Question Description SABRINA CORPORATION UNADJUSTED TRIAL BALANCE DECEMBER 31, 2019 DEBIT CREDIT CASH 36,868 FV-NI Short Term INVESTMENTS 30,300 ACCOUNTS RECEIVABLE 425,755 ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,400 INVENTORY 402,912 NOTES RECEIVABLE 30,000 OFFICE BUILDING 500,000 ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000 OFFICE EQUIPMENT 120,000 ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT) 0 ACCOUNTS PAYABLE 205,258 DIVIDENDS PAYABLE 7,328 NOTES PAYABLE 60,000 PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2019 100,000 COMMON STOCK, 100,000 OUTSTANDING ON DEC 31, 2019 185,000 RETAINED EARNINGS 280,623 SALES REVENUE 3,590,524 SALES DISCOUNTS 20,571 SALES RETURNS AND ALLOWANCES 51,259 PURCHASES 2,600,824 PURCHASES DISCOUNTS 35,678 TRANSPORTATION - IN 25,235 SALARIES EXPENSE 320,523 RENT EXPENSE 40,955 INSURANCE EXPENSE 16,456 SUPPLIES EXPENSE 25,673 GAIN ON SALE OF ASSETS OF DISCONTINUED DIVISION 13,650 ADVERTISING EXPENSE 18,860 OPERATING LOSS ON DISCONTINUED DIVISION 21,998 UTILITIES EXPENSE 28,540 CASH DIVIDENDS DECLARED -Preferred Dividends 29,732 CASH DIVIDENDS DECLARED -Common Dividends 20,000 TOTAL 4,766,461 4,766,461 NOTE: All revenue, expense, gain and loss figures above are before tax. This company uses a Periodic Inventory system. 1. There was a customer that has gone bankrupt in 2019 and will not pay his $4480 account. This has not been recorded yet. Also, Sabrina Corp. uses the allowance method to record Bad Debts based on an estimate of 4% of ending Accounts Receivable. 2. The Office Building is depreciated at a rate of 5% of cost per year. The Office Equipment is depreciated straight line and has a residual value of $5,000 . It was purchased on March 1, 2019 and it is estimated to have a useful life of 6 years. 3. A one year 6% note payable of $60,000 was signed on October 1, 2019. 4. On December 1, 2019, a customer signed a 5% note receivable for $30,000 due in 90 days. 5. FV- NI Short term investments have a fair market value of $32,300 on December 31, 2019. Investments need to be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement. 6. The insurance expense includes : Policy A, cost of $12,700, three year term, paid in advance on April 1, 2019 AND Policy B, cost of $3,756, two year term paid in advance on June 1, 2019. 7. The company performed a year end physical count of its inventory as at December 31, 2019. The amount of inventory on hand at December 31, 2019 amounted to $421,200. Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required. a. Prepare the Adjusting Journal Entries required for the 2019 fiscal year at December 31, 2019. b. Prepare a detailed multi-step income statement (including detailed EPS presentation) for the year ended December 31, 2019. NOTE: Assume that the tax rate was 30%. Also, in 2019 common stock was issued as follows: 20,000 commons shares were issued on April 1 and 30,000 commons shares were issued on August 1. The amount of common stock outstanding at the beginning of the year (January 1, 2019) was 50,000 shares.

Question Description SABRINA CORPORATION UNADJUSTED TRIAL BALANCE DECEMBER 31, 2019 DEBIT CREDIT CASH 36,868 FV-NI Short Term INVESTMENTS 30,300 ACCOUNTS RECEIVABLE 425,755 ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,400 INVENTORY 402,912 NOTES RECEIVABLE 30,000 OFFICE BUILDING 500,000 ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000 OFFICE EQUIPMENT 120,000 ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT) 0 ACCOUNTS PAYABLE 205,258 DIVIDENDS PAYABLE 7,328 NOTES PAYABLE 60,000 PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2019 100,000 COMMON STOCK, 100,000 OUTSTANDING ON DEC 31, 2019 185,000 RETAINED EARNINGS 280,623 SALES REVENUE 3,590,524 SALES DISCOUNTS 20,571 SALES RETURNS AND ALLOWANCES 51,259 PURCHASES 2,600,824 PURCHASES DISCOUNTS 35,678 TRANSPORTATION - IN 25,235 SALARIES EXPENSE 320,523 RENT EXPENSE 40,955 INSURANCE EXPENSE 16,456 SUPPLIES EXPENSE 25,673 GAIN ON SALE OF ASSETS OF DISCONTINUED DIVISION 13,650 ADVERTISING EXPENSE 18,860 OPERATING LOSS ON DISCONTINUED DIVISION 21,998 UTILITIES EXPENSE 28,540 CASH DIVIDENDS DECLARED -Preferred Dividends 29,732 CASH DIVIDENDS DECLARED -Common Dividends 20,000 TOTAL 4,766,461 4,766,461 NOTE: All revenue, expense, gain and loss figures above are before tax. This company uses a Periodic Inventory system. 1. There was a customer that has gone bankrupt in 2019 and will not pay his $4480 account. This has not been recorded yet. Also, Sabrina Corp. uses the allowance method to record Bad Debts based on an estimate of 4% of ending Accounts Receivable. 2. The Office Building is depreciated at a rate of 5% of cost per year. The Office Equipment is depreciated straight line and has a residual value of $5,000 . It was purchased on March 1, 2019 and it is estimated to have a useful life of 6 years. 3. A one year 6% note payable of $60,000 was signed on October 1, 2019. 4. On December 1, 2019, a customer signed a 5% note receivable for $30,000 due in 90 days. 5. FV- NI Short term investments have a fair market value of $32,300 on December 31, 2019. Investments need to be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement. 6. The insurance expense includes : Policy A, cost of $12,700, three year term, paid in advance on April 1, 2019 AND Policy B, cost of $3,756, two year term paid in advance on June 1, 2019. 7. The company performed a year end physical count of its inventory as at December 31, 2019. The amount of inventory on hand at December 31, 2019 amounted to $421,200. Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required. a. Prepare the Adjusting Journal Entries required for the 2019 fiscal year at December 31, 2019. b. Prepare a detailed multi-step income statement (including detailed EPS presentation) for the year ended December 31, 2019. NOTE: Assume that the tax rate was 30%. Also, in 2019 common stock was issued as follows: 20,000 commons shares were issued on April 1 and 30,000 commons shares were issued on August 1. The amount of common stock outstanding at the beginning of the year (January 1, 2019) was 50,000 shares.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Question Description

