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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
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
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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: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
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
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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