Puzzle Corporation\'s preliminary Trial balance as of December 31, 2018 is prese
ID: 2537519 • Letter: P
Question
Puzzle Corporation's preliminary Trial balance as of December 31, 2018 is presented below. All 2018 transactions have been recorded except for the items described below. Debit Credit Cash $ 29,636 Accounts Receivable 48,300 Inventory 20,423 Land 65,400 Buildings 125,000 Equipment 86,250 Allowance for Doubtful Accounts $ 735 Accumulated Depreciation-Buildings 24,600 Accumulated Depreciation-Equipment 34,200 Accounts Payable 16,785 Interest Payable 0 Dividends Payable 0 Unearned Rent Revenue 13,000 Income Tax Payable 0 Bonds Payable 0 Discount on Bonds Payable 0 Common Stock ($8 par) 30,000 Paid in Capital in Excess of Par-Common Stock 11,834 Preferred Stock ($25 par) 0 Paid in Capital in Excess of Par-Preferred Stock 0 Retained Earnings 105,862 Treasury Stock 0 Cash Dividends 0 Sales Revenue 585,245 Rent Revenue 0 Bad Debt Expense 0 Interest Expense 0 Cost of Goods Sold 331,578 Depreciation Expense 0 Other Operating Expenses 39,465 Salaries and Wages Expense 76,209 Income Tax Expense 0 Total $ 822,261 $ 822,261 CONTINUED Unrecorded transactions 1. On January 1, 2018, Puzzle issued 1,000 shares of $25 par, 6% preferred stock for $36,500. 2. On January 1, 2018, Puzzle also issued 1,000 shares of common stock for $45,275. 3. On January 1, 2018, Puzzle issued $46,000, 6.25%, 8 year bonds when the market rate was 7%. Interest is to be paid annually on each January 1, beginning January 1, 2019. 4. Puzzle reaquired 450 shares of its common stock on May 5 for $48 per share. 5. On December 31, 2018, Puzzle declared the annual preferred dividend as well as a $1.75 per share dividend on the outstanding common stock, all payable in cash on January 15, 2019. 6. Puzzle estimates that the total amount of accounts receivable that is uncollectible at year end is $3,289. 7. The building is being depreciated using the straight line method over 25 years. The salvage value is $22,500. 8. The equipment is being depreciated using the straight line method over 9 years. The salvage value is $9,300. 9. The unearned rent was collected on November 1, 2018. It was receipt of 5 months' rent in advance. 10. The 6.25% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2018, has not been recorded. Puzzle uses the effective interest method of amortization. 11. The Puzzle Corporation must make an adjusting entry to accrue income tax expense on Income Before Income Tax at a rate of 26.5%. The income taxes will not be paid until March 2019. Instructions: (a) Prepare Journal entries for the transactions listed above. Round final answers if necessary to -0- decimals (to the nearest dollar, do not show cents). (b) Prepare an updated December 31, 2018 trial balance, reflecting the unrecorded transactions. (c) Prepare a multiple-step income statement for the year ending December 31, 2018. (d) Prepare a retained earnings statement for the year ending December 31, 2018. (e) Prepare a classified balance sheet as of December 31, 2018. Puzzle Corporation's preliminary Trial balance as of December 31, 2018 is presented below. All 2018 transactions have been recorded except for the items described below. Debit Credit Cash $ 29,636 Accounts Receivable 48,300 Inventory 20,423 Land 65,400 Buildings 125,000 Equipment 86,250 Allowance for Doubtful Accounts $ 735 Accumulated Depreciation-Buildings 24,600 Accumulated Depreciation-Equipment 34,200 Accounts Payable 16,785 Interest Payable 0 Dividends Payable 0 Unearned Rent Revenue 13,000 Income Tax Payable 0 Bonds Payable 0 Discount on Bonds Payable 0 Common Stock ($8 par) 30,000 Paid in Capital in Excess of Par-Common Stock 11,834 Preferred Stock ($25 par) 0 Paid in Capital in Excess of Par-Preferred Stock 0 Retained Earnings 105,862 Treasury Stock 0 Cash Dividends 0 Sales Revenue 585,245 Rent Revenue 0 Bad Debt Expense 0 Interest Expense 0 Cost of Goods Sold 331,578 Depreciation Expense 0 Other Operating Expenses 39,465 Salaries and Wages Expense 76,209 Income Tax Expense 0 Total $ 822,261 $ 822,261 CONTINUED Unrecorded transactions 1. On January 1, 2018, Puzzle issued 1,000 shares of $25 par, 6% preferred stock for $36,500. 