Question 1
Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method
Assume that Brainiac uses the straight-line method. (1) Prepare the journal entry to record 2011 depreciation. (2) Show how the truck would be reported in the December 31, 2011, balance sheet.
Question 2
Don Walls's gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73.
What was Walls's net pay for the week?
Journalize the entry for the recording of his pay in the general journal.
Record the issuing of the check for Walls's pay in the general journal
Question 3
On January 1, Neuer Company issued $500,000, 10%, 10-year bonds at par. Interest is payable semiannually on July 1 and January 1.
Prepare journal entries to record the following.
The issuance of the bonds.
The payment of interest on July 1, assuming that interest was not accrued on June 30.
The accrual of interest on December 31.
Question 4
On January 1, Flory Company issued $300,000, 8%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.
Prepare journal entries to record the following events.
The issuance of the bonds.
The payment of interest on July 1, assuming no previous accrual of interest.
The accrual of interest on December 31.
Question 5
Leoni Co. receives $240,000 when it issues a $240,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2011. The terms provide for semiannual installment payments of $20,000 on June 30 and December 31.
Prepare the journal entries to record the mortgage loan and the first two installment payments.
Question 6
Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for $562,613. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Hrabik uses the effective-interest method to amortize bond premium or discount.
Prepare the journal entries to record the following.
The issuance of the bonds. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
The payment of interest and the discount amortization on July 1, 2011, assuming that interest was not accrued on June 30. (
The accrual of interest and the discount amortization on December 31, 2011.
Question 7
Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2010. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.
Complete the installment payments schedule for the first 2 years.
Prepare the entries for (1) the loan and (2) the first two installment payments.
Show how the total mortgage liability should be reported on the balance sheet at December 31, 2011.
Question 8
Elkins Company sold $2,500,000, 8%, 10-year bonds on July 1, 2011. The bonds were dated July 1, 2011, and pay interest July 1 and January 1. Elkins Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.
Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2011, assuming that the bonds sold at 104.
Prepare journal entries as in the previous part of the question assuming that the bonds sold at 98.
Show balance sheet presentation for each bond issue at December 31, 2011.
Question 9
Tony Masasi started his own consulting firm, Masasi Company, Inc. on June 1, 2011. The trial balance at June 30 is shown below.
MASASI COMPANY, INC.
Trial Balance
June 30, 2011
Account Number Debit Credit
101 Cash $ 7,150
112 Accounts Receivable 6,000
126 Supplies 2,000
130 Prepaid Insurance 3,000
157 Office Equipment 15,000
201 Accounts Payable $ 4,500
209 Unearned Service Revenue 4,000
311 Common Stock 21,750
400 Service Revenue 7,900
726 Salaries Expense 4,000
729 Rent Expense 1,000
$38,150 $38,150
In addition to those accounts listed on the trial balance, the chart of accounts for Masasi Company, Inc. also contains the following accounts and account numbers: No. 158 Accumulated Depreciation—Office Equipment, No. 212 Salaries Payable, No. 244 Utilities Payable, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.
Other data:
1. Supplies on hand at June 30 are $600.
2. A utility bill for $150 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $2,500 of unearned service revenue has been earned at the end of the month.
5. Salaries of $2,000 are accrued at June 30.
6. The office equipment has a 5-year life with no salvage value. It is being depreciated at $250 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of June 30.
Prepare adjusting entries, post to ledger accounts, and prepare adjusted trial balance.
(SO 5, 6, 7)
Instructions
(a) Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance at June 30, 2011.
Adj. trial balance $41,550
Question 10
Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.
NEOSHO RIVER RESORT, INC.
Trial Balance
August 31, 2011
Account Number Debit Credit
101 Cash $ 19,600
126 Supplies 3,300
130 Prepaid Insurance 6,000
140 Land 25,000
143 Cottages 125,000
149 Furniture 26,000
201 Accounts Payable $ 6,500
209 Unearned Rent Revenue 7,400
275 Mortgage Payable 80,000
311 Common Stock 100,000
332 Dividends 5,000
429 Rent Revenue 80,000
622 Repair Expense 3,600
726 Salaries Expense 51,000
732 Utilities Expense 9,400
$273,900 $273,900
In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort, Inc. also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Cottages, No. 150 Accumulated Depreciation—Furniture, No. 212 Salaries Payable, No. 230 Interest Payable, No. 320 Retained Earnings, No. 620 Depreciation Expense—Cottages, No. 621 Depreciation Expense—Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.
Other data:
1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $600 of supplies on hand.
3. Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4. Unearned rent revenue of $4,100 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Prepare adjusting entries, post, and prepare adjusted trial balance, and financial statements.
(SO 5, 6, 7)
Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on August 31.
Adj. trial balance $278,000
(d) Prepare an income statement and a retained earnings statement for the 3 months ending August 31 and a balance sheet as of August 31.
Net income $14,100
Ending retained earnings $9,100
Total assets $199,900
Answer of question-9 is in excel, rest are in word file. Question 1-8 are in required format (selecting from drop down). Answer of question 10 is solution guide.
Answer will be sent by email as attachment.
