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$ 25,620 $ 25,620

Date Account Titles Explanation Dr. Cr.


Adjustment Entries
2015
December 31 Account Receivable $ 900 a
Unearned Service Revenue $ 400
Service Revenue $ 1,300
31 Rent Expense $ 600 b
Prepaid Rent $ 600
31 Supplies Expense $ 500 c
Prepaid Expense $ 500
31 Depreciation Expense $ 200 d
Accumulated DepreciationEquipment $ 200
31 Utilities Expense $ 300 e
Accounts Payable $ 300
31 Interest Expense $ 120 f
Interest Payable $ 120
31 Salaries and Wages Payable $ 800 g
Salaries and Wages Expense $ 800
Closing Entries
31 Service Revenue $ 9,300 h
Income Summary $ 9,300
31 Income Summary $ 6,880 i
Salaries and Wages Expense $ 2,860
Utilities Expense $ 2,100
Rent Expense $ 1,100
Supplies Expense $ 500
Depreciation Expense $ 200
Interest Expense $ 120
31 Income Summary $ 2,420
Retained Earnings $ 2,420
31 Retained Earnings $ 3,200
Dividends $ 3,200
STABLER COMPANY
Income Statement
For the Year Ended December 31, 2015

Revenues
Service Revenue $ 9,300

Expenses
Salaries and Wages Expense $ 2,860
Utilities Expense $ 2,100
Rent Expense $ 1,100
Supplies Expense $ 500
Depreciation Expense $ 200
Interest Expense $ 120
Total Expense $ 6,880
Net Income $ 2,420
STABLER COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2015

Retained Earnings, December 1 $ -


Add: Net Income $ 2,420 Current Assets
$ 2,420
Less: Dividends $ 3,200
Retained Earnings, December 31 $ (780)

Property, plan, and equipm

Total Assets

Liab
Current liabilities

Stockholders' equity

Total Liabilities and Stockho


STABLER COMPANY
Balance Sheet
December 31, 2015

Assets

Current Assets
Cash $ 3,000
Accounts Receivable $ 3,700
Supplies $ 700
Prepaid Rent $ 1,500
Total Current Assets $ 8,900
Property, plan, and equipment
Equipment $ 18,000
Accumulated DepreciationEquipment $ 1,500 $ 16,500
Total Assets $ 25,400

Liabilities and Stockholders' Equity


Current liabilities
Notes Payable $ 10,000
Accounts Payable $ 3,000
Unearned Service Revenue $ 4,060
Salaries and Wages Payable $ 800
Interest Payable $ 120
Total Current Liabilities $ 17,980
Stockholders' equity
Common Stock $ 8,200
Retained Earnings $ (780)
Total Stockholders' equity $ 7,420
Total Liabilities and Stockholders' Equity $ 25,400
STABLER COMPANY
Worksheet
December 31, 2015

Adjusted Trial
Trial Balance Adjustment Income Statement Balance Sheet
Balance
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash $ 3,000 $ 3,000 $ 3,000
Accounts Receivable $ 2,800 a $ 900 $ 3,700 $ 3,700
Prepaid Rent $ 2,100 b $ 600 $ 1,500 $ 1,500
Supplies $ 1,200 c $ 500 $ 700 $ 700
Equipment $ 18,000 $ 18,000 $ 18,000
Accumulated DepreciationEquipment $ 1,300 d $ 200 $ 1,500 $ 1,500
Accounts Payable $ 2,700 e $ 300 $ 3,000 $ 3,000
Notes Payable $ 10,000 $ 10,000 $ 10,000
Interest Payable f $ 120 $ 120 $ 120
Salaries and Wages Payable g $ 800 $ 800 $ 800
Unearned Service Revenue $ 4,460 a $ 400 $ 4,060 $ 4,060
Common Stock $ 8,200 $ 8,200 $ 8,200
Dividends $ 3,200 $ 3,200 $ 3,200
Service Revenue $ 8,000 a $ 1,300 $ 9,300 h $ 9,300
Salaries and Wages Expense $ 2,060 g $ 800 $ 2,860 i $ 2,860
Utilities Expense $ 1,800 e $ 300 $ 2,100 i $ 2,100
Rent Expense $ 500 b $ 600 $ 1,100 i $ 1,100
Supplies Expense c $ 500 $ 500 i $ 500
Depreciation Expense d $ 200 $ 200 i $ 200
Interest Expense f $ 120 $ 120 i $ 120
Totals $ 34,660 $ 34,660 $ 3,820 $ 3,820 $ 36,980 $ 36,980 $ 6,880 $ 9,300 $ 30,100 $ 27,680
Net Income j $ 2,420 $ 2,420
Totals $ 9,300 $ 9,300 $ 30,100 $ 30,100
Unit Cost (in
Date Explanation Units
US dollars)

August 1 Inventory 12 100


Auguts 5 Sale 8 125
August 12 Purchases 45 103
August 16 Sale 48 127
August 19 Purchases 50 104
August 26 Purchases 20 105
August 29 Sale 46 130

b.

