FINANCE

4. Complete the following cash budget: (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Total Financing should be indicated with a minus sign when the company is repaying amounts that were previously borrowed.) Picanuy Corporation Cash Budget January February March Quarter – Total Cash balance, beginning $ 6,000 $ $ $ Add cash collections 64,000 Total cash available 70,000 Less cash disbursements: For inventory 45,150 For operating expenses 19,400 For equipment 3,000 Total cash disbursements 67,550 Excess (deficiency) of cash 2,450 Financing: Borrowings Repayments Interest Total financing Cash balance, ending $ $ $ $ 5. Prepare an absorption costing income statement for the quarter ended March 31. (Input all amounts as positive values.) Picanuy Corporation Income Statement For the Quarter Ended March 31 $ Cost of goods sold: $ Selling and administrative expenses: $ 6. Prepare a balance sheet as of March 31. (Be sure to list the assets and liabilities in order of their liquidity.) Picanuy Corporation Balance Sheet March 31 Assets Current assets: $ Total current assets Total assets $ Liabilities and Stockholders’ Equity $ Stockholders’ equity: $ Total liabilities and stockholders’ equity $

Comprehensive Problem 3

Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows:

Jan. 2. Issued a check to establish a petty cash fund of $3,200.

Mar. 14. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,200; miscellaneous selling expense, $410; miscellaneous administrative expense, $620.

Apr. 21. Purchased $22,400 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.

May 20. Paid the invoice of April 21 after the discount period had passed.

23. Received cash from daily cash sales for $15,120. The amount indicated by the cash register was $15,152.

June 15. Received a 60-day, 10% note for $127,500 on the Cady account.

Aug. 14. Received amount owed on June 15 note, plus interest at the maturity date.

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

Sept. 9. Reinstated the Yoder account written off on August 18 and received $960 cash in full payment.

15. Purchased land by issuing a $480,000, 90-day note to Ace Development Co., which discounted it at 8%.

 

Oct. 17. Sold office equipment in exchange for $96,000 cash plus receipt of a $64,000, 90-day, 6% note. The equipment 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:

Current Liabilities and Payroll: Comprehensive Problem 3

 

Unemployment tax rates:  
     State unemployment 4.0%
     Federal unemployment 0.8%
Amount subject to unemployment taxes:  
     State unemployment $5,000
     Federal unemployment 5,000

 

  30. Journalized the employer’s payroll taxes on the payroll.

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

31. The pension cost for the year was $136,000, of which $99,840 was paid to the pension plan trustee.

Instructions

1. Journalize the selected transactions.

2. Based on the following data, prepare a bank reconciliation for December of the current year:

a. Balance according to the bank statement at December 31, $202,240.

b. Balance according to the ledger at December 31, $175,440.

c. Checks outstanding at December 31, $48,960.

d. Deposit in transit, not recorded by bank, $21,120.

e. Bank debit memo for service charges, $540.

f. A check for $11,520 in payment of an invoice was incorrectly recorded in the accounts as $11,020.

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

4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year:

a. Estimated uncollectible accounts at December 31, $11,520, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $1,200 (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. Office supplies used during the year, $2,800.

e. Depreciation is computed as follows:

Asset Cost Residual Value Acquisition Date Useful Life in Years Depreciation Method Used
Buildings $650,000 $    0 January 2 50 Double-declining-balance
Office Equip. 176,000 16,000 January 3 5 Straight-line
Store Equip. 80,000 8,000 July 1 10 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.

h. Vacation pay expense for December, $7,500.

i. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 3% of sales, which totaled $1,350,000 in December.

j. Interest was accrued on the note receivable received on October 17.

5. Based on the following information and the post-closing trial balance shown below, prepare a balance sheet in report form at December 31 of the current 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 $5,100
    Long-term liability 2,400

The unfunded pension liability is a long-term liability.

Notes payable:  
    Current liability $ 50,000
    Long-term liability 450,000

 

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