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

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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 1.20 per share dividend on the outstanding common stock , all payable on January 15, 2013 11. An account receivable of $1700 which originated in 2011 is written off as uncollectiable. 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

Working Trans. No Assets = Liabilities Stockholder equity Income Expenses Paticulars Amt Paticulars Amt Paticulars Amt Paticulars Amt Paticulars Amt 1 Cash 49200 8% Preferrence Stock (1200*40) 48000 paid in capital in excess of par 1200 2 Cash 21000 Common stock 900*10 9000 paid in capital in excess of par- Comon Stock (21000-9000) 12000 3 Accounts Receivable 320000 sales 320000 4 Cash 36000 Unearned Revenue 36000 5 Cash 276000 Accounts Receivable -276000 6 Supplies 35100 Accounts Payable 35100 7 Cash -32200 Accounts Payable -32200 8 Cash (400*28) -11200 Treasury Stock -11200 9 Cash -188200 Operating Expenses 188200 10 Dividend Payable (1200*40*8%)+((8000+900-400)*1.2) 14040 Retained Earnings -14040 11 Accounts Receivable -1700 Allowance for Doubtfuldebts -1700 12 Supplies (35100+4400-5900) -33600 Supplies Expenses 33600 13 Unearned Revenue -36000 Sales 36000 14 Allowance for Doubtful Debts 3700 Bad Debt Expense 3500-(1500-1700) 3700 15 Accumulated Depreciation 4400 Depreciation Expense (142000-10000)/30 4400 Income Before taxes 126100 Income Tax (30%) 37830 Income after Tax 88270 Unadjusted Trial balance Adjusting Entries Adjusted Trial balance Closing Trial Balance Particulars Opening Bal added in unadjusted Trial balance Dr Cr Dr Cr Dr Cr Dr Cr Cash 24600 175200 175200 175200 Accounts Receivable 45500 87800 87800 87800 Supplies 4400 39500 33600 5900 5900 Land 40000 40000 40000 40000 Building 142000 142000 142000 142000 Accumulated Depreciation 22000 22000 4400 26400 26400 Allowance for Doubtful Debts 1500 200 3700 3500 3500 Accounts Payable 25600 28500 28500 28500 Unearned Revenue 36000 36000 0 0 Dividend Payable 14040 14040 14040 Income Tax Payable 37830 37830 37830 Common Stock 80000 89000 89000 89000 8% Preferred Stock 48000 48000 48000 Paid in capital in excess of Par-Pref Stock 1200 1200 1200 Paid in capital in excess of Par-CommonStock 12000 12000 12000 Retained Earnings 127400 113360 113360 201630 Treasury stock 11200 11200 11200 Sales 320000 36000 356000 ( Operating expenses 188200 188200 Supplies expenses 33600 33600 Depreciation 4400 4400 BadDebt Expenses 3700 3700 Income Tax Expense 37830 37830 256500 256500 684100 684100 115530 115530 729830 729830 462100 462100 0 Accounts Title Dr Cr Income Summary 229900 Operating expenses 188200 Supplies expenses 33600 Depreciation 4400 BadDebt Expenses 3700 sales 356000 Income Summary 356000 Income Summary 88270 Retained earnings 88270 Retained earnings 14040 Dividend Payable 14040

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