REINFORCEMENT ACTIVITY 3, Part B, p. 715

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1 REINFORCEMENT ACTIVITY 3, Part B, p Unadjusted Trial Balance December 31, 20X4 ACCOUNT TITLE DEBIT CREDIT Cash Petty Cash Accounts Receivable Allowance for Uncollectible Accounts Notes Receivable Interest Receivable Merchandise Inventory Supplies Prepaid Insurance Office Equipment Accumulated Depreciation Office Equipment Warehouse Equipment Accumulated Depreciation Warehouse Equipment Accounts Payable Sales Tax Payable Notes Payable Interest Payable Unearned Rent Income Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Medical Insurance Payable Unemployment Tax Payable State Unemployment Tax Payable Federal Federal Income Tax Payable Dividends Payable Bonds Payable Capital Stock Common Paid-in Capital in Excess of Par Common Capital Stock Preferred (Note: Unadjusted trial balance is continued on next page.) Reinforcement Activity 3, Part B 195

2 REINFORCEMENT ACTIVITY 3, Part B (continued) Unadjusted Trial Balance (Concluded) December 31, 20X4 ACCOUNT TITLE DEBIT CREDIT Paid-in Capital in Excess of Par Preferred Retained Earnings Dividends Income Summary Sales Sales Discount Sales Returns and Allowances Purchases Purchases Discount Purchases Returns and Allowances Advertising Expense Cash Short and Over Credit Card Fee Expense Depreciation Expense Office Equipment Depreciation Expense Warehouse Equipment Insurance Expense Miscellaneous Expense Payroll Taxes Expense Rent Expense Repairs Expense Salary Expense Supplies Expense Uncollectible Accounts Expense Utilities Expense Federal Income Tax Expense Interest Income Rent Income Gain on Plant Assets Interest Expense Loss on Plant Assets Totals Working Papers TE

3 REINFORCEMENT ACTIVITY 3, Part B (continued) 11., 15. DATE ACCOUNT TITLE Adjusting Entries GENERAL JOURNAL PAGE X4 2 2 Dec. 31 Uncollectible Accounts Expense DOC. NO. POST. REF. DEBIT CREDIT Allowance for Uncollectible Accounts Interest Receivable Interest Income Merchandise Inventory Income Summary Supplies Expense Supplies Insurance Expense Prepaid Insurance Depreciation Expense Office Equipment Accumulated Depr. Office Equipment Depreciation Expense Warehouse Equipment Accumulated Depr. Warehouse Equipment Interest Expense Interest Payable Unearned Rent Income Rent Income Federal Income Tax Expense Federal Income Tax Payable Adjusted Trial Balance amounts: Total of Income Statement Credit amounts, including Income Summary, $1,580, Total of Income Statement Debit amounts, $1,494, Net Income before Federal Income Tax: $1,580, $1,494, $85, (Calculation of Federal Income Tax is part of Instruction #14.) Interest Calculations NP19: Days accrued: 0 days October, 30 days November, 31 days December 5 61 days 61/ $20, $ (rounded) NP22: 3 days in December 3/ $12, $10.00 (rounded) Reinforcement Activity 3, Part B 197

4 REINFORCEMENT ACTIVITY 3, Part B (continued) 14. Net Income before Federal Income Tax Of the Amount Over = Net Income Subject to Marginal Tax Rate Marginal Tax Rate = Marginal Income Tax $ 85, $ 75, = $ 10, % = $ 3, Bracket Minimum Income Tax + Marginal Income Tax = Federal Income Tax $ 13, $ 3, = $ 17, Federal Income Tax 2 Taxes Already Paid = Amount of Adjustment $ 17, $ 12, = $ 5, Working Papers TE

