Financial Accounting
Financial Accounting
15th Edition
ISBN: 9781337272124
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 11, Problem 3CPP

1.

To determine

Record the journal entries.

1.

Expert Solution
Check Mark

Explanation of Solution

The following are the journal entries.

20Y5ParticularsDebit ($)Credit ($)
January3Petty Cash4,500 
  Cash 4,500
     
February26Office Supplies1,680 
  Miscellaneous Selling Expense570 
  Miscellaneous Administrative Expense880 
  Cash 3,130
     
April14Inventory31,300 
  Accounts Payable 31,300
     
May13Accounts Payable31,300 
  Cash 31,300
     
 17Cash21,200 
  Cash Short and Over40 
  Sales 21,240
     
June2Notes Receivable180,000 
  Accounts  Receivable 180,000
     
August1Cash182,400 
  Notes Receivable 180,000
  Interest Revenue 2,400
     
 24Cash7,600 
  Allowance for Doubtful Accounts1,400 
  Accounts  Receivable 9,000
     
September15Accounts  Receivable1,400 
     Allowance for Doubtful  Accounts 1,400
     
 15Cash1,400 
  Accounts  Receivable 1,400
     
September15Land654,925 
  Interest Expense15,075 
  Notes Payable 670,000
     
October17Cash135,000 
  Notes Receivable100,000 
  Accumulated Depreciation—Office Equipment64,000 
  Loss on Sale of Office Equipment21,000 
  Office Equipment 320,000
     
November30Sales Salaries Expense135,000 
  Office Salaries Expense77,250 
  Employees Income Tax Payable 39,266
  Social Security Tax Payable 12,735
  Medicare Tax Payable 3,184
  Salaries Payable 157,065
     
 30Payroll Tax Expense16,219 
  Social Security Tax Payable 12,735
  Medicare Tax Payable 3,184
  State Unemployment Tax Payable 270
  Federal Unemployment Tax Payable 30
     
December14Notes Payable670,000 
  Cash 670,000
     
 31Pension Expense190,400 
  Cash 139,700
  Unfunded Pension Liability 50,700

Table (1)

2.

To determine

Prepare the bank reconciliation statement for December.

2.

Expert Solution
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Explanation of Solution

Prepare the bank reconciliation statement for Company K.

K Company
Bank Reconciliation December 31, 20Y5
ParticularsAmount ($)Amount ($)
Balance according to bank statement 283,000
Adjustments:  
Deposit in transit, not recorded by bank29,500 
Deduct outstanding checks(68,540) 
Total adjustments (39,040)
Adjusted balance 243,960
 
Balance according to company’s records 245,410
Adjustments:  
Bank service charges(750) 
Error in recording check(700) 
Total adjustments (1,450)
Adjusted balance 243,960

Table (2)

3.

To determine

Record the bank service charges using miscellaneous administrative expense account.

3.

Expert Solution
Check Mark

Explanation of Solution

Record the journal entry.

20Y5ParticularsDebit ($)Credit ($)
December31Miscellaneous Expense750 
  Accounts Payable700 
        Cash 1,450 

Table (3)    

  • Miscellaneous expense is an expense account and it decreases the value of equity by $750. Therefore, debit miscellaneous expense account with $750.
  • Accounts payable is a liability and it is decreased by $700. Therefore, debit accounts payable account with $700.
  • Cash is an asset and it is decreased by $1,450. Therefore, credit cash account with $1,450.

4.

To determine

Record the adjusting entries.

4.

Expert Solution
Check Mark

Explanation of Solution

Record the adjusting entries.

20Y5ParticularsAmount ($)Amount ($)
a31-DecBad Debt Expense18,000 
 Allowance for Doubtful Accounts 18,000
 (To record estimated uncollectible accounts.)  
    
b31-DecCost of Goods Sold3,300 
 Inventory 3,300
 (To record inventory shrinkage.)  
    
c31-DecInsurance Expense22,820 
 Prepaid Insurance 22,820
 (To record expired insurance.)  
    
d31-DecOffice Supplies Expense3,920 
 Office Supplies 3,920
 (To record supplies used during the period.)  
    
e31-DecDepreciation  Expense—Buildings36,000 
 Depreciation Expense—Office Equipment44,000 
 Depreciation Expense—Store Equipment5,000 
 Accumulated  Depreciation—Buildings 36,000
 Accumulated Depreciation—Office Equipment 44,000
 Accumulated Depreciation—Store Equipment 5,000
 (To record depreciation for the period.)  
    
     
20Y5ParticularsAmount ($)Amount ($)
f31-DecAmortization  Expense—Patents6,000 
 Patents 6,000
 (To record patent amortization)  
    
g31-DecDepletion Expense30,000 
 Accumulated Depletion 30,000
 (To record depletion.)  
    
h31-DecVacation Pay Expense10,500 
 Vacation Pay Payable 10,500
 (To record vacation pay for the period.)  
    
i31-DecProduct Warranty Expense76,000 
 Product Warranty Payable 76,000
 (To record product warranty for the period.)  
    
j31-DecInterest Receivable1,875 
 Interest Revenue 1,875
  (To record interest earned on note receivable.)  

