Questions -
Q1. Requirements:
a. Record the following transactions in the journal of Howell Consulting. Explanations are not required.
b. Create T accounts for each transaction (Use the next blank page)
c. Prepare a trial balance for the end of the period (Use the next blank page)
d. Prepare a Balance Sheet
e. Prepare an Income Statement
f. Prepare a statement of retained earnings (Beginning R/E is $0)
Sep. 1 received $150,000 cash and issued common stock.
Sep. 4 Purchased supplies, $800, and furniture, $5,000, on account.
Sep. 6 Performed Services for a law firm and received $12,000 cash.
Sep. 6 Declared dividends in the amount of $4,000
Sep. 7 Paid $35,000 cash to acquire land for a future office site.
Sep. 10 Performed service for a client and received their promise to pay the $2,000 within one week.
Sep. 14 Paid for the furniture purchased September 4 on account.
Sep. 30 Paid Secretary's salary, $1,600.
Sep. 30 Paid Dividends declared on September 6.
Q2. Compute Cost of goods sold using both FIFO and LIFO from the following data.
|
Date
|
Activities
|
Units Acquired/Sold at Cost
|
|
Jan. 1
|
Beginning Inventory
|
1500 units @ $14
|
|
Jan. 10
|
Sales
|
550 units @ $34
|
|
Mar. 14
|
Purchases
|
400 units @ $19
|
|
Mar. 15
|
Sales
|
500 units @ $40
|
|
July 30
|
Purchase
|
600 units @ $11
|
|
Oct. 5
|
Sales
|
250 units @ $35
|
|
Oct. 26
|
Purchase
|
100 units @ $18
|
Q3. On January 1, 2007 your company purchased a piece of equipment for $650,000 with a useful life of 15 years and an expected salvage value of $50,000. At the end of year 10 the company revised the life of the equipment to 25 years. What is the depreciation expense taken in year 10? What is the depreciation expense taken in year 11? What is the depreciation expense taken in year 26 after the purchase of the equipment?
Q4. Using the information from problem 12. What would be the accumulated depreciation on the asset after year four of the purchase? What would be the gain/loss on the asset if sold at the beginning of year 5 for $600,000?
Q5. Howell's Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
| |
|
Days Past Due
|
| |
Total
|
0
|
1 to 30
|
31 to 60
|
61 to 90
|
Over 90
|
|
A/R
|
115,000
|
40,000
|
61,000
|
6,000
|
3,000
|
5,000
|
|
% Uncollectible
|
|
1%
|
2%
|
4%
|
7%
|
12%
|
a) Estimate the balance of the allowance for doubtful accounts using the aging of accounts receivable method. What entry would you make to record bad debt expense for the period?