Dare Corporation -
Journal entries: due Friday April 28th at 5:00 pm
Everything else: due Friday May 5th at 5:00 pm
Dare Corporation was formed on January 1, 2016 when Dare issued no-par common stock for $150,000 cash. On the date of formation, Dare paid $25,000 cash for equipment, $70,000 for 1,000 units of inventory (unit cost, $70), and $5,000 for office supplies. Also on January 1, Dare acquired land by signing a 10-year, 12%, $100,000 note payable. The principle is not due for 10 years, but interest is payable annually on January 1, with the first interest payment due January 1, 2017. (You will need to record accrued interest at the end of 2016 by debiting Interest Expense and crediting Interest Payable.)
Dare purchased an additional 2,000 units of inventory on account at a cost of $130,000 (unit cost, $65). Before year end, Dare paid $110,000 of this amount. Dare uses the FIFO method to account for inventory and cost of goods sold.
Sales for 2016 consisted of 2,500 units sold on account for $120 each. (When recording sales revenue, don't forget to also record cost of goods sold.) Before year end, Dare collected 80% of the sales revenue. Of the remainder, Dare expects to collect three-fourths. Dare uses the allowance method to account for potential uncollectible accounts. No specific accounts were actually written off in 2016.
Dare employs three people. The total payroll for 2016 was $60,000, of which Dare still owes $2,000 at year end. During 2016, Dare paid building rent of $12,000 and used $3,500 of office supplies.
Dare uses the straight-line method to depreciate office equipment assuming a five year life and no residual value.
Income taxes for 2016 are $11,000, of which $8,000 has been paid as of the end of the year.
In November, one of the initial investors wished to cash in his stock, so Dare paid $6,000 for treasury stock. Late in the year, Dare declared and paid a $10,000 cash dividend to stockholders.
ALL WORK TO BE DONE IN EXCEL AND PRINTED TO RECEIVE EXTRA CREDIT!!!!
Required:
1. Prepare journal entries to record the transactions and other events described or implied above. There are approximately 20 journal entries, depending on whether or not you combine or separate certain entries.
2. Post all journal entries to the ledger (T-accounts). The T-accounts are attached. You will not necessarily need every T-account.
3. Prepare the income statement for 2016.
4. Prepare the statement of retained earnings for 2016 (beginning retained earnings is zero).
5. Prepare the balance sheet as of December 31, 2016.
6. Prepare a statement of cash flows for 2016. You may use either the direct method or the indirect method for presenting cash flows from operating activities.
Check Figures:
Income Statement:
Gross profit, $132,500
Total operating expenses, $118,500 (7 items)
Statement of Retained Earnings:
Retained earnings, December 31, 2016, $4,000 (includes net income, $14,000)
Balance Sheet:
Cash, $86,000
Total assets, $285,000 (6 asset accounts and 2 contra asset accounts)
Total liabilities, $137,000 (5 accounts)
Total stockholder's equity, $148,000 (3 accounts)
Statement of Cash Flows:
Net cash used in operating activities, $23,000
Net cash used in investing activities, $25,000
Net cash provided by financing activities, $134,000
Attachment:- Assignment Files.rar