Citikonk Corporation balance sheet at 12/31/15 is presented below. During 2016,

Question

Citikonk Corporation balance sheet at 12/31/15 is presented below. During 2016, the following transactions occurred: Purchased $123,600 inventory on account. Perpetual is used. Sales made on account to customers for $180,000 plus 5.5% sales tax. Cost of sales were $111,300. Received $10,000 cash down payment for orders to be shipped next year. Issued 10 year, $40,000 face, 8% bonds on 7/2/16 at 103. The bonds pay interest every 1/1 and 7/1. Collected $160,000 on account. Paid other operating expenses of $27.500. Paid $121,030 on account. Paid $8,000 to the state for some of the sales tax collected from customers. On 1/1/16 sold equipment which cost $20,000 with accumulated depreciation of $8,500 for $4,000 cash. Issued 1,100 shares of $100 par 8% preferred stock for $160.000 cash. Purchased equipment on 7/1/16 for $80,000 for cash. Purchased 400 shares of Citikonk common stock from a disgruntled shareholder for $40 per share. Recorded wages and payroll taxes. Gross wages were $20,000. FICA tax was with held at a 7.55% rate, federal income taxes (FIT) of $2,000 were with held, state income taxes (SIT) of $500 were withheld. The Federal unemployment tax (FUTA) rate is 0.9% and the state unemployment (SUTA) rate is 3.5%. The net wage checks were given immediately to employees. The payroll taxes will be paid to the IRS and state in early January. Requirement A: Journalize 1-13 above Post to the ledger Prepare an unadjusted trail balance which will Be used as the first 2 columns of a worksheet. (See Requirement B.) Four Optional solution templates have been prepared to assist you. They can be accessed by clicking on the Solution tabs below. Use of Microsoft Excel is optional. Hand prepared solutions are also acceptable. Requirement B: Using your unadjusted trial balance above and the following data for adjusting entries, prepare a 10 column worksheet similar to the one in the chapter 4 appendix of your text. Depreciation on equipment purchased in previous years uses straight-line, 5 year life, no salvage value For the 2016 purchase (11 above) use a useful life of 10 years, $15,000 salvage, double declining balance. Accrue Bone interest payable (Premium amortization too.). The prepaid insurance relates to a policy purchased in 2015 that expires at a rate of $80 per month. The company estimates that all accounts receivable are collectible. So don't worry about bad debts. Requirement C: Prepare a Statement of Cash Flows.

Explanation / Answer

1) we journalise as below

Date Particulars Debit Credit 1 Merchandise Inventory 123600                Accounts Payable 123600 2 Accounts Receivables 189900               Sales 180000               Sales Tax Payable 9900 Sales made on account and sales tax recovered = 180000 x 5.5 % , = 9900 Cost of Goods Sold 111300             Merchandise Inventory 111300 Transfer of inventory to cost of goods sold account 3 cash 10000            Unearned Revenue 10000 Unearned revenue recorded 4 Cash 41200              8% Bonds Payable 41200 Issue of $ 40000 bonds at 103 Interest expense 1600             Interest Payable 1600 Interest due at end of year to be payable on 1/ 1 next year 5 Cash 160000         Acccounts Receivables 160000 Amount receivaed ona account 6 Opearating expenses 27500               Cash 27500 opearating expenses paid 7 Accounts Payable 121030             Cash 121030 Amount paid on account 8 Sales Tax Payable 8000           Cash 8000 Amount of saes tax payable paid to state government 9 Cash 4000 Accumulated Depreciation 8500 Loss on sale of asset 7500              Equipment 20000 Equipment of Book Value 11500 ( 20000-8500) sold for 4000 , i.e loss of 7500 10 cash 160000                8% Preferred stock 110000               Paid in capital in excess of par 50000 issue of preferred stock at price in excess of par value 11 Equipment 80000               Cash 80000 equipment purchased 12 Treasury Stock 16000             Cash 16000 Purchase of own common stock 13 Wages expense 20000          FICA Tax withheld 1510          Federral Income Tax withheld 2000          State Income tax withheld 500          Cash 15990 Fica = 20000 x 7.55 % , = 1510 Futa Expense 180 Suta Expense 700                Payroll taxes Payable 880 Amount of unemplyment taxes recorded Futa = 20000 x 0.9 % , = 180 Suta = 20000 x 3.5 % , =700

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.