Date Account Titles Explanation Dr. Cr.


2016
August 5 Cash $ 1,000.00
Cost of Goods Sold $ 400.00
Sales $ 1,000.00
Inventory $ 400.00
12 Inventory $ 4,635.00
Cash $ 4,635.00
16 Cash $ 6,096.00
Cost of Goods Sold $ 4,932.00
Sales $ 6,096.00
Inventory $ 4,932.00
19 Inventory $ 5,200.00
Cash $ 5,200.00
26 Inventory $ 2,100.00
Cash $ 2,100.00
29 Cash $ 5,980.00
Cost of Goods Sold $ 4,783.00
Sales $ 5,980.00
Inventory $ 4,783.00
$ 35,126.00 $ 35,126.00
a. FIFO

Total (in
US
dollars) Date Purchases Cost of Goods Sold
1200 v
1000 v 2016
4635 v August 1
6096 v 5 $ 100 8 $ 800
5200 v 12 $ 103 45 $ 4,635
2100
5980 16 $ 100 4 $ 400
$ 103 44 $ 4,532
19 $ 104 50 $ 5,200

26 $ 105 20 $ 2,100

29 $ 103 1 $ 103
$ 104 45 $ 4,680
31

LIFO

1
5 $ 100 8 $ 800
12 $ 103 45 $ 4,635

16 $ 103 45 $ 4,635
$ 100 3 $ 300
19 $ 104 50 $ 5,200

26 $ 105 20 $ 2,100

29 $ 105 20 $ 2,100
$ 104 26 $ 2,704
31

moving average

Date Purchases Cost of Goods Sold

2016
August 1
5 $ 100 8 $ 800
12 $ 103 45 $ 4,635
16 $ 102.76 48 $ 4,932
19 $ 104 50 $ 5,200
26 $ 105 20 $ 2,100
29 $ 104.26 46 $ 4,796
31
Balance

$ 100 12 $ 1,200
$ 100 4 $ 400
$ 100 4 $ 400
$ 103 45 $ 4,635

$ 103 1 $ 103
$ 103 1 $ 103
$ 104 50 $ 5,200
$ 103 1 $ 103
$ 104 50 $ 5,200
$ 105 20 $ 2,100
$ 104 5 $ 520
$ 105 20 $ 2,100
$ 104 5 $ 520
$ 105 20 $ 2,100

$ 100 12 $ 1,200
$ 100 4 $ 400
$ 100 4 $ 400
$ 103 45 $ 4,635

$ 100 1 $ 100
$ 100 1 $ 100
$ 104 50 $ 5,200
$ 100 1 $ 100
$ 104 50 $ 5,200
$ 105 20 $ 2,100
$ 100 1 $ 100
$ 104 24 $ 2,496
$ 100 1 $ 100
$ 104 24 $ 2,496

Balance
$ 100 12 $ 1,200
$ 100 4 $ 400
$ 102.76 49 $ 5,035
$ 102.76 1 $ 102.76
$ 103.98 51 $ 5,303
$ 104.26 71 $ 7,403
$ 104.26 25 $ 2,607
$ 104.26 25 $ 2,607
Case III (25)

PT Batara Mulia purchased machinery on


January 1, 2016, at a cost of $ 250,000. The
estimated useful life of the machinery is 4
years, with an estimated salvage value at the
end of that period of $ 30,000. The company is
considering different depreciation methods
that could be used for financial reporting
purposes.

Required:

1. Prepare seperate depreciation schedules


for the machinery using the straight-line
method, and the declining balance method
using double the straight-line rate (round to
the nearest dollar).

2. Which method would result in the


higher reported 2016 income? In the highest
total reported income over the 4-year period?

3. Which method would result in the lower


reported 2016 income? In the lowest total
reported income over the 4-year period?

purchased machinery on January 1, 2016 250,000


salvage value 30,000
220,000
Estimated useful life of the machinery 4
a. Straight-Line Method

Computation
Year Depreciable Cost x Depreciation Rate =
2016 $ 220,000 25%
2017 $ 220,000 25%
2018 $ 220,000 25%
2019 $ 220,000 25%
Total
b. Declining Balance Method
c. Straight-Line Method
Declining Balance Method

End of Year
Annual Depreciation Expense Accumulated Depreciation Book Value Year
$ 55,000 $ 55,000 $ 195,000 2016
$ 55,000 $ 110,000 $ 140,000 2017
$ 55,000 $ 165,000 $ 85,000 2018
$ 55,000 $ 220,000 $ 30,000 2019
$ 220,000
Declining Balance Method

End of Year
Annual Depreciation Expense Accumulated Depreciation Book Value
$ 125,000 $ 125,000 $ 125,000
$ 62,500 $ 187,500 $ 62,500
$ 31,250 $ 218,750 $ 31,250
$ 1,250 $ 220,000 $ 30,000
$ 220,000
2019 adjusted

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