acc112 final-On January 2, 2013 Mr. Burn?s decided to incorporate his business Mr. Smith GoodOld Fashion Cookies
Question;On;January 2, 2013 Mr. Burn?s;decided to incorporate his business Mr. Smith GoodOld Fashion Cookies;Check Figures;Unadjusted Net Income: $171,268;Adjusted Net Income: $74,928;Ending Retained Earnings Balance;$203,860;Journal Entries;1. January 2: Smith sold 100,000 shares of;common stock @ $10. The stock had a par value of $8;2. January 5: Smith collected $20,000 of prior;accounts receivables by acquiring help from Jammie Nash.;3. January 5: Smith issued a bond (new bond);to raise the needed capital to enhance his company in Ozark, Missouri. The new;bond is a five year 12%, $100,000 semi annual bond with an effective market;rate of 10%. Payments are to be made semi-annually. The bond will be amortized;using the effective interest method. Record the issuance of the new bond. Round;to the nearest dollar.;4. February 4: Smith bought a new car to speed;up delivery time. Smith bought the car outright for $20,000. The car is;expected to have a useful life of 150,000 miles.;5. February 10: Smith bought $200,000 of;inventory on account. The freight cost was $2,000. The terms were FOB;Destination.;6. March 1: Smith paid off what he originally;owed in accounts payable at the beginning of the year.;7. March 15: Smith paid income tax from last;year.;8. April 1: Smith wrote off a $1,000 of;accounts receivable that he knew that he would never be able to collect from;Jack Ford. Record the write-off.;9. April 15: Smith sold on account $700,000;(2/10, n30) to city of Ozark. The cost of merchandise sold was $300,000;10. April 20: Cookie batches had;contamination, they were returned. $100,000 of inventory was returned. The cost;of merchandise sold was $40,000.;11. May 1: The city of Ozark paid Smith for;the shipment of cookies in entry 9 and 10.;12. July 1: Smith made the third interest;payment and amortized using the effective interest method on the old bond from;January 1, 2012. This bond was a five year, semi annual bond with a face value;of $100,000, effective market rate of 8%, and coupon rate of 6%. Payments are;made semi-annual. Record the interest payment and the amortization. Round to;the nearest dollar.;13. July 1: Smith made his first semi-annual;interest payment on the new bond and amortized using effective interest method.;Record the interest payment. Round to the nearest dollar.;14. July 1: Smith bought back 20,000 shares of;treasury stock for $7 a share.;15. August 10: Smith paid the following;expenses: Wage Exp $10,000, Rent Exp $20,000, Professional Fees $40,000, Sales;Salary Exp $10,000, and Advertising Exp $60,000. (Combine the amounts into;ONE cash entry);16. August 25: Ford was able to pay off the;debt he owed to Smith. This was the debt Smith previously wrote off.;17. September 15: Smith declared dividends;$50,000.;18. September 30: Smith sold 10,000 of the;treasury stock with a cost $7 for $12 per share.;19. October 20: Smith paid off the entire;Notes Payable which was due in 2015. The amount Smith paid included the face;value of Note plus $10,000 of interest.;20. November 1: Smith paid off the Notes;Payable due in December 2013. Smith paid full carrying value of the Note plus;$500 of interest.;21. December 31: Smith made a semi annual;interest payment on the old bond and amortized. Round to the nearest dollar.;22. December 31: Smith made a semi annual;interest payment on the new bond and amortized. Round to the nearest dollar.;23. December 31: Smith paid the dividends;previously declared.;Adjustments: At December 31, 2013;Smith made the following adjusting entries to update the books.;A1. At year end, it was estimated that 6% of;the year end accounts receivable will not be collected.;A2. Smith accrued for 2013 income taxes which;are to be paid March 15, 2014, $70,000;A3. Smith earned the remaining amount of;unearned sales revenue in 2013.;A4. Smith incurred the following depreciation;expenses for the year;Equipment (10 year straight line bought in;2011);Machinery (10 year double decline bought in;2011);Car (driven 75,000 miles during the year);Combine depreciation expense into;one entry;A5. All prepaid expenses expired during the;year.;A6. Office supplies were counted to $3,000;worth at year end.;A7. Accounts Receivables not recorded, $10,000;Closing Entries;At December 31, 2013, the following closing;entries were needed;C1. & C2. Close all revenue and expense;accounts.;C3. Close income summary to retained earnings.;C4. Close the Dividends account.
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