Problem .3 Presented below are transactions related to Guillen, Inc. + May 10 Purchased goods billed at $20,000 subiect to cash discount terms of 2//10, n/60. + 11 Purchased goods billed at $15,000 subject to terms of 1/15, n/30. + 19 Paid invoice of May 10. +24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30. Instructions (a) Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense. (b) Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.
Problem .3 Presented below are transactions related to Guillen, Inc. + May 10 Purchased goods billed at $20,000 subiect to cash discount terms of 2//10, n/60. + 11 Purchased goods billed at $15,000 subject to terms of 1/15, n/30. + 19 Paid invoice of May 10. +24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30. Instructions (a) Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense. (b) Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Key Insurance Agency was organized on October 1, 2015. Assume that the a
are closed and financial statements prepared each month. The company occupies rented office
Max Wayer Meat Packing, Inc.Has recently accepted a donation of land with a fair
Packing promises to build a packing plant in Memphis. Recird the entry for Max Wayer's.
value of $150,000 from the MemphisIndustrial Development Corp. In return Max Wayer Meat
acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown
space but owns office equipment estimated to have a useful life of 10 years from date of
PART II: WORK OUT
Problem .1
Key Insurance Agency was organized
accounts
on October 1, 2015. Assume that the
are closed and financial statements prepared each month. The company occupies rented office
Space but owns office equipment estimated to have a useful life of I0 years from date of
acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown
below.
Cash
$22,565
Accounts Receivables
7.050
Office Equipment
9,600
Accumulated Depreciation: Office Equipment
160
Accounts Payable
2,260
Income Taxes Payable
4,965
Capital Stock
20,000
Retained Earnings
7,450
Dividends
2,500
Commissions Earned
31,080
Advertising Expense
2,400
Salaries Expense
18,000
Rent Expense
3,800
Totals
$65,915 S65,915
Instructions:
a. Prepare the adjusting entry to record depreciation of the office equipment for the month of
December, using the straight line method of computing depreciation expense.
b. Compute Taxable income for December – assume this is the same as "Income before income
taxes." Using a corporate income tax rate of 40%, prepare the adjusting entry to accrue Key
Insurance Agency's income taxes for the month of December 31, 2015.
c. Prepare an adjusted trial balance at December 31, 2015.
d. Prepare an income statement and a statement of retained earnings for the month ended December
31, 2015, and a balance sheet in report form at December 31, 2015
Problem .2
Max Wayer Meat Packing, Inc.Has recently accepted a donation of land with a fair
value of $150,000 from the Memphislndustrial Development Corp. In return Max Wayer Meat
Packing promises to build a packing plant in Memphis. Recird the entry for Max Wayer's.
Page | 2
Transcribed Image Text:d. Compute gross profit using the perpetual system.
Problem .3 Presented below are transactions related to Guillen, Inc.
+ May 10 Purchased goods billed at $20,000 subiect to cash discount terms of 2/10, n/60.
+ 11 Purchased goods billed at $15,000 subject to terms of 1/15, n/30.
+ 19 Paid invoice of May 10.
+ 24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30.
Instructions
(a) Prepare general journal entries for the transactions above under the assumption that purchases are
to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial
expense.
(b) Assuming no purchase or payment transactions other than those given above, prepare the
adjusting entry required on May 31 if financial statements are to be prepared as of that date.
Problem .4
Chippewas Company sells one product. Presented below isinformation for January for
Chippewas Company.
+ Jan. 1 Inventory 100 units at $6 each
+ 4 Sale 80 units at $8 each
+ 11 Purchase 150 units at $6.50 each
+ 13 Sale 120 units at $8.75 each
+ 20 Purchase 160 units at $7 each
+ 27 Sale 100 units at $9 each
Instructions: Chippewas uses the FIF0 cost flow assumption. All purchases and sales are on
account.
a. Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including
theend-of-month closing entry to record cost of goods sold. A physical count indicates that the
ending inventory for January is 110 units.
b. Compute gross profit using the periodic system.
c. Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.
Problem .5
Problem .6 On January 2, 2012 Man & Drake Company buys Office Equipment on account from
Prince Company, $2,450.
a
Problem .7
a
Page | 3
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