Accounting chapter 11 comprehensive problem 3

ACC 211 : Assienment #2

Due:

Time: 3-5 hours

Assignment: Complete Comprehensive Problem: Chapters 3 to 10

Points: This assignment is worth 20 points. It is due at the beginning of class on the date shown on your Course Schedule. If you turn it in one class period late, your assignment grade will be reduced by 25%. If you tum it in two class periods late, your assignment grade will be reduced by 50%. Any assignment more than two class periods late will not be accepted.

Working Papers on pages 1 3 1- 1 36 in your ACC 211 Handouts & Challenges booklet to complete the assignment. The journal entries for Chapter 11 have been completed for you.

Use2012 as the year.

An explanation for each journal entry is not required.

A classified balance sheet is on page 153 and example financial statements are also in the back of your booklet. Use the figures given on the trial balance-you do not need to post the journal entries or update the accounts (this has already been done for you). Also, pay attention to the currentllong-term liability information that is presented above the trial balance.

Hints:

o August 18th - the total account receivable is $6,400. Of this amount, the company is receiving.$5,440 in cash and the remainder is being written-off as uncollectible.

o October 17th-the company is selling a fixed asset. o December I4tn - simply pay off the Note Payable balance that was created on

9/15. You do not need to calculate interest. o 4(e) - notice that they didn't own the store equipment for the whole year o 4(i) - you need to accrue interest on the note from Oct. 17 through Dec. 31.

Here are some check figures:

Current Assets: $839,080 Total Assets: $2,550,840 (note: the check figure in the book is wrong!) Current Liabilities: 8497,&A

Start early! Do r-rot wait until the night before to start this assignment!!

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532 {hapter X 1 Current Liabilities and payroll

Dec. 26. Journalized rhe entry to record the biweekly payroll. A surnmary of the pay- roll record follows:

Salary distribution: Sales

Officers

Office

Deductions:

Social security tax Medicare tax Federal income tax withheld State income tax withheld Savings bond deductions

Net amount

535,400 17,250

6,400 ss9,0s0

S 3,s43 886

10,5i 1

2,6s7

1,260 18,857 540,1 93

*/ 5" T{,tal assets, $:,sd3,s4fi

ffiF ''': l{

26. Issued check No. 640 for the net amount of the Lriweekly payrolr. 26. Journalized the entry to record payroll taxes on employees' earnings of

December 26: social security tax,#3,543; Medicare iax, $gg6; stateirnemploy- ment tax, $170; federal unemployment tax, fi45.

30. Issued Check No. 651 for 915,169 to Stare Department of Revenue, in pay_ ment of employees, state income tax due on December 31.

30. lssued Check No.652 to Green Bank for 62,520 to purchase U.S. savings bonds for ernployees.

31. Paid $61,600 to the employee pension plan. The annual pension cost is $72,800. (Record both the paymenr and the unfunded pension riabirity.)

lnstructions 1. Journalize the transactions. Z. Jouroalize the following adjusting entries on Decernber 31:

a. Salaries accrued: sales salaries, $10,520; officers salaries, 65,175; office salaries, #1,92Q. The payroll taxes are immaterial and are not accrued.

b. Vacation pay, 614,84O.

selected transactions completed by Gampfer company during its first fiscal year endingDecember 31 were as follows:

Jan. 2. Issued a check to establish a petty cash fund of $3,200. Ma. 14. Replenished the petty cash fund, based on the folrowing sulrullary of pe*y

cash receipts: office supplies, $1,200; miscellaneous ,e[Lg expense, g410; miscellaneous administrative expense, $620.

Apr. 21. Purchased #2Z,4AA of merchandise on account, terms 1/1A, n/3l.The perpet_ ual inventory system is used to accollnt for inventory.

May 20. Paid the invoice of April 2! after the discount period had passed. 23' Received cash from daily cash sales for $15,120. The arnoult indicated by the

cash register was $15,152. June 15. Received a6}-day,10% note for g127,500 on the Cady account. Aug' 14' Received aniolrnt owed onJune 15 note, plus interest at the mafurity date.

18. Received $5,440 on the yoder account and wrote off the remainder owed on a $6,400 accounts receivable balance. (The allowance rnethod is used in accounting for uncollectible receivables.)

sept. 9. Reinstated the yoder account written offon August 1g and received $960 cash in fulI payment.

15. Purchased land by issuing a $4g0,000, 90_day note to Ace Development Co., which discounted it at go/o_

{hapt*r I i Current Liabilities and Payroll

oct. 17. Sold office equipment in exchange for $96,000 cash plus receipt of a $64,000, 90-day,6% note. The equiprnent had a cost of #224,000 and accumulated depreciation of $44,800 as of October 17,

Nov. 30. Journalized the monthly payroll for November. based on the following data:

Salarier Deductions

Sales salaries

Office salaries

Residual Asset Cost Value

5 96,640 Income tax withheld 55,200 Social security tax withheld

51 5 1 ,840 Medicare tax withheld

Unemployment tax rates:

State unemployment Federal unemployment

Amount subject to unemployment taxes: State unemployment Federal unemployment

4.0o/o

0.Bolo

5s,000 5,000

528,090 9,110

2,278

Depreciation Method

Used

30. Journalized the etnployer's payroll taxes on the pal'roll.

Dec. 14. Journalized the payment of the September 15 note at maturity.

