In this project, you are given complete 2014 and selected 2015 information about a company, and are asked to prepare the following in good form (Note: Because much of the information relates to summary transactions for the entire year, use June 30, 2015 as the date for the original entries unless a specific date is provided.)
1. Original entry to record the transactions
2. Adjusting entries made at year end (see Note 1)
3. Trial balance worksheet through the ending or closing balance column, including closing entries
4. Bounce's 2015 multiple step Income Statement
5. 2015 Classified Balance Sheet
6. 2015 Statement of Stockholders' Equity
7. 2015 Direct method Statement of Cash Flows
8. Disclosures, complete with Indirect Cash Flows reconciliation
Round all calculations, except earnings per share, to the nearest dollar. Be sure to use dollar signs where appropriate.
All work must be done in an Excel spreadsheet.
All transactions must be linked to the General Journal. All totals must be calculated on the spreadsheet either by adding and subtracting cells or using the sum function. Closing entries must be completed by reference to the adjusted balances. All totals and subtotals on the financial statements must also be calculated either by adding and subtracting cells or using the sum function.
Notes:
1. For purposes of the Bounce Company, certain transactional entries that affect the cash balance must be computed. You may date these as either transactional entries or adjusting entries for purposes of the Bounce Company journal entries.
2. Several accounts and account balances are missing from the 2015 information provided. You will need to determine this missing information by reference to the transaction and adjusting entries above.
General Information about the Bounce Company:
The Bounce Company makes basketballs for the NBA and NCAA. Manufacturing occurs at the plant in Zanesville, Ohio. Bounce Company also owns a warehouse in South Dakota. Bounce Company also rents a sales office in New Orleans.
The Bounce Company is in the 30% tax bracket. Note that 70% of 2015 taxes have been paid, and the remaining 30% will be paid in 2016.
All purchases of property, plant and equipment assets are made with cash.
500,000 shares of $1 par value common stock have been authorized. As of 12/31/14, 100,000 shares of stock were issued and outstanding.
Additional information concerning 2015:
On January 2, 2015 Bounce Company sold an additional 2,000 shares of stock for $10 per share.
During 2015, 10,000 shares of Bounce's stock were actively traded on the NYSE among investors (this excludes the 2,000 shares from the 2015 offering). The December 31, 2015 year-end price for Bounce's stock was $15 per share.
The following transactions (a partial list) took place:
- $15,000 of supplies was purchased on account during 2015.
- 2015 rent payments totaled $45,000.
- 2015 utility payments totaled $15,000.
- Gross sales revenue for 2015 was $1,600,000.
- Transportation-in for inventory items bought on account for 2015 totaled $9,000.
- Purchase returns for inventory items bought on account for 2015 totaled $1,100.
- 2015 inventory purchases, all on account, totaled $500,000.
- 2015 wage payments to employees totaled $200,000.
- Sales returns for goods purchased on account totaled $1,300 in 2015. The cost of the merchandise was $390.
- Payments were made to suppliers for general operating expenses in the amount of $8,000.
During 2015, Bounce changed its estimate of bad debts from 2% of net credit sales to 2.5% of total credit sales. All sales are credit sales on terms of net 30 days.
During 2015, Bounce Company sold a building that had an original cost of $100,000 and accumulated depreciation at the time of sale of $50,000. Bounce sold the building for $55,000 cash.
During 2015, Bounce Company disposed of $100,000 of equipment at the city dump. At the time of disposal the equipment had accumulated depreciation of $80,000.
Bounce Company rents part of the South Dakota warehouse to another company, and received $30,000 in cash for the rental during 2015.
The warehouse in South Dakota received extensive water damage from rain due to a freako hurricane. It cost $100,000 to repair the damages, for which the Bounce Company paid. Later, the Bounce Company received $50,000 from its property and casualty insurer to cover part of the cost of the damages.
On December 31, 2015, Bounce received $100,000 cash from the issuance of a 10% bank note due in ten annual installments of $16,275. The $10,000 of the first annual payment, due 12/31/16, will be the payment of interest.
Cash dividends of $66,400 were declared and paid in 2015.
Check figures:
Net Income $367,710
Total assets $976,487
Cash used by investing activities $595,000
Hints and other helpful information:
The selected account balances that are reported are all correct as of 12/31/14.
Go through the information on the attached pages and determine the missing information (i.e., accounts and account balances) that must be added to the partial information that has been provided.
The Bounce Company (All accounts have normal balances)
|
Account
|
Selected Balances12/31/15
|
Final Balances 12/31/14
|
|
Accumulated Depreciation -Buildings
|
$240,000
|
$200,000
|
|
Accumulated Depreciation - Equipment
|
280,000
|
250,000
|
|
Gross Accounts Receivable
|
130,000
|
47,500
|
|
Allowance for Uncollectible Accounts
|
42,500
|
2,500
|
|
Cash
|
112,987
|
29,500
|
|
Prepaid Rent
|
3,000
|
5,000
|
|
Prepaid Utilities
|
6,000
|
4,000
|
|
Unearned Rent
|
8,500
|
7,000
|
|
Wages Payable
|
3,000
|
5,000
|
|
Accounts Payable
|
29,900
|
0
|
|
Land
|
45,000
|
45,000
|
|
Buildings
|
500,000
|
300,000
|
|
Equipment
|
650,000
|
400,000
|
|
Supplies
|
12,000
|
10,000
|
|
Inventory
|
80,000
|
90,000
|
|
Capital Stock
|
|
100,000
|
|
Additional Paid in Capital
|
|
190,000
|
|
Retained Earnings
|
|
176,500
|
|
|
|
|