Answered: Other Expenses and Losses Interest…

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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Question

Cheyenne Corp's unadjusted trial balance at December 1, 2022, is presented below.

Cash $20,100

Accounts Receivable 38,600

Notes Receivable 11,000

Interest Receivable 0

Inventory 34,700

Prepaid Insurance 3,600

Land 20,900

Buildings 141,000

Equipment 59,000

Patent 9,900

Allowance for Doubtful Accounts $500 Accumulated Depreciation-Buildings 47,000

Accumulated Depreciation-Equipment 23,600

Accounts Payable 25,300

Salaries and Wages Payable 0

Notes Payable (due April 30, 2023) 10,500

Income Taxes Payable 0

Interest Payable 0

Notes Payable (due in 2028) 32,100

Common Stock 49,000

Retained Earnings 92,700

Dividends 12,000

Sales Revenue 919,000

Interest Revenue 0

Gain on Disposal of Plant Assets 0

Bad Debt Expense 0

Cost of Goods Sold 674,000

Depreciation Expense 0

Income Tax Expense 0

Insurance Expense 0

Interest Expense 0

Other Operating Expenses 65,900

Amortization Expense 0

Salaries and Wages Expense 109,000

Total debit/credit:

$1,199,700

The following transactions occurred during December.

Dec. 2 Purchased equipment for $14,600, plus sales taxes of $700 (paid in cash).

Dec. 2 Cheyenne sold for $3,800 equipment which originally cost $4,800. Accumulated depreciation on this equipment at January 1, 2022, was $1,800; 2022 depreciation prior to the sale of equipment was $775.

Dec.15 Cheyenne sold for $5,500 on account inventory that cost $3,800.

Dec. 23 Salaries and wages of $7,100 were paid for December.

Adjustment data:

1. Cheyenne estimates that uncollectible accounts receivable at year-end are $3,700.

2. The note receivable is a 1-year, 8% note dated April 1, 2022. No interest has been recorded.

3. The balance in prepaid insurance represents payment of a $3,600, 6-month premium on September 1, 2022.

4. The building is being depreciated using the straight-line method over 30 years. The salvage value is $33,000.

5. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.

6. The equipment purchased on December 2, 2022, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,500.

7. The patent was acquired on January 1, 2022, and has a useful life of 9 years from that date.

8. Unpaid salaries at December 31, 2022, total $2,400.

9. Both the short-term and long-term notes payable are dated January 1, 2022, and carry a 10% interest rate. All interest is payable in the next 12 months.

10. Income tax expense was $13,000. It was unpaid at December 31.

2022 income statement for missing boxes.