I. Exercises
1. An extract from the trial balance of Armstrong Corp. at June 30, 2016 is reproduced below:
|
|
Account
|
Amount in unadjusted trial balance
|
Amount in adjusted trial balance
|
|
1
|
Prepaid insurance
|
$1,200
|
$ 800
|
|
2
|
Salaries payable
|
$ 650
|
$ 950
|
|
3
|
Interest payable
|
$ 0
|
$ 470
|
|
4
|
Unearned revenue
|
$2,500
|
$1,800
|
|
5
|
Accumulated depreciation
|
$ 875
|
$1,150
|
|
6
|
Unused office supplies
|
$ 280
|
$ 75
|
Required: Prepare in general journal format the entries that were posted, including a plausible description. General ledger account numbers are not necessary.
2. The following account balances in the unadjusted trial balance at November 30, 2015 are presented below:
Unearned commissions revenue $1,875
Prepaid insurance 600
Office supplies 875
Prepaid rent 750
Salaries expense 6,240
Additional information:
a. The prepaid rent consisted of a payment for three months' rent at $250 per month for November 2015, December 2015 and January 2016.
b. Office supplies on hand at December 31, 2015 amounted to $375.
c. On July 1, 2015 a one year insurance policy was purchased for $600.
d. All but $625 in the Unearned Commissions account has been earned in 2015.
e. The last three days of December 2015 salaries were earned but not paid, and have not been recorded. The total salaries for one day is $125.
Required:
1. Prepare the adjusting entries at December 31, 2015. Descriptions of the journal entry and account numbers are not required.
2. If the adjusting entries were not recorded, what affect would this have on the net income for 2015 to include the amount understated or overstated?
3. The following information is provided for the Ramsey Corporation as of December 31, 2016:
|
Account
|
Debit
|
Credit
|
|
Cost of goods sold
|
$78,460
|
|
|
Delivery expenses
|
3,250
|
|
|
Depreciation sales equipment
|
4,500
|
|
|
Depreciation office equipment
|
6,500
|
|
|
Sales basic salaries + commission
|
9,250
|
|
|
Office salaries
|
6,890
|
|
|
Sales revenue
|
|
125,000
|
|
Interest revenue
|
|
2,500
|
|
Interest expense
|
1,225
|
|
|
Income tax 30%
|
|
|
Required:
1) Prepare a multi-step income statement
2) Prepare a single-step income statement
4. The Tansian Company had 200,000 shares outstanding on January 1, 2016. On March 1 Tansian issued 125,000 shares. On June 1 Tansian issued a 12% dividend. On 8/1 Tansian repurchased 24,000 shares of treasury stock. On December 31, 2016 Tansian declared a 1.5 to 1 stock split.
Required: What are the weighted average shares at December 31, 2016?
Note: I have included an illustration, with different amounts and dates, to help in completing exercise 4.