ACC 301 Financial Reporting I Spring 2018 Accounting Cycle Practice Set Attached

Question

ACC 301

Financial Reporting I

Spring 2018

Accounting Cycle Practice Set

Attached is the unadjusted trial balance for Surfs Up, Inc.

Instructions:

1.         Construct T-accounts and enter the balances shown.

2.         The following adjusting entries have been identified:

            a.         Bad debt expense is estimated to be $8,000.

b.         Annual depreciation expense on the Equipment is $16,000 and annual depreciation expense for building is $9,000.

c.         Prepaid Insurance is for 2 years of insurance paid on 1/1/17. Record the amount for 2017.

d.         The note payable ($270,000) has interest of 6% per year and the interest is payable on 1/1/18. Record the interest for 2017.

e.         Salaries and wages earned but unpaid as of year-end are $10,750 (sales) and $4,950 (administrative).

            f.          At year-end, $1,660 of Supplies remain on hand.

            g.         $10,000 of the unearned rent revenue was earned as of 12/31/17.

h.           Utilities expense incurred for December, but unpaid and unrecorded was $4,000.

i.          Assume no income tax expense and do not calculate earnings per share.

Prepare the adjusting journal entries (include explanations) and post the entries to the appropriate T-accounts (construct additional T-accounts as necessary).

3.         Prepare an adjusted trial balance.

4.         Prepare a classified balance sheet and a multiple-step income statement in good form.

5.         Prepare closing journal entries and post to the T-accounts.

6.         Prepare a post-closing trial balance.

You should use Excel or a similar spreadsheet program to prepare your work. (you T- accounts can be prepared by hand and postings can be by hand) Your grade will be based on both the accuracy and the organization of your work product. Please submit a hard copy of your work or upload all pieces on blackboard under the assignment. (Submit adjusting journal entries, adjusted trial balance, classified balance sheet, multistep income statement, closing journal entries, post closing trial balance and your final T-accounts after posting closing entries)

Surfs Up, Inc.

Trial Balance

31-Dec-17

Debit

Credit

Cash

$45,760

Accounts Receivable

$83,350

Allowance for Doubtful Accounts

$4,000

Supplies

$7,110

Inventory

$315,240

Prepaid Insurance

$14,000

Equipment

$422,000

Accumulated Depreciation - Equipment

$118,000

Building

$500,000

Accumulated Depreciation - Building

$15,000

Land

$100,000

Notes Payable

$270,000

Accounts Payable

$89,500

Unearned Rent Revenue

$18,000

Common Stock

$110,000

Retained Earnings

$265,000

Sales Revenue

$2,100,000

Rent Revenue

$64,000

Cost of Goods Sold

$937,440

Salaries and Wages Expense - sales

$273,500

Advertising Expense-Sales

$78,100

Utilities Expense-Administrative

$49,000

Telecommunications -Administrative

$32,000

Salaries and Wages Expense - administrative

$196,000

$3,053,500

$3,053,500

$ 0

ACC 301

Financial Reporting I

Spring 2018

Accounting Cycle Practice Set

Attached is the unadjusted trial balance for Surfs Up, Inc.

Instructions:

1.         Construct T-accounts and enter the balances shown.

2.         The following adjusting entries have been identified:

            a.         Bad debt expense is estimated to be $8,000.

b.         Annual depreciation expense on the Equipment is $16,000 and annual depreciation expense for building is $9,000.

c.         Prepaid Insurance is for 2 years of insurance paid on 1/1/17. Record the amount for 2017.

d.         The note payable ($270,000) has interest of 6% per year and the interest is payable on 1/1/18. Record the interest for 2017.

e.         Salaries and wages earned but unpaid as of year-end are $10,750 (sales) and $4,950 (administrative).

            f.          At year-end, $1,660 of Supplies remain on hand.

            g.         $10,000 of the unearned rent revenue was earned as of 12/31/17.

h.           Utilities expense incurred for December, but unpaid and unrecorded was $4,000.

i.          Assume no income tax expense and do not calculate earnings per share.

Prepare the adjusting journal entries (include explanations) and post the entries to the appropriate T-accounts (construct additional T-accounts as necessary).

3.         Prepare an adjusted trial balance.

4.         Prepare a classified balance sheet and a multiple-step income statement in good form.

5.         Prepare closing journal entries and post to the T-accounts.

6.         Prepare a post-closing trial balance.

You should use Excel or a similar spreadsheet program to prepare your work. (you T- accounts can be prepared by hand and postings can be by hand) Your grade will be based on both the accuracy and the organization of your work product. Please submit a hard copy of your work or upload all pieces on blackboard under the assignment. (Submit adjusting journal entries, adjusted trial balance, classified balance sheet, multistep income statement, closing journal entries, post closing trial balance and your final T-accounts after posting closing entries)

Surfs Up, Inc.

Trial Balance

31-Dec-17

Debit

Credit

Cash

$45,760

Accounts Receivable

$83,350

Allowance for Doubtful Accounts

$4,000

Supplies

$7,110

Inventory

$315,240

Prepaid Insurance

$14,000

Equipment

$422,000

Accumulated Depreciation - Equipment

$118,000

Building

$500,000

Accumulated Depreciation - Building

$15,000

Land

$100,000

Notes Payable

$270,000

Accounts Payable

$89,500

Unearned Rent Revenue

$18,000

Common Stock

$110,000

Retained Earnings

$265,000

Sales Revenue

$2,100,000

Rent Revenue

$64,000

Cost of Goods Sold

$937,440

Salaries and Wages Expense - sales

$273,500

Advertising Expense-Sales

$78,100

Utilities Expense-Administrative

$49,000

Telecommunications -Administrative

$32,000

Salaries and Wages Expense - administrative

$196,000

$3,053,500

$3,053,500

$ 0

Explanation / Answer

$5,450

1. T accounts General Ledger Cash 31/12/2017 $45,760 Accounts Receivable 31/12/2017 $83,350 Allowance for Doubtful accounts 31/12/2017 $4,000 Supplies 31/12/2017 $7,110 Inventory 31/12/2017 $315,240 Prepaid Insurance 31/12/2017 $14,000 Equipment 31/12/2017 $422,000 Accumulated Depreciation - Equipment 31/12/2017 $118,000 Building 31/12/2017 $500,000 Accumulated Depreciation-Building 31/12/2017 $15,000 Land 31/12/2017 $100,000 Notes Payable 31/12/2017 $270,000 Accounts payable 31/12/2017 $89,500 Unearned Rent Revenue 31/12/2017 $18,000 Common Stock 31/12/2017 $110,000 Retained Earnings 31/12/2017 $265,000 Sales Revenue 31/12/2017 $2,100,000 Rent Revenue 31/12/2017 $64,000 Cost of Goods Sold 31/12/2017 $937,440 Salaries & wages expenses - sales 31/12/2017 $273,500 Advertisement expenses - sales 31/12/2017 $78,100 Utilities expenses - Administrative 31/12/2017 $49,000 Telecommunications - Administrative 31/12/2017 $32,000 Salaries & wages expenses - administrative 31/12/2017 $196,000

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