000.00 3000 Depreciation - Patent 960.00 960.00 960 Operating Expenses 93525 100 93625.00 93625 Bad Debt Expense 800.0 800.00 800 Loss on sale of Equipment 1380 1380 1380 Net Profit 41475 330400 318130 9620 9620.000 338720 322850 143000 143000 209475 193605Related Questions
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