Correcting entries:

Date Account Debit Credit

31-12-
15 Cash 1,500

Accounts receivable 1,500

b. Adjusting Entries:

Date Account Debit Credit

31-12-
300
15 Interest receivable

Interest income ($30,000 0.06 2/12) 300

31-12-
1,875
15 Interest expense

Interest payable ($75,000 0.05 6/12) 1,875

31-12-
4,500
15 Depreciation: Building (150,000 0.03)

Accumulated depreciation: Building 4,500

31-12-
7,500
15 Depreciation: Equipment (50,000 0.15)

Accumulated depreciation: Equipment 7,500

31-12-
3,500
15 Cost of sales

Inventory (55,000 51,500) 3,500

31-12-
5,500
15 Salaries and wages expense

Salaries and wages payable 5,500

31-12- Bad debts expense [(53,500 1,500) 0.05]

4,100
15 + 1,500

Allowance for bad debts 4,100

c. Adjusted Trial Balance:

XYZ Company
Adjusted Trial Balance
December 31, 2015
Account Debit Credit
45,00
Cash 0
52,00
Accounts Receivable 0
2,6
Allowance for Doubtful Accounts 00
30,00
Notes Receivable 0
3
Interest receivable 00
51,50
Merchandise Inventory 0
20,00
Land 0
150,00
Building 0
19,50
Accumulated Depreciation, Building 0
50,00
Equipment 0
28,50
Accumulated Depreciation, Equipment 0
26,00
Goodwill 0
25,00
Accounts Payable 0
5,5
Salaries payable 00
1,8
Interest payable 75
75,00
Long-Term Notes Payable 0
Common Stock, $10 par, 2,000 shares authorized 20,00
and outstanding 0
147,00
Retained Earnings 0
700,00
Sales Revenue 0
3
Interest income 00
Salaries Expense 155,50
 0
3,5
Utilities Expense 00
353,50
Cost of Goods Sold 0
55,00
Administrative Expenses 0
4,5
Depreciation: Building 00
7,5
Depreciation: Equipment 00
4,1
Bad debts expense 00
1,8
Interest expense 75
15,00
Sales Expenses 0
Totals 1,025,275 1,025,275

d. Classified Balance Sheet:

ABC Company
Balance Sheet as at 31-12-2015 $ $
Non-Current Assets:
Goodwill 26000
Land 20,000
Buildings 150,000
Equipment 50,000
Accumulated depreciation (48,000) 198,000
Current Assets:
Cash 45,000
Merchandise Inventory 51,500
Accounts Receivable 52,000
Allowance for Doubtful Accounts (2,600)
Notes Receivable 30,000
Interest receivable 300 176,200
Total assets 374,200

Equity:
Common Stock 20,000
Retained earnings 246,825 266,825
Non-Current liabilities:
Long-term loan notes payable 75,000 75,000
Current liabilities:
Accounts Payable 25,000
Salaries payable 5,500
Interest payable 1,875 32,375
Total equity and liabilities 374,200

e. Closing Entries:

Date Account Debit Credit

31-12-
700,000
15 Sales

Interest income 300

Cost of sales 353,500

Salaries expense 155,500

Utilities expense 3,500

Administrative expenses 55,000

Depreciation: Building 4,500

Depreciation: Equipment 7,500

Bad Debts expense 4,100

Interest expense 1,875

 Sales expense 15,000

Income summary 99,825

31-12-
99,825
15 Income summary

Retained earnings 99,825

Question 2

Required:

a. Calculate the cost of goods available for sale.

Opening inventory (150 $7.00) 1,050

Add: Purchases 6,945__
Cost of goods available for sale $7,995 (Answer)

b. Calculate the dollar value of sales.

(100 $10) + (125 $10) + (75 $12) + (200 $12.50) + (150 $15) =
$7,900

c. Calculate the value of Ending Inventory and Cost of Goods Sold

under the following independent assumptions:

a. Cost of Goods Available for Sale $7,995

b. Sales $7,900
Ending
c. Value of: COGS
Inventory
(1)LIFO method $3,103 $4,893
(2)FIFO method $3,206 $4,789
(3)Average-cost method $3,178 $4,817
Please see workings below for calculations.
(2) FIFO
METHOD
Total In Total Out Balance
Date Per Per Per
Units Unit Total Units Unit Total Units Unit Total

