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 depreciation 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 balanceof $3,500 at year end. 4. Depreciation is recorded on the building on astraight-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.) Instructions: a.) Create the trial balance. b.) Create the closing entries

Explanation / Answer

Hampton Corporation All Amounts in $ Trial Balance as on December 31, 2012 Particulars Debit Balances Credit Balances Opening Adjustments Closing Opening Adjustments Closing Increase Decrease Decrease Increase Cash 24600 382200 231600 175200 0 Accounts Payable 0 25600 32200 35100 28500 Accounts Receivable 45500 320000 276000 89500 0 Common Stock ($10 par) 0 80000 4000 9000 85000 Allowance for Doubtful Accounts 0 1500 2000 3500 Retained Earnings 0 127400 127400 Supplies 4400 35100 33600 5900 0 Land 40000 40000 0 Buildings 142000 142000 0 Accumulated Depreciation 0 0 on Buildings 0 22000 4400 26400 7% Preferred Stock 0 48000 48000 Additional Paid-in Capital 0 7200 13200 6000 Services 0 0 347000 347000 Fees in Advance 0 27000 36000 9000 Other Operating Expenses 188200 188200 0 Dividend on Preferred Stock 3360 3360 0 Dividends Payable 0 3360 3360 Supplies Expense 33600 33600 0 Bad Debts Expense 2000 2000 0 Depreciation on Building 4400 4400 0 Income Tax Expense 35640 35640 Income Tax Payable 0 35640 35640 0 0 Total 256500 1004500 541200 719800 256500 70400 533700 719800 Income Statement for the year ended 31 December 2012 Services 347000 Other Operating Expenses 188200 Supplies Expense 33600 Bad Debts Expense 2000 Depreciation on Building 4400 228200 Net Income before Taxes 118800 Income Tax @ 30% 35640 Net Income post Taxes 83160 Transfer to Retained Earnings Net Income A/c 83160 To Retained Earnings A/c 83160

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