Question 1: 30% points: Flip Corporation's trial balance at December 31, 2014, is presented below. All 2014 transactions have been recorded except for the items described below.
Flip Corporation
Trial Balance
December 31, 2014
Accounts Debit Credit
Cash $23,000
Accounts Receivable 51,000
Inventory 22,700
Land 65,000
Buildings 95,000
Equipment 40,000
Allowance for Doubtful Accounts $450
Accumulated Depreciation, Buildings 30,000
Accumulated Depreciation, Equipment 14,400
Accounts Payable 19,300
Interest Payable 0
Dividends Payable 0
Unearned Rent Revenue 8,000
Bonds Payable (10%) 50,000
Common Stock ($10 par) 30,000
Paid-in Capital in Excess of Par, Common Stock 6,000
Preferred Stock ($20 par) 0
Paid-in Capital in Excess of Par, Preferred Stock 0
Retained Earnings 75,050
Treasury Stock 0
Cash Dividends 0
Sales Revenue 570,000
Rent Revenue 0
Bad Debt Expense 0
Interest Expense 2,500
Cost of Goods Sold 400,000
Depreciation Expense 0
Other Operating Expenses 39,000
Salaries and Wages Expense 65,000 _______
Totals $803,200 $803,200
Unrecorded transactions:
1. On January 1, 2014, Flip issued 1,000 shares of $20 par, 6% preferred stock for $22,000.
2. On January 1, 2014, Flip also issued 1,000 shares of common stock for $23,000.
3. Flip reacquired 300 shares of its common stock on July 1, 2014, for $49 per share.
4. On December 31, 2014, Flip declared the annual preferred stock dividend and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2015.
5. Flip estimates that uncollectible accounts receivable at year-end is $5,100.
6. The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000.
7. The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000.
8. The unearned rent was collected on October 1, 2014. It was receipt of 4 months' rent in advance (October 1, 2014 through January 31, 2015).
9. The 10% bonds payable pay interest every January 1 and July 1. The interest for the 6 months ended December 31, 2014, has not been paid or recorded.
Instructions: (Ignore income taxes.)
a. Prepare journal entries for the transactions listed above.
b. Prepare an updated/adjusted December 31, 2014, trial balance, reflecting the unrecorded transactions.
c. Prepare a multiple-step income statement for the year ending December 31, 2014.
d. Prepare a retained earnings statement for the year ending December 31, 2014.
e. Prepare a classified balance sheet as of December 31, 2014.