Jan-01 150 7.00 1,050

Jan-02 100 7.00 700 50 7.00 350

Jan-05 225 7.20 1,620 50 7.00 350

225 7.20 1,620

Jan-07 50 7.00 350 150 7.20 1,080

75 7.20 540

Jan-10 100 7.50 750 150 7.20 1,080

100 7.50 750

Jan-12 75 7.20 540 75 7.20 540

100 7.50 750

Jan-15 150 7.80 1,170 75 7.20 540

100 7.50 750

150 7.80 1,170

Jan-17 75 7.20 540 125 7.80 975

100 7.50 750

25 7.80 195

Jan-20 200 7.95 1,590 125 7.80 975

200 7.95 1,590

Jan-24 125 7.80 975 175 7.95 1,391

 25 7.95 199

Jan-25 150 8.00 1,200 175 7.95 1,391

150 8.00 1,200

Jan-30 75 8.20 615 175 7.95 1,391

150 8.00 1,200

75 8.20 615

Total 6,945 4,789 3,206

AVERAGE COST
METHOD
Total In Total Out Balance
Date Uni Per Per
ts Per Unit Total Units Unit Total Units Unit Total
Jan-
01 150 7.00 1,050
Jan-
02 100 7.00 700 50 7.00 350
Jan-
05 225 7.20 1,620 275 7.16 1,970
Jan-
07 125 7.16 895 150 7.16 1,075
Jan-
10 100 7.50 750 250 7.30 1,825
Jan-
12 75 7.30 547 175 7.30 1,277
Jan-
15 150 7.80 1,170 325 7.53 2,447
 Jan-
17 200 7.53 1,506 125 7.53 941
Jan-
20 200 7.95 1,590 325 7.79 2,531
Jan-
24 150 7.79 1,168 175 7.79 1,363
Jan-
25 150 8.00 1,200 325 7.89 2,563
Jan-
30 75 8.20 615 400 7.94 3,178

Total 6,945 4,817 3,178

Question 3

Required: Prepare Acme Supply Company's general journal entries for the following
transactions:

Date Account Debit Credit

Jan 1 10% Note receivable $15,000
Accounts receivable $15,000
Jan 15 Equipment $10,000
12% Notes payable $10,000
Jan 15 10% notes receivable $30,000
Cash $30,000
Jan 31 Interest receivable ($15,000 0.10 1/12) $125
Interest income $125
Apr 15 Cash $30,000
10% notes receivable $30,000
Apr 15 Cash ($30,000 0.10 3/12) $750
Interest income $750
May 15 Cash $15,000
10% Notes receivable $15,000
May 15 Cash ($15,000 0.10 4/12) $500
Interest receivable $125
Interest income $375

Oct 15 12% Notes payable $10,000

Cash $10,000
Oct 15 Interest expense ($10,000 0.12 9/12) $900
Cash $900

Question 4:

XYZ Company purchased a refrigerated delivery truck for $65,000 on January 1,

2015. The plan is to use the truck for 5 years and then replace it. At the end of its
useful life, the truck is expected to have a salvage value of $10,000. The fiscal year
ends December 31.

a. Prepare the depreciation table for XYZ's truck, assuming that the company
uses the straight-line method for depreciation.

b. Prepare the depreciation table for XYZ's truck, assuming that the company
uses the double-declining-balance depreciation method.

c. Compute the depreciation expense for 2015 for XYZ's truck, assuming the
truck has an expected life of 200,000 miles and during 2015 the truck was
driven 24,540 miles. Round your depreciation expense per mile to three
decimal places.
a.Answer:

Total
Depreciation End-of-Year
Year Accumulated
Expense Book Value
Depreciation
2015 11,000 11,000 $54,000
2016 11,000 22,000 43,000
2017 11,000 33,000 32,000
2018 11,000 44,000 21,000
2019 11,000 55,000 10,000

b. Answer:
Total
Depreciation End-of-Year
Year Accumulated
Expense Book Value
Depreciation
2015 26,000 26,000 $39,000
2016 15,600 41,600 23,400
2017 9,360 50,960 14,040
2018 4,040 55,000 10,000

c.
Answer $6,748.500

[($65,000 cost - $10,000 salvage) / 200,000 miles] 24,540 miles = 6,748.500

Question 5

Required:
Prepare the general journal entry to record the employer's payroll liability.
Prepare the general journal entry to record the employer's payroll-tax liability.
Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and
(b) on January 22.

Date Account Debit Credit

(a) Salaries and wages expense 25,000
FICA social security 1,550
FICA Medicare 363
State income tax 1,250
 Income tax withheld 3,750
Net wages payable 18,087

(b) Employer Payroll tax expense 5,300

FICA tax withheld (Employer match) 3,750
FUTA 200
SUTA 1,350

Net wages payable 18,087

Cash/bank 18,087

FICA social security 1,550

FICA Medicare 363
State income tax 1,250
FUTA 200
SUTA 1,350
Cash $4,713

Question 6

Required:

a. Prepare the general journal entry to record the end-of-the-year adjusting

entry if Acme uses 0.5% of Net Credit Sales as the basis for determining
Bad-Debt Expense.

b. Prepare the general journal entry to record the end-of-the-year adjusting

entry if Acme uses 5% of Accounts Receivable as the basis for determining
Bad-Debt Expense.
 Date Account Debit Credit

(a) Bad Debts expense 13,875

Allowance for doubtful accounts 13,875

(b) Bad debts expense 11,500

Allowance for doubtful accounts 11,500

(a) [(Credit sales $2,500,000 25,000 sales return) 0.5%] + $1,500 debit
balance of allowance = 13,875

(b) (Accounts receivable $200,000 5%) + $1,500 debit balance of allowance =

11,500