31. The pension cost fol'the year n'as $136,000, of rl'hich $99,840 was paid to the pension plan trustee.

[$strH{t;eres 1. Jorrmalize the selected transactions. 2. Basecl on the follo*'ing data, prepare a bank reconciliation fbr December of the

cuffent year:

a. Balance according to the bank statelnent at December 31, fi202,240. b. Balance according to the ledger at Decenber 3I, $I75,44O. c. Checks out$tanding at December 31,, fi48,960. d. Deposit in transit, not recorded by bank, $21,120. e. Bank debit merno for service charges, $540. f. A check for $"11,520 in payment of an inr.'oice was incorrectly recorded in the

accounts as $11,O20.

3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be rnade by Garnpfer Company.

4. Based on the following selected data, journalize the adiusting enlries as of December 31 of the current year: a. Estimated uncollectible accounts at December 31, $l!,520, based on an aging of

accounts recei'r'able. The balance of Allowance for Doubtful Accounts at December 31 u'as $r,Z0O (debit).

b. The physical inventory on December 31 indicated an inventory shrinkage of $2,360. c. Prepaid insurance expired during the year, $16,300. d. Oflice sr"rpplies used during the year, $2,800, e. Depreciation is computed as follows:

Acquieition Useful Life Date inYears

Buildings 5650,000 5 0 Office Equip. 1 76,000 16,000 Store Equip. 80,000 8,000

January 2

January 3

July 1

50

5

10

Double-declining-bala nce Straight-line Straight-line

f. A patent costing $36,000 when acquired on January 2 has a remaining legal life of eight years and is expected to have value for six years.

g. The cost of mineral rights was $390,000. Of the estimated deposit of 650,000 tons of ore, 38,400 tons were mined and sold during the year.

(Cotttinued)

n 534 {!rapter 'i T Current Liabilities and Payroll

h. Vacation pay expense for December, $7,500. i. A product waffanty was granted begiming December 1 and covering a one-year

period. The estimated cost is 3vo af sales, which totaled $1,350,000 in December. j' Interest was accnred ou the note receivable received on October 17,

5. Based o11 the follos'ing information and the post-closing tr.ial balance shown below, prepare a balance sheet in report form at December 31 of the curreflt year.

The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability.

Vacation pay payable:

Current liability Long-term liability

The unfunded pension liability is a long-rerm liability

Notes payable:

Current liability Long-term liability

Gampfer Company Post-Closing Trial Balance

December 31,2012

Debit Balances

Petty Cash Cash .. Notes Receivable...... Accounts Receivable.

$s,1 oo

2,400

s s0,000 450,000

Credit Balances

Allowance for Doubtful Merchandise lnventory I nterest Receivable Prepaid lnsurance . Office Supplies.... Land .. Buildings Accumulated Depreciation-Buildings. OfficeEquipment.,.. Accumulated Depreciation-Office Equipmenr. . . . StoreEquipment..... Accumulated Depreciation-Store Equipment. Mineral Rights . Accumulated Depletion. Patents

Social Security Tax Payable. Medicare Tax Payable. Employees Federal lncome Tax payable

5tate Unemployment Tax payable

Federa{ Unemployment Tax payable

Salaries Payable

Accounts Payable lnterest Payable Product Warranty Payable. Vacation Pay Payable Unfunded Pension Liability Notes Payable

Accounts.

3,200

174,400

64000 336,000

230,000

800

32,600

9,600

474,400

650,000

176,000

80,000

390,000

30,000

1 1,520

26,00a

32,000

3,600

23,440

1 3,51 3

3,378

28,090

40

200

112,612

224,000

20,207

40,500

7,500

36,i 60

500,000

1,564,640

2,647,00A

J. Gampfer, Capital

2,647,000

Date Gamofer comoanv

Gampfer Company GeneralJournal Account Titles

10

11

12

13

14

15

16

17

18

19

Name Comprehensive Problem 3

Gamofer Cornoanv

Continued

Gampfer Company

GeneralJournal Account Titles

Federallncome Tax P 0

1

2

3

4

5

6

7

8

I ,0

'.1

Section

Date Gamofer comoanv

2.

GAMPFER COMPANY Bank Reconciliation

Cash balance per bank statement Add:

Subtotal

Deduct:

Adjusted cash balance per bank

Gash balance per books (depositor's records)

Add:

$

Subtotal

Deduct:

iusted cash balance per books $

Comprehensive Problem 3

Gampfer CompanyDate

4.

10

11

12

13

14 15

16

17

18

19

Gampfer Company General Journal Account Titles

Journal Entries:

Vacation Pav Pavable

O"r*_ _ Gampfer Company 5.

Balance Sheet

Assets Cunent assets:

$

s

Property, plant and equipment:

lntangible asset:

Totalassets

Liabilities Current liabilities:

Long-term liabilities:

Total liabilities

Owner's Equitv

Total liabilities and owner's equity