5 REINFORCEMENT ACTIVITY 3, Part B (continued) 13., 16. Adjusted Trial Balance December 31, 20X4 ACCOUNT TITLE DEBIT CREDIT Cash Petty Cash Accounts Receivable Allowance for Uncollectible Accounts Notes Receivable Interest Receivable Merchandise Inventory Supplies Prepaid Insurance Office Equipment Accumulated Depreciation Office Equipment Warehouse Equipment Accumulated Depreciation Warehouse Equipment Accounts Payable Sales Tax Payable Notes Payable Interest Payable Unearned Rent Income Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Medical Insurance Payable Unemployment Tax Payable State Unemployment Tax Payable Federal Federal Income Tax Payable Dividends Payable Bonds Payable Capital Stock Common Paid-in Capital in Excess of Par Common Capital Stock Preferred (Note: Adjusted trial balance is continued on next page.) Reinforcement Activity 3, Part B 199

6 REINFORCEMENT ACTIVITY 3, Part B (continued) adjusted Trial Balance (Concluded) December 31, 20X4 ACCOUNT TITLE DEBIT CREDIT Paid-in Capital in Excess of Par Preferred Retained Earnings Dividends Income Summary Sales Sales Discount Sales Returns and Allowances Purchases Purchases Discount Purchases Returns and Allowances Advertising Expense Cash Short and Over Credit Card Fee Expense Depreciation Expense Office Equipment Depreciation Expense Warehouse Equipment Insurance Expense Miscellaneous Expense Payroll Taxes Expense Rent Expense Repairs Expense Salary Expense Supplies Expense Uncollectible Accounts Expense Utilities Expense Federal Income Tax Expense Interest Income Rent Income Gain on Plant Assets Interest Expense Loss on Plant Assets Totals Working Papers TE

7 REINFORCEMENT ACTIVITY 3, Part B (continued) 17. Income Statement For Year Ended December 31, 20X4 Operating Revenue: Sales Less: Sales Discount Sales Returns and Allowances Net Sales Cost of Merchandise Sold: Merchandise Inventory, Jan. 1, Purchases Less: Purchases Discount Purchases Returns and Allowances Net Purchases Total Cost of Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, Cost of Merchandise Sold Gross Profit Operating Expenses: Advertising Expense Cash Short and Over Credit Card Fee Expense Depreciation Expense Office Equipment Depreciation Expense Warehouse Equipment Insurance Expense Miscellaneous Expense Payroll Taxes Expense Rent Expense Repairs Expense Salary Expense Supplies Expense Uncollectible Accounts Expense Utilities Expense % OF SALES Income from Operations Other Revenue: Interest Income Rent Income Gain on Plant Assets Total Other Income Other Expenses: Interest Expense Loss on Plant Assets Total Other Expenses Net Deduction ( ) (0.1) Net Income before Federal Income Tax Less Federal Income Tax Expense Net Income after Federal Income Tax Reinforcement Activity 3, Part B 201

8 REINFORCEMENT ACTIVITY 3, Part B (continued) 18. Statement of Stockholders Equity For Year Ended December 31, 20X4 Common Stock: $10.00 Par Value January 1, 20--, 6,000 Shares Issued Issued during Current Year, 500 Shares Balance December 31, 20--, 6,500 Shares Issued Paid-in Capital in Excess of Par Common: Balance, January 1, 20-- Issued during Current Year Balance, December 31, Preferred Stock: $50.00 Par Value, 5% January 1, 20--, 0 Shares Issued Issued during Current Year, 300 Shares Balance, December 31, 20--, 300 Shares Issued Retained Earnings: Balance, January 1, Net Income after Federal Income Tax for Less Dividends Declared during Net Increase during Balance, December 31, Total Stockholders' Equity, December 31, Working Papers TE

9 REINFORCEMENT ACTIVITY 3, Part B (continued) 19. Balance Sheet December 31, 20X4 Assets Current Assets: Cash Petty Cash Accounts Receivable Less: Allowance for Uncollectible Accounts Notes Receivable Interest Receivable Merchandise Inventory Supplies Prepaid Insurance Total Current Assets Plant Assets: Office Equipment Less Accumulated Depreciation Office Equipment Warehouse Equipment Less Accumulated Depreciation Warehouse Equipment Total Plant Assets Total Assets Liabilities Current Liabilities: Accounts Payable Sales Tax Payable Notes Payable Interest Payable Unearned Rent Income Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Medical Insurance Payable Unemployment Tax Payable State Unemployment Tax Payable Federal Federal Income Tax Payable Dividends Payable Total Current Liabilities Long-term Liabilities: Bonds Payable Total Long-term Liabilities Total Liabilities Stockholders' Equity Capital Stock Common Paid-in Capital in Excess of Par Common Capital Stock Preferred Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Reinforcement Activity 3, Part B 203