Table (4)

5.

To determine

Prepare the balance sheet as at December 31, 20Y5 of Company K.

5.

Expert Solution
Check Mark

Explanation of Solution

Prepare the balance sheet.

K Company
Balance Sheet
As on December 31, 20Y5
AssetsAmount ($)Amount ($)Amount ($)
Current assets:   
Petty cash 4,500 
Cash 243,960 
Notes receivable 100,000 
Accounts receivable470,000  
Allowance for doubtful accounts(16,000)  
Accounts receivable, net 454,000 
Inventory 320,000 
Interest receivable 1,875 
Prepaid insurance 45,640 
Office supplies 13,390 
Total current assets  1,183,365
Property, plant, and equipment:   
Land 654,925 
Buildings900,000  
Accumulated  depreciation—buildings(36,000)  
Book value—buildings 864,000 
Office equipment246,000  
Accumulated depreciation— office equipment(44,000)  
Book value—office equipment 202,000 
Store equipment112,000  
Accumulated depreciation— store equipment(5,000)  
Book value—store equipment 107,000 
Mineral rights546,000  
Accumulated depletion—mineral rights(30,000)  
Book value—mineral rights 516,000 
Total property, plant, and equipment Intangible assets:  2,343,925
Patents  42,000
Total assets  3,569,290
Liabilities   
Current liabilities:   
Social security tax payable 25,470 
Medicare tax payable 4,710 
Employees federal income tax payable 40,000 
State unemployment tax payable 270 
Federal unemployment tax payable 30 
Salaries payable 157,000 
Accounts payable 131,600 
Interest payable 28,000 
Product warranty payable 76,000 
Vacation pay payable (current portion) 7,140 
Notes payable (current portion) 70,000 
Total current liabilities  540,220
Long-term liabilities:   
Vacation pay payable 3,360 
Unfunded pension liability 50,700 
Notes payable 630,000 
Total long-term liabilities  684,060
Total liabilities  1,224,280
Stockholders’ Equity   
Mr. J’s Capital 2,345,010 
Total stockholders’ equity  2,345,010
Total liabilities and stockholders’ equity  3,569,290

Table (5)

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Chapter 11 Solutions

Financial Accounting

Ch. 11 - Proceeds from notes payable On May 15, Maynard Co....Ch. 11 - Proceeds from notes payable On January 26, Nyree...Ch. 11 - Prob. 2PEACh. 11 - Prob. 2PEBCh. 11 - Prob. 3PEACh. 11 - Prob. 3PEBCh. 11 - Journalize period payroll The payroll register of...Ch. 11 - Journalize period payroll The payroll register of...Ch. 11 - Journalize payroll tax The payroll register of...Ch. 11 - Journalize payroll tax The payroll register of...Ch. 11 - Prob. 6PEACh. 11 - Prob. 6PEBCh. 11 - Prob. 7PEACh. 11 - Prob. 7PEBCh. 11 - Quick ratio Nabors Company reported the following...Ch. 11 - Quick ratio Adieu Company reported the following...Ch. 11 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 11 - Entries for notes payable Cosimo Enterprises...Ch. 11 - Entries for discounting notes payable Ramsey...Ch. 11 - Evaluating alternative notes A borrower has two...Ch. 11 - Entries for notes payable A business issued a...Ch. 11 - Entries for discounted note payable A business...Ch. 11 - Entries for notes payable Bull City Industries is...Ch. 11 - Prob. 8ECh. 11 - Calculate payroll An employee earns 25 per hour...Ch. 11 - Prob. 10ECh. 11 - Summary payroll data In the following summary of...Ch. 11 - Payroll tax entries According to a summary of the...Ch. 11 - Payroll entries The payroll register for Gamble...Ch. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Accrued vacation pay A business provides its...Ch. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Accrued product warranty General Motors...Ch. 11 - Prob. 22ECh. 11 - Quick ratio Gmeiner Co. had the following current...Ch. 11 - Prob. 24ECh. 11 - Liability transactions The following items were...Ch. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data on employer FICA tax...Ch. 11 - Prob. 4PACh. 11 - Payroll accounts and year-end entries The...Ch. 11 - Prob. 1PBCh. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data and employer FICA tax...Ch. 11 - Prob. 4PBCh. 11 - Payroll accounts and year-end entries The...Ch. 11 - Prob. 3CPPCh. 11 - Ethics in Action Tonya Latirno is a staff...Ch. 11 - Prob. 2CPCh. 11 - Communication WBM Motorworks is a manufacturer of...Ch. 11 - Recognizing pension expense The annual examination...Ch. 11 - Prob. 7CP
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