Assets
Cash $500,000
Accounts Receivable 700,000
Inventory 300,000
Property, Plant & Equipment 900,000
Accumulated Depreciation (100,000) 800,000
Total Assets $2,300,000
Liabilities & Equity
Accounts Payable $300,000
Notes Payable 1,000,000
Common Stock 500,000
Retained Earnings 500,000
Total Liabilities & Equity $2,300,000
Instructions:
- Open the balances in the T-accounts (general ledger).
- Post the journal entries to the T-accounts (general ledger).
- Prepare an income statement, statement of retained earnings, balance sheet, and statement of cash flows-indirect method.
Journal Entries for January 2013
Transaction 1: Services Provided for Cash
Description: Receives $155,000 cash from customers for programming services it has provided.
Journal Entry: Dr. Cr.
Cash 155,000
Sales 155,000
Transaction 2: Receipt of Cash on Account
Description: Receives $28,000 in cash from customers who had been billed for services.
Journal Entry: Dr. Cr.
Cash 28,000
Accounts Receivable 28,000
Transaction 3: Cost Flow Assumption: LIFO
Description: Recorded $45,000 in cost of goods sold under the LIFO cost flow assumption.
Journal Entry: Dr. Cr.
Cost of Goods Sold 45,000
Inventory 45,000
Transaction 4: Recording Depreciation Expense
Description: Recorded depreciation expense under the straight-line method.
Journal Entry: Dr. Cr.
Depreciation Expense 9,000
Accumulated Depreciation 9,000
Transaction 5: Sale of Plant Asset
Description: Sale of plant asset for cash. The cash received was equal to the book value.
Journal Entry: Dr. Cr.
Cash 3,000
Accumulated Depreciation 16,000
Equipment 19,000
Transaction 6: Gain on Sale of Plant Asset
Description: Sale of plant asset for cash. The cash received was $2,000 more than the book value resulting in a gain.
Journal Entry: Dr. Cr.
Cash 5,000
Accumulated Depreciation 16,000
Gain 2,000
Equipment 19,000
Transaction 7: Loss on Sale of Plant Asset
Description: Sale of plant asset for cash. The cash received was $500 less than the book value resulting in a loss.
Journal Entry: Dr. Cr.
Cash 2,500
Loss 500
Accumulated Depreciation 13,000
Equipment 16,000
Transaction 8: Note Given to Borrow from Bank
Description: Borrowed $2,000 cash with a 60-day, 12%, $2,000 note.
Journal Entry: Dr. Cr.
Cash 2,000
Notes Payable 2,000
Transaction 9: Payment of Note
Description: Paid the principal and interest on the note in Transaction 8.
Journal Entry: Dr. Cr.
Notes Payable 2,000
Interest Expense 40
Cash 2,040
Transaction 10: Bond Issue
Description: Issued a $100,000 Par Value Bond at a Discount
Journal Entry: Dr. Cr.
Cash 96,454
Bonds Payable 96,454
Transaction 11: Effective Interest Amortization
Description: Recorded bond interest expense under the effective interest method.
Journal Entry: Dr. Cr.
Bond Interest Expense 4,823
Bonds Payable 823
Cash 4,000
Transaction 12: Issuing Par Value Stock at a Premium
Description: Issued common stock and received cash of $50,000 in excess of par value.
Journal Entry: Dr. Cr.
Cash 350,000
Common Stock , $10 Par Value 300,000
Paid-in Capital in Excess of Par Value, Common Stock 50,000
Transaction 13: Dividend
Description: The corporation pays a dividend of $3,800 in cash to the stockholders of Softbyte.
Journal Entry: Dr. Cr.
Dividends 3,800
Cash 3,800
- What is the ending cash balance?
- $1,132,114
- $1,235,553
- $1,339,885
- $1,433,559
- What is the ending accounts receivable balance?
- $675,000
- $672,000
- $680,000
- $685,000
- What is the ending inventory balance?
- $250,000
- $255,000
- $260,000
- $264,000
- What is the ending equipment balance net of accumulated depreciation?
- $755,000
- $768,000
- $775,000
- $782,000
- What is the amount of total assets as of January 31, 2013?
- $2,462,995
- $2,655,235
- $2,841,114
- $2,935,755
- What is the ending retained earnings balance?
- $575,713
- $581,972
- $593,837
- $615,245
- What is the amount of net income?
- $90,468
- $92,743
- $97,637
- $99,645
- What is the amount of total expenses and losses?
- $55,455
- $57,924
- $59,363
- $61,455
- What is the net increase in cash for the period?
- $632,114
- $645,935
- $660,348
- $662,465
- What is the net cash provided by operating activities?
- $172,940
- $178,960
- $177,244
- $179,486
- What is the net cash provided by investing activities?
- $15,325
- $13,350
- $12,500
- $10,500
- What is the net cash provided by financing activities?
- $435,359
- $438,915
- $441,355
- $442,654
The following information is used to answer question 13 to 16:
Bonds: $3,000,000 Par Value
Semiannual Interest Payments
Three-Year Life
Annual Contract Rate: 12%
Annual Market Rate: 10%
- What is the price of the bond?
- $3,152,270.76
- $3,187,305.54
- $3,215,852.37
- $3,330,744.36
- What is the amount of the bond premium?
- $330,744.36
- $187,305.54
- $152,270.76
- $215,852.37
- What is the semi-annual cash payment to the bondholder?
- $150,000
- $160,000
- $170,000
- $180,00
- What is the total amount of interest expense over the life of the bond?
- $927,729.24
- $945,756.32
- $955,798.51
- $963,877.98
The following information is used to answer questions 17 to 20:
Bonds: $1,000,000 Par Value
Semiannual Interest Payments,
Three-Year Life
Annual Contract Rate: 6%
Annual Market Rate: 8%
- What is the price of the bond?
- 963,544.12
- 952,877.65
- 947,578.63
- 925,587.96
- What is the amount of the bond discount?
- 52,421.37
- 50,865.35
- 47,822.45
- 45,647.24
- What is the semi-annual cash payment to the bondholder?
- 25,000
- 30,000
- 35,000
- 40,000
- What is the interest expense for the second semi-annual payment under the effective interest method?
- 37,903.15
- 38,219.27
- 38,548.04
- 38,889.96
- Bonus Question!! You have taken out a $25,000 loan to purchase a car. Your interest rate is 6% and your loan term is 4 years. How much is your monthly car payment?
- $524.56
- $587.13
- $595.39
- $602.85
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