Case: Financial Statement Case
The purpose of this assignment is to review material covered in Acct:2100 and refresh your journal entry and financial statement skills as well as build your cash-flow skills. You may collaborate with colleagues; however, you are required to do your own work and your own case. Using the balance sheet at September30, 2016 and information below:
- Prepare the Income Statement, Statement of Owners' Equity and the Balance Sheet for the fiscal year ending September 30, 2017. To support your work prepare the appropriate journal entries and post to the related Accounting Equation or "T-accounts," template on the accompanying Excel Workbook
- Your work is to be done using Microsoft Office's EXCEL or an EXCEL compatible program.
The attached Balance Sheet gives your firm's position at the end of fiscal 2016. During fiscal 2017, your firm has the following transactions:
A. Your firm has total sales for the year of $1,210,500. Included in the total sales figure are $1,010,500 sales on credit. During the year, the firm received $792,000 of payments on account. Customers returned $7,800for cash refunds during the year.
B. During the year, the firm determined that accounts totaling $2,900were uncollectible. Moreover, a $375 receivable written off during the year was subsequently collected. The $375 is not included in "A." above.
C. Your firm uses the allowance method to record bad debts. Specifically, the firm uses the percentage of receivables method to compute the allowance for doubtful accounts. The firm uses the following information to determine the allowance:
|
Age of Receivables
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Percent of current balance
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Percent expected uncollectible
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|
<30 days
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70%
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2%
|
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< 60 days
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23%
|
10%
|
|
>60 days
|
7%
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50%
|
D. Your firm purchases $650,500 of additional inventory on account during the year. The purchases are charged to accounts payable. Total payments made on account for the year were $590,725. Inventory (prior to any LCM write-down's) at September 30, 2017 totaled $131,875.
E. Your firm has an outstanding 4% note payable (in long-term debt). Interest is paid annually on September 30th.
F. On October 1, 2016, the firm used $75,000 cash to purchase Abbee Company 5% bonds at face (par) value. The bonds pay interest semi-annually on April 1st and October 1st. Your firm intends to hold the bonds as Available-for-Sale Securities.
G. On October 1, 2016, the firm put a new roof on the administrative building. The cash cost of the new roof was $25,000 and is expected to add 6 years to the life of the building from the date of installation. The firm also repainted the exterior of the building. The cash cost of the painting, which the firm does every three years, was $12,000.
H. On October 20, 2016, the firm sold trading securities with a book value of $8,400 for $9,800 in cash.
I. Annual liability insurance premiums are payable on January 1st of each year. The premium amount paid in January 2017 was $72,000.
J. On March 1st, the firm purchased Sales Building4 costing $450,000. Your firm paid thirty percent (30%) of the building's cost in cash and issued a 4% 5-year note payable for the balance. The note requires annual interest payments. The expected life of the facility is 20 years, with no salvage value. Your firm uses the straight-line method of depreciation. The book values (as of 9/30/2016) of other PP&E currently on the books (also with no salvage value) are as follows:
|
Asset
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Historical Cost
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Accumulated Depreciation
|
Remaining Life
|
|
Land
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$ 247,500
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$ -
|
-
|
|
Sales Building 1
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418,000
|
229,900
|
9
|
|
Sales Building 2
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451,000
|
180,400
|
12
|
|
Sales Building 3
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368,500
|
92,125
|
15
|
|
Administration Building
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148,500
|
44,550
|
14
|
|
Total
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$1,633,500
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$546,975
|
|
K. Administrative and Sales employee wages of $180,650were earned andpaid during fiscal 2017. In addition, during October 2016, the firm paid wages owed from the prior year. Unpaid wages for Fiscal 2017, which will be paid in October 2017, amount to $16,200.
L. On September 30, 2017, the firm sold Sales Building 2 for $244,000. The firm received payment in cash.
M. Also on September 30th, the firm determined that a piece of equipment in Sales Building 1 was outdated due to significant technology changes. The estimated future undiscounted cash flows over the useful life of the equipment is expected to be $20,000 and the fair value of the equipment is estimated to be $15,000. The book value of the equipment at September 30th (after adjusting for current year depreciation) is $29,300.
N. On August 31, 2017, the ABBEE 4% bonds have a fair market value of $81,300. Trading Securities have a fair market value of $98,200.
O. During September 2017, Your Firm paid $33,000 to acquire its own shares. These shares were correctly classified as Treasury Shares.
P. In the closing process, the firm determines that a substantiallower of cost or market (LCM) write-down of inventory is required. The estimated loss is $5,250.
Q. During August 2017, your firm's board of directors declared $44,000 of dividends. At September 30, 2017, the Dividend Payable account balance was $4,750.
Additional information:
1. The firm uses the periodic inventory system.
2. Ignore income taxes
CHECK FIGURES
- Net Income = $121,571
- Total Assets = $1,967,106
|
Your Firm Balance Sheet September 30, 2016
|
|
Assets
|
|
|
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Cash
|
|
$ 102,530
|
|
Accounts receivable
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$ 101,640
|
|
|
Allowance for doubtful accounts
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(6,160)
|
|
|
Accounts receivable, net
|
|
95,480
|
|
Inventories
|
|
136,400
|
|
Trading securities
|
|
111,100
|
|
Prepaid insurance
|
|
17,100
|
|
Total Current Assets
|
|
462,610
|
|
|
|
|
Property, Plant and Equipment, gross
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$ 1,633,500
|
|
|
Accumulated depreciation
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(546,975)
|
|
|
Property, Plant and Equipment, net
|
|
1,086,525
|
|
Total Assets
|
|
$ 1,549,135
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
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Accounts payable
|
|
$ 89,645
|
|
Salaries payable
|
|
31,575
|
|
Dividends payable
|
|
4,400
|
|
Total Current Liabilities
|
|
125,620
|
|
|
|
|
Long-term note payable
|
|
380,000
|
|
Total Liabilities
|
|
505,620
|
|
|
|
|
Common stock, no par
|
|
490,000
|
|
Retained Earnings
|
|
591,215
|
|
Accumulated Other Comprehensive Income
|
4,300
|
|
Treasury stock
|
|
(42,000)
|
|
Total Shareholder's Equity
|
|
1,043,515
|
|
Total Liabilities and Shareholder's Equity
|
|
$ 1,549,135
|
|
|
|
Attachment:- Assignment.rar