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Question;Problem 1:TheQEC Company owns and operates an amusement park. The following are selected accounts from theQEC Company?s trial balance as of December 31:DebitCreditEquipment$973,400Accumulated Depreciation ? Equipment$304,200Notes Payables456,300Admissions Revenue1,926,600Advertising Expense69,400Salaries Expense292,000Interest Expense7,100The following information is also available:1. The equipment is depreciated using the straight-line method over its estimated life of17years. The equipment has an estimated salvage value of$202,8002. The note payable carries a8% interest rate. It was given to the First National Bank onSeptember17and is due to be repaid in270days after that date. (Note: Assume a 365 day year in any computations.)3. During the Christmas holiday season,QEC Company ran a promotion for park admission tickets valid during the next year. In total, they sold4,980tickets at a price of$15each. The sales amount was credited to Admissions Revenue.4. Included in the Advertising Expense account balance is a$5,580prepayment of advertising that will be aired on local radio stations during the first quarter of the next year.5. As of December 31, there was$23,830in salaries that had been earned but not recorded.6. QEC Company ends its accounting year on December 31.Instructions:1. Prepare the annual adjusting journal entries necessary as of December 31.2. Compute the amount of the following account balances that should be shown on the income statement for the year:a. Interest Expenseb. Admissions Revenuec. Advertising Expensed. Salaries ExpenseProblem 2:The following is the trial balance of theRRV Company as of December 31:RRV CompanyTrial BalanceDecember 31DebitCreditCash$121,600Accounts Receivable276,000Allowance for Doubtful Accounts$4,600Inventory, December 31525,700Prepaid Insurance33,500Equipment552,000Accumulated Depreciation ? Equipment230,000Notes Payable184,000Common Stock529,600Retained Earnings65,700Sales3,942,600Cost of Goods Sold2,615,300Sales Salaries Expense328,600Advertising Expense44,000Administrative Salaries Expense427,100Office Expense32,700$4,956,500$4,956,500Additional Information:1. Estimated bad debt expense for the year is$9,200.2. Equipment is depreciated using the straight-line method over the estimated life of12 years with zero estimated salvage value.3. During the year,$16,750 of the prepaid insurance expired.4. During the year,$22,080 of interest on the notes payable accrued.5. $15,770 of sales salaries were earned towards the end of the year but not recorded.6. The company paid$4,600 for advertising in advance which will be used during the next year.7. At the end of the year,$9,810 of office supplies was on hand. All purchases of office supplies are charged to Office Expense when purchased. 8. The company ends its accounting year on December 31.Instructions:1. Prepare the annual adjusting journal entries necessary as of December 31.2. Prepare the annual closing journal entries necessary to close the books for the year.E4-6(Multiple-Step and Single-Step) The accountant of Weatherspoon Shoe Co. has compiled the following information from the company?s records as a basis for an income statement for the year ended December 31, 2012.Rent revenue $29,000Interest expense 18,00018,000Market appreciation on land above cost 31,00031,000Salaries and wages expense (sales) 114,000114,800Supplies (sales) 17,60017,600Income tax 30,60030,600Salaries and wages expense (administrative)$135,900135,900Other administrative expenses 51,70051,700Cost of goods sold 516,000516,000Net sales 980,000980,000Depreciation on plant assets (70% selling, 30% administrative) $65,00065,000Cash dividends declared 16,00016,000There were 20,000 shares of common stock outstanding during the year.Instructions1. Prepare a multiple-step income statement.2. Prepare a single-step income statement.3. Which format do you prefer? Discuss. (As a short essay.)E4-16(Various Reporting Formats) The following information was taken from the records of Gibson Inc. for the year 2012: income tax applicable to income from continuing operations $119,000, income tax applicable to loss on discontinued operations $25,500, income tax applicable to extraordinary gain $32,300, income tax applicable to extraordinary loss $20,400, and unrealized holding gain on available-for-sale securities $15,000.Extraordinary gain$95,000Cash dividends declared$ 150,000Loss on discontinued operations75,000Retained earnings January 1, 2012600,000Administrative expenses240,000Cost of goods sold850,000Rent revenue40,000Selling expenses300,000Extraordinary loss60,000Sales revenue1,700,000Shares outstanding during 2012 were 100,000.Instructions4. Prepare a single-step income statement for 2012.5. Prepare a retained earnings statement for 2012.6. Show how comprehensive income is reported using the second income statement format.

 

Paper#37494 | Written in 18-Jul-2015

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