10 REINFORCEMENT ACTIVITY 3, Part B (continued) 20. Statement of Cash Flows For Year Ended December 31, 20X4 Cash flows from operating activities: Cash receipts from: Sales Interest Rent Total cash receipts Cash payments for: Inventory purchases ( ) Salaries and wages ( ) Insurance ( ) Interest ( ) Taxes ( ) Rent ( ) Other operating expenses ( ) Total cash payments ( ) Net cash provided/(used) by operating activities Cash flows from investing activities: Sale of equipment Purchase of equipment ( ) Net cash provided/(used) by investing activities Cash flows from financing activities: Issuance of stock Issuance of bonds ( ) Payment of notes payable ( ) Payment of cash dividends ( ) Net cash provided/(used) by financing activities ( ) Net change in cash Cash balance, January 1, Cash balance, December 31, Working Papers TE

11 REINFORCEMENT ACTIVITY 3, Part B (continued) 21. DATE ACCOUNT TITLE Closing Entries GENERAL JOURNAL PAGE X4 2 2 Dec. 31 Sales Purchases Discount DOC. NO. POST. REF. DEBIT Purchases Returns and Allowances Interest Income Rent Income Gain on Plant Assets CREDIT Income Summary Income Summary Sales Discount Sales Returns and Allowances Purchases Advertising Expense Cash Short and Over Credit Card Fee Expense Depreciation Expense Office Equipment Depreciation Expense Warehouse Equipment Insurance Expense Miscellaneous Expense Payroll Taxes Expense Rent Expense Repairs Expense Salary Expense Supplies Expense Uncollectible Accounts Expense Utilities Expense Federal Income Tax Expense Interest Expense Loss on Plant Assets Income Summary Retained Earnings Retained Earnings Dividends Reinforcement Activity 3, Part B 205

12 REINFORCEMENT ACTIVITY 3, Part B (continued) 22. Post-Closing Trial Balance December 31, 20X4 ACCOUNT TITLE DEBIT CREDIT Cash Petty Cash Accounts Receivable Allowance for Uncollectible Accounts Notes Receivable Interest Receivable Merchandise Inventory Supplies Prepaid Insurance Office Equipment Accumulated Depreciation Office Equipment Warehouse Equipment Accumulated Depreciation Warehouse Equipment Accounts Payable Sales Tax Payable Notes Payable Interest Payable Unearned Rent Income Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Medical Insurance Payable Unemployment Tax Payable State Unemployment Tax Payable Federal Federal Income Tax Payable Dividends Payable Bonds Payable Capital Stock Common Paid-in Capital in Excess of Par Common Capital Stock Preferred Paid-in Capital in Excess of Par Preferred Retained Earnings Totals Working Papers TE

13 REINFORCEMENT ACTIVITY 3, Part B (concluded) 23. DATE ACCOUNT TITLE Reversing Entries GENERAL JOURNAL PAGE X5 2 2 Jan. 1 Interest Income Interest Receivable Interest Payable DOC. NO. POST. REF. DEBIT CREDIT Interest Expense Federal Income Tax Payble Federal Income Tax Expense Reinforcement Activity 3, Part B 207

ACCOUNTING I. 1. The cash account is used to summarize information about the amount of money the business has available.

ACCOUNTING I. 1. The cash account is used to summarize information about the amount of money the business has available. ACCOUNTING I True/False Indicate whether the sentence or statement is true or false. 1. The cash account is used to summarize information about the amount of money the business has available. 2. The source