Assignment Part A:
1. The Williams Company had the following accounting framework available:
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Cash
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Liabilities +
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Owner Equity
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Cash
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A/R
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Pre. Exp.
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Supp.
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A/P
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N/P
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Unearn. Rev.
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Cap.
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R/E
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6,000
|
840
|
630
|
80
|
920
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1,670
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460
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4,000
|
960
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Required:
a. If $240 of insurance expired, what dollar amount of ending prepaid expenses would the company report?
b. If the company made sales on account of $4,000 and reported ending accounts receivable of $380, what dollar amount of cash receipts from sales did the company have?
c. If $380 of services previously sold in advance were performed, what dollar amount of ending unearned revenue would the company report?
d. If the company paid $100 in dividends and reported an ending retained earnings of $2,920, what was its net income?
2. The Speedy-Quick Delivery Company purchased some new equipment on November 1st that had a list price of $27,740, but was purchased at a discounted price of $25,340. The company expects the equipment to be useful for 8 years at which time they will trade it in for new equipment and will likely get a trade in value of $2,300.
Required:
a. Prepare an accounting framework model and then indicate the amount and impact of the purchase of the equipment as well as depreciation for the first three calendar years.
b. Prepare the balance sheet (for this asset only) for the first three calendar years.
c. If the company sold the equipment at the end of the third year for $19,300, indicate the amount and impact of the sale on the accounting framework model.
Assignment Part B:
1. The Rateliff Corporation had the following accounting framework available:
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Assets=
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Liabilities +
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Owner Equity
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Cash
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A/R
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Pre. Exp.
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Inventory
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Equip.
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A/D.
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A/P
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N/P
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Unearn. Rev.
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Cap.
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R/E
|
|
3,630
|
840
|
390
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6,440
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0
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0
|
320
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1,410
|
590
|
7,760
|
1,220
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Required -
a. Using the accounting framework above, record each of the following transactions/events for the month:
May 1 Received $50 from customers on account
May 1 Borrowed $10,000 on a long-term note payable
May 1 Purchased equipment for $7,200, which is expected to be useful for 7 years at which time, it should be worth $900
May 3 Purchased $2,400 of inventory on account
May 8 Paid suppliers $180 for purchases previously made on account
May 10 Paid an insurance premium of $210
May 13 Received and paid utility bill for $600
May 19 Sold 25% of all inventory to a customer for $8,400
May 24 Sold a customer a gift card for $120
May 30 Paid employee salaries of $4,800
May 31 Insurance of $80 expired
b. Use the resulting accounting framework to prepare an income statement, statement of retained earnings and a balance sheet for the company at the end of the month.
c. Record the necessary transactions related to the equipment assuming it were sold for $6,000 on June 1st of the same year.