	SABRINA CORPORATION
				UNADJUSTED TRIAL BALANCE
				DECEMBER 31, 2019


				DEBIT		CREDIT

CASH					36,868
FV-NI Short Term INVESTMENTS			30,300
ACCOUNTS RECEIVABLE				425,755
ALLOWANCE FOR DOUBTFUL ACCOUNTS				8,400
INVENTORY					402,912
NOTES RECEIVABLE				30,000
OFFICE BUILDING				500,000
ACCUMULATED DEPRECIATION (OFFICE BUILDING)				280,000
OFFICE EQUIPMENT				120,000
ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT)				0
ACCOUNTS PAYABLE						205,258
DIVIDENDS PAYABLE						7,328
NOTES PAYABLE						60,000
PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2019				100,000
COMMON STOCK, 100,000 OUTSTANDING ON DEC 31, 2019				185,000
RETAINED EARNINGS						280,623
SALES REVENUE						3,590,524
SALES DISCOUNTS				20,571
SALES RETURNS AND ALLOWANCES			51,259
PURCHASES					2,600,824
PURCHASES DISCOUNTS						35,678
TRANSPORTATION - IN				25,235
SALARIES EXPENSE				320,523
RENT EXPENSE				40,955
INSURANCE EXPENSE				16,456
SUPPLIES EXPENSE				25,673
GAIN ON SALE OF ASSETS OF DISCONTINUED DIVISION				13,650
ADVERTISING EXPENSE				18,860
OPERATING LOSS ON DISCONTINUED DIVISION		21,998
UTILITIES EXPENSE				28,540
CASH DIVIDENDS DECLARED -Preferred Dividends		29,732
CASH DIVIDENDS DECLARED -Common Dividends		20,000
TOTAL					4,766,461		4,766,461

NOTE: All revenue, expense, gain and loss figures above are before tax.
This company uses a Periodic Inventory system.

1. There was a customer that has gone bankrupt in 2019 and will not pay his $4480 account. This has not been recorded yet.

Also, Sabrina Corp. uses the allowance method to record Bad Debts based on an estimate of 4% of ending Accounts Receivable.

2. The Office Building is depreciated at a rate of 5% of cost per year.

The Office Equipment is depreciated straight line and has a residual value of $5,000 . It was purchased on March 1, 2019
and it is estimated to have a useful life of 6 years.

3. A one year 6% note payable of $60,000 was signed on October 1, 2019.

4. On December 1, 2019, a customer signed a 5% note receivable for $30,000 due in 90 days.

5. FV- NI Short term investments have a fair market value of $32,300 on December 31, 2019. Investments need to
be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement.

6. The insurance expense includes : Policy A, cost of $12,700, three year term, paid in advance on April 1, 2019
AND Policy B, cost of $3,756, two year term paid in advance on June 1, 2019.

7. The company performed a year end physical count of its inventory as at December 31, 2019.
The amount of inventory on hand at December 31, 2019 amounted to $421,200.
Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required.

a. Prepare the Adjusting Journal Entries required for the 2019 fiscal year at December 31, 2019.
b. Prepare a detailed multi-step income statement (including detailed EPS presentation) for the year ended December 31, 2019.

NOTE: Assume that the tax rate was 30%.

Also, in 2019 common stock was issued as follows:
20,000 commons shares were issued on April 1 and 30,000 commons shares were issued on August 1.
The amount of common stock outstanding at the beginning of the year (January 1, 2019) was 50,000 shares.

Expert Solution

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.