2. On January 1, 2018, Puzzle also issued 1,000 shares of common stock for $45,275. 3. On January 1, 2018, Puzzle issued $46,000, 6.25%, 8 year bonds when the market rate was 7%. Interest is to be paid annually on each January 1, beginning January 1, 2019. 4. Puzzle reaquired 450 shares of its common stock on May 5 for $48 per share. 5. On December 31, 2018, Puzzle declared the annual preferred dividend as well as a $1.75 per share dividend on the outstanding common stock, all payable in cash on January 15, 2019. 6. Puzzle estimates that the total amount of accounts receivable that is uncollectible at year end is $3,289. 7. The building is being depreciated using the straight line method over 25 years. The salvage value is $22,500. 8. The equipment is being depreciated using the straight line method over 9 years. The salvage value is $9,300. 9. The unearned rent was collected on November 1, 2018. It was receipt of 5 months' rent in advance. 10. The 6.25% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2018, has not been recorded. Puzzle uses the effective interest method of amortization. 11. The Puzzle Corporation must make an adjusting entry to accrue income tax expense on Income Before Income Tax at a rate of 26.5%. The income taxes will not be paid until March 2019. Instructions: (a) Prepare Journal entries for the transactions listed above. Round final answers if necessary to -0- decimals (to the nearest dollar, do not show cents). (b) Prepare an updated December 31, 2018 trial balance, reflecting the unrecorded transactions. (c) Prepare a multiple-step income statement for the year ending December 31, 2018. (d) Prepare a retained earnings statement for the year ending December 31, 2018. (e) Prepare a classified balance sheet as of December 31, 2018.Explanation / Answer
Journal Entries for Puzzle Corporation
To Paid in capital in excess of par- Preferred stock
To Paid in capital in excess of par- Common stock
Trial Balance of puzzle Corporation as of 31 December 2018
Income statement of Puzzle Corporation as of 31st December, 2018
Statement of retained earnings as of 31st December 2018
Retained earnings balance as of 1 january 2018
Journal Entries for Puzzle Corporation
1 Cash a/c Dr 36500 To 6% Preference shares a/c Cr 25000To Paid in capital in excess of par- Preferred stock
Cr 11500 2 Cash a/c Dr 45,275 To Equity shrare capital a/c Cr 8,000To Paid in capital in excess of par- Common stock
Cr 37,275 3 Cash a/c Dr 46,000 To 8 years bonds a/c Cr 46,000 4 Common stock a/c Dr 4,500 Additional paid-in capital a/c Dr 17,100 To Cash a/c Cr 21600 5 Retained earnings a/c Dr 6563 To dividend payable a/c Cr 6563 6 Bad debts a/c Dr 3,289 To accounts receivable a/c Cr 3,289 7 Depreciation on Building a/c Dr 4,100 To building a/c Cr 4,100 8 Depreciation on equipment a/c Dr 8,550 To equipment a/c Cr 8,550 9 Cash a/c Dr 13,000 To rent received in advance a/c Cr 13,000 10 Interest expense a/c Dr 2875 To interest payable a/c Cr 2875 11 Income tax expense Dr 31,777 To income tax payable Cr 31,777Trial Balance of puzzle Corporation as of 31 December 2018
Particulars Debit Particulars Credit Cash 148,811 Accounts payable 16,785 Accounts Receivable 45,011 Rent received in advance 13,000 Inventory 20,423 Common stock 33,500 Land 65,400 Paid in capital in excess of par- Common stock 32,009 Building 96300 Preference stock 25,000 Equipment 43500 Paid in capital in excess of par- Prefered stock 11,500 Bad Debts 2,554 Retained earnings 99,299 Cost of goods sold 331,578 Sales revenue 585,245 Other operating expenses 39,465 Interest payable 2,875 Salaries and wages 76,209 Dividend payable 6563 Interest expense 2,875 8 years bonds 46000 Depreciation on Equipment 8,550 Unearned rent revenue 13,000 Depreciation on building 4100 884,776 884,776Income statement of Puzzle Corporation as of 31st December, 2018
Particulars Amount Particulars Amount Revenue 585245 COGS 331578 Other operating expenses 39,465 Salaries and wages 76,209 Interest expense 2,875 Depreciation on Equipment 8,550 Depreciation on building 4100 Bad Debts 2,554 Profit before tax 119914 Tax expense 31777 Profit after tax 88137 585245 585245Related Questions
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