**Fall Corporation Capital Structure Analysis**Fall Corporation's capital structure is composed of 500,000 authorized shares of common stock, with 100,000 of these shares issued and outstanding as of December 31, 2022. A detailed examination of their financial accounts has yielded the following data:- **Accounts Payable:** $50,000- **Accounts Receivable (Trade Accounts):** $325,000- **Accumulated Depreciation:** $160,000- **Accumulated Other Comprehensive Income:** $(10,000)- **Allowance for Uncollectible Accounts:** $16,000- **Amortization Expense:** $12,000- **Cash:** $459,300- **Common Stock ($1 Par Value):** $100,000- **Cost of Goods Sold:** $1,560,000- **Deferred Revenue:** $156,000- **Depreciation Expense:** $40,000- **Dividend Revenue:** $5,000- **Fair Value Adjustment (Trading Securities – Debit Balance):** $50,000- **Gain on Investments (Unrealized, NI):** $80,000- **General and Administrative Expenses:** $350,000- **Interest Expense:** $10,000- **Interest Payable:** $4,000- **Inventory as of December 31, 2022:** $222,000- **Investments in Trading Securities (Cost):** $180,000- **Land Held for Future Plant Site:** $824,700- **4% Notes Payable (Maturity 7/1/26 - $40,000 Due July 1, 2023):** $200,000- **Paid in Capital in Excess of Par:** $280,000- **Patents:** $228,000- **Pension Plan Assets:** $1,000,000- **Projected Benefit Obligation:** $800,000- **Property, Plant & Equipment:** $664,000- **Retained Earnings as of January 1, 2022:** $622,000- **Sales Revenue for 2022:** $4,000,000- **Sales Discounts Forfeited:** $12,000- **Selling Expenses:** $550,000This financial snapshot provides insightful data for evaluating Fall Corporation’s financial health and performance, offering **Adjusting Journal Entries as of December 31, 2022**When preparing financial statements, it's important to adjust journal entries to reflect accurate and up-to-date information. The following adjustments should be made as of December 31, 2022:a) **Deferred Revenue Recognition**: By the end of 2022, two-thirds of the deferred revenue has been earned by the organization. This requires an adjustment to move a portion of the deferred revenue into earned revenue for the current period.b) **Warranty Expense**: An estimated warranty expense of 2% of total sales needs to be recorded. This adjusts for expected future costs related to warranty claims that have not yet been accounted for in the financial records.c) **Accrued Vacation Pay**: There is an unused vacation pay liability amounting to $20,000 that can be used in 2023. This amount should be accrued to accurately reflect the obligation on the balance sheet as of the end of 2022.These adjustments ensure that financial statements provide a true and fair view of the company’s financial position and performance as of December 31, 2022.

The revenue may be recorded as earned revenue or deferred revenue. Deferred revenue is also called…

2 - Prepare adjusting journal entries as of December 31, 2022, as follows: a) Fall has earned 2/3 of the deferred revenue by the end of 2022. b) Estimated warranty expense of 2% of sales has not been recorded yet. c) Accrue unused vacation pay that can be taken in 2023 in the amount of $20,000.

2 - Prepare adjusting journal entries as of December 31, 2022, as follows: a) Fall has earned 2/3 of the deferred revenue by the end of 2022. b) Estimated warranty expense of 2% of sales has not been recorded yet. c) Accrue unused vacation pay that can be taken in 2023 in the amount of $20,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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