) Prepare journal entries for the transactions listed above. (b) Prepare an updated December 31, 20XX trial balance. (c) Prepare a multiple-step income statement for the year ending December 31, 20XX.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
I posted this a few days ago. In the attached image is the updated trial balance. All I need is help with creating the balance sheet from the provided data.
ACC 122 Fall 2020
Comprehensive Project
BestValue Corporation's Trial Balance at December 31, 20XX is presented below.
All 20XX transactions have been recorded except for the items described on the next page.
Debit Credit
Cash $ 109,890
Accounts Receivable 28,789
Inventory 25,540
Debt Investments 0
Land 55,674
Buildings 215,850
Equipment 75,120
Allowance for Doubtful Accounts $ 1,027
Accumulated Depreciation-Equipment 16,048
Accounts Payable 35,278
Interest Payable 0
Unearned Rent Revenue 48,900
Dividends Payable 0
Income Tax Payable 0
Bonds Payable 0
Discount on Bonds Payable 0
Common Stock ($2 par) 29,200
Paid in Capital in Excess of Par-Common Stock 44,580
Paid in Capital in Excess of Par-Preferred Stock 0
Treasury Stock 0
Cash Dividends 0
Sales Revenue 776,068
Rent Revenue 0
Gain on Sale of Land 0
Bad Debt Expense 0
Interest Expense 0
Cost of Goods Sold 478,542
Depreciation Expense 0
Other Operating Expenses 53,274
Salaries and Wages Expense 79,632
Income Tax Expense 0
Total $ 1,122,311 $ 1,122,311
Round all calculations if necessary to -0- decimals (to the nearest dollar, do not show cents).
1. On January 1, 20XX, BestValue issued 520 shares of $60 par, 5% preferred stock for $75,810.
2. On January 1, 20XX, BestValue also issued 5,800 shares of common stock for $42,050.
3. On January 1, 20XX, BestValue issued $325,000, 5.5%, 9 year bonds when the market rate was 6%.
Interest is to be paid annually on each January 1, beginning 1 year from date of issue.
4. BestValue reacquired 3,600 shares of its common stock on January 12, 20XX for $8.50 per share.
5. On December 31, 20XX, BestValue declared the annual preferred dividend plus a $2.75 per
share dividend on the outstanding common stock, all payable in cash on January 31 of next year.
is uncollectible at year end is $1,850.
7. The building is being depreciated using the
The salvage value is $100,000.
8. The equipment is being depreciated using the straight line method over 5 years.
The salvage value is $15,000.
9. Sold the Land for $60,000 cash.
10. Bought Debt Investments worth $200,000 for cash.
11. The unearned rent was collected on December 1, 20XX. It was receipt of 3 months'
rent in advance (December 1, 20XX through February 28 of next year).
12. The first cash interest payment on the 5.5% bonds is due January 1 of next year. The annual
interest on the bonds for 20XX has not yet been recorded. Use the effective interest method.
13. The BestValue Corporation must make an
Income Before Income Tax at a rate of 36%. The taxes will not be paid until March of next year.
Instructions:
(a) Prepare
(b) Prepare an updated December 31, 20XX trial balance.
(c) Prepare a multiple-step income statement for the year ending December 31, 20XX.
(d) Prepare a retained earnings statement for the year ending December 31, 20XX.
(e) Prepare a classified balance sheet as of December 31, 20XX.
(f) Prepare a Statement of Cash Flows as of December 31, 20XX.
(g) and (h) Calculate and analyze the following ratios, clearly presenting your work and answers:
1. Working Capital
2. Current Ratio
3. Return on
4. EPS (all shares are already weighted)
5. Payout Ratio
6. Debt to Assets Ratio
7. Times Interest Earned
8.
(f) Statement of Cash Flows:
BESTVALUE CORPORATION
Comparative Balance Sheets
December 31 of the previous year
Cash $ 115,982
Accounts Receivable (net of AFDA) 11,208
Inventory 15,790
Land 55,674
Buildings 215,850
Equipment 75,120
Accumulated Depreciation-Buildings #REF!
Accumulated Depreciation-Equipment #REF!
Accounts Payable 47,598
Interest Payable 0
Unearned Rent Revenue 0
Dividends Payable #REF!
Income Tax Payable #REF!
balances for last year's Balance Sheet accounts to prepare the "Net cash provided by operating
activities" section of the Cash Flow Statement below using the indirect method.
BESTVALUE CORPORATION
Statement of Cash Flows
December 31, 20XX
Cash flows from operating activities
Net income $
Adjustments to reconcile net income to
net cash provided by operating activities
Add: Depreciation expense $
Add: Bad debt expense
Less: Gain on sale of land
Increase in accounts receivable
Increase in inventory
Decrease in accounts payable
Increase in unearned rent revenue
Increase in interest payable
Increase in dividends payable
Increase in income taxes payable
Net cash provided by operating activities $
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 11 images
