Coop-Mart Corporation prepares quarterly financial statements. The balance sheet atlimra
Coop-Mart Corporation prepares quarterly financial statements. The balance sheet at 12/31/11 is presented below.
Allowance for doubtful accounts
Accumulated depreciation - equipment
Accumulated depreciation - building
During the first quarter of 2012 the following transactions occurred:
1. Performed services for $140,000 on account.
2. On 2/1/12, collected fees of $12,000 in advance. $1,000 worth of services are to be performed each month from 2/1/12 to 1/30/13.
3. On 2/1/12, purchased equipment for $15,000 plus sales taxes of $750. $3,000 cash was paid with the remaining balance on account. Check #455 was used.
4. Collected $133,000 on 3/5/12 from customers on account.
5. Paid $16,370 on accounts payable. Check #456 was used.
6. Paid operating expenses of $97,500. Check #457 was used.
7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/12. Check #458 was used.
8. Wrote off a receivable of $200 for a customer who went bankrupt.
9. On 3/31/12, Coop-Mart Corp. sold for $2,620 cash equipment which originally cost $13,000. It had an estimated life of 5 years and salvage of $2,000. It had an estimated life of 5 years and a salvage of $2,000. Accumulated depreciation as of 12/31/2011 was $8,000 using the straight line method. (1) Record depreciation on the equipment sold, then (2) record the sale.
Adjusting Journal Entries:
10. AJE 3/31/2012: Record revenue earned from item 2 above.
11. AJE: At 3/31/2012, $26,000 of Accounts Receivable is not yet due. The bad debt percentage for these current receivables is 4%. The remaining balance in Accounts Receivable is past due. The bad debt percentage for these receivables is 23.75%. Record bad debt expense.
HINT: You will need to calculate the balance in accounts receivable before calculating bad debt expense.
12. AJE: Record depreciation as of 3/31/12. The new equipment purchased in February is being depreciated using the double declining balance method over 5 years. The equipment has an estimated salvage value of $1,000. The equipment that was on the books on 12/31 that is still owned by Coop-Mart is being depreciated over a 10 year life using straight line with no salvage value.
13. AJE: Depreciation is recorded on the building on a straight-line basis using a 30-year life and a salvage value of $10,000.
14. AJE: Amortization is recorded on the patent.
15. The company reconciles its bank statement every quarter. Information from the 12/31/11 Bank Reconciliation is provided below:
Deposit in transit 12/30/11 $5,000
Outstanding Checks #440 $3,444
The Bank statement received for the quarter ended 3/31/10 was:
Beginning balance per bank $ 29,787
Deposits: 1/2/12 $5,000; 2/2/12 $12,000; 3/6/12 $133,000 150,000
Checks: #452 $333; #453 $865; #456 $16,370; #457 $97,500 ( 115,068)
Debit memo: Bank service charge (Record as operating expense) ( 100)
Ending bank balance $ 64,619
Hint: Prepare the income statement up to income before taxes and multiply by 40% to compute the amount of income tax expense.
REQUIRED: Print out the solution pages for the general journal, ledger and worksheet that follow and enter the following transactions. I suggest that you use a pencil.
- Enter the transactions numbered 1-9 in the general journal provided on the following pages.
- Enter the 12/31/11 balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages.
- Post the journal entries to the ledger accounts for items 1-9.
- Prepare an unadjusted trial balance at March 31st and enter on the worksheet. Then complete the other worksheet columns. (See below)
Worksheet requirement: Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet similar to the one on page 196 in the chapter 4 appendix of your text.
- Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE.
- Journalize and post all other adjusting entries. (Items 10-16)
- Prepare an income statement and a retained earnings statement for the quarter ended 3/31/12 and a classified balance sheet at 3/31/12. Use your own paper. (No formatted sheets are supplied as for the other items.)
- 7 years ago
Purchase the answer to view it