Question 1: Company XYX December 31, 2016 trial balance is as follows:
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Alpha Corporation
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Trial Balance
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December 31, 2016
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Account
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Debit
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Credit
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Cash
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$43,500
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Accounts Receivable
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53,500
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Allowance for Doubtful Accounts
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1,500
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Notes Receivable
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30,000
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Merchandise Inventory
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55,000
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Land
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20,000
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Building
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150,000
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Accumulated Depreciation, Building
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$15,000
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Equipment
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50,000
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Accumulated Depreciation, Equipment
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21,000
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Goodwill
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26,000
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Accounts Payable
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25,000
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Long Term Notes Payable
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75,000
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Common Stock, $10 par, 2,000 shares authorized & outstanding
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20,000
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Retained Earnings
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147,000
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Sales Revenue
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700,000
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Salaries Expense
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150,000
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Utilities Expense
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3,500
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Cost of Goods Sold
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350,000
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Administrative Expenses
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55,000
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Sales Expenses
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15,000
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_______
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Totals
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$1,003,000
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$1,003,000
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Alpha is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded.
Additional Information:
a. Notes Receivable is a 3-months, 6% note accepted on November 1, 2016.
b. Long Term Notes Payable is a 5-year, 5% note, that was signed on July 1, 2016. Interest is payable annually.
c. Building is depreciated at 3% per year. There is no salvage value.
d. Equipment is depreciated at 15% year. There is no salvage value.
e. Alpha discovered, on December 30th, that the inexperienced bookkeeper recorded in the general journal and general ledger that day's $1,500 cash sales as a debit to f. Accounts Receivable and a credit to Sales Revenue.
The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any difference in value will not be considered theft or loss.
Salaries for the last half of December, payable in January, amount to $5,500.
Alpha estimates that of the Accounts Receivable 5% will not be collectable.
Required:
a. Prepare in journal form, any required correcting entries
b. Prepare in journal form, all end-of-the period adjusting entries
c. Prepare a December adjusted trial balance
d. Prepare a classified balance sheet for the year ended December 31, 2016
e. Prepare in journal form, the closing entries for the year ended December 31, 2016