Instructions
1. Make the entries in the appropriate journal for December 25 through December 31. (adjusting entries are recorded in general journal)
2. Post any amounts to be posted as individual amounts from journals to the general ledger and update the receivable and payable subsidiary ledger accounts. (only a few entries are posted for Dec, e.g., account receivable. Please post all other entries)
3. Foot and cross-foot the columnar journals and complete the month-end postings of all books of orginal entry.
4. Prepare a trial balance by entering the accout balance from the general ledger in the work sheet (list all accounts, including those with zero balances).
5. From the following information prepare adjusting entries in the general journal and enter them in the work sheet.
a. The annual provison for doubtful accounts receivable is recorded by providing a charge to Bad Debt Expense in an amount equal to 2.2% of net credit sale. All cash sales were executed in December.
b. An inventory count of the office supplies revealed $850 of supplies on hand at year end.
c. The prepaid insurance on January 1, 2014 was $3,220, which covers the period January 1 through August 31, 2014. The insurance premium of $7,800 recorded in August covers the period of September 1, 2014 through August 31, 2015. Rockford estimates that 60% of the premiums are attributable to general activities (Use Insurance Expense) and 25% to selling activities. (Use Miscellaneous Expense).
d. The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2014:
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Delivery and Warehouse Wages
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$6,100
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FICA Taxes Payable
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430
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Federal Withholding Taxes
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1,036
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State Withholding Taxes
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218
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Net pay
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4,416 (will pay in 2015)
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e. The employer's share of the FICA tax ($430) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salries earned during the last quarter exceed the manimum subject to unemployment tax.
f. Interest has accrued at 7% on the long-term notes payable since July 1,2014.
These interests are due on January 1, 2015 (The first six-month interests have been recorded and paid in July).
Interest on bonds is accrued and paid semi-annually, at a 4% annual coupon rate.
The next interest payment is due on January 1, 2015. The bonds are dated January 1, 2008, and mature January 1, 2018. Market interest rate was 6% at issurance . Use effective interest amortization method.
g. The interest accrued to 12/31/14 on notes receivable is composed of the following:
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Platteville Plumbers, 10%, 6 months, due March 31, 2015
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$1,325
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Bilder Construction, 11%, 6 months, due June 14, 2015
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232
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Beverly's Building, 9%, 6 months, due June 26, 2015
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17
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$1,574
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The interst accrued at 12/31/14 on the note payable (current) of $15,000 is $1,200. Interest is payable on January 2, 2015. (The note is due in 2015)
h. A warehouse lease payment of $9,600 was made on Septermber 1, 2014, for rental through February 28, 2015. (The Prepaid Rent account is for advance lease payments on the warehouse.)
i. $730 is owned to Northern Electric Co. and $279 is owned to City of Rockford for utility services proved during December 2014.
j. Plant and equipmentto be depreciated are composed of the following:
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Assets
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Date Acquired
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cost
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estimated
usage or life
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Salvage value
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depreciation method
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Building
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7/1/2010
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$306,000
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25 years
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$20,000
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sum-of-years' digits
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Truck #1
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4/1/2010
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28,000
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60,000 miles
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3,100
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miles driven
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Truck #2
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9/1/2011
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33,000
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60,000 miles
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4,200
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miles driven
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Lift Truck #1*
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8/17/2007
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7,900
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10 years
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900
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straight-line
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Lift Truck #2
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3/29/2011
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4,500
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10 years
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500
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straight-line
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Lift Truck #3
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9/16/2012
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5,000
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10 years
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500
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straight-line
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Office Equipment
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Prior to 1/1/14
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32,800
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7 years
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2,000
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straight-line
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Computer
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12/19/2014
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6,100
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4 years
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1,300
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Double-decling
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*sold 12/31/14
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Truck No. 1has been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was driven 13,000 miles and truck No. 2 was driven 17,000 miles. Remember that Rockford Company takes a half-year's depreciation in the year of acquisition and a half-year in the year of sale.
6. Complete the worksheet. Compute State of Illinois corporate income taxes at 4.5% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax is not deductible on the Illinois return. Assume federal corporate income tax on income subject to federal tax is as follows:
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first $50,000
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15%
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next 25,000
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25%
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remainder
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34%
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Income between $100,000 and $335,000 is assessed a 5% federal surtax, not to exceed $11,750.00
7. Prepare the journal entry for income taxes. Post all adjusting entries.
8. Prepare 2014's income statement (assume the weighted-average number of shares outstanding for the year 2014 is 5,600 shares). Assume that bad debt expense and depreciation expense are administrative expenses.
9. Prepare 2014's statement of retained earnings.
10. Prepare 2014's balance sheet.
Attachment:- Project_Instruction.xlsx