ACC 310 Spring 2006 Practice Case ACC 310 Whited 2021 Accounting Practice Set This case is designed to reinforce certain technical accounting skills that are a prerequisite to a solid understanding of...

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ACC 310 Spring 2006 Practice Case ACC 310 Whited 2021 Accounting Practice Set This case is designed to reinforce certain technical accounting skills that are a prerequisite to a solid understanding of the generally accepted accounting principles that underlie preparation of general purpose financial statements. You are tasked with the preparation of a set of 2021 financial statements for Brian Burns Technology Corp., a company that purchases merchandise inventory for resale. You will be required to prepare journal entries, post those entries the general ledger, and prepare year-end adjustments, an adjusted trial balance, income statement, balance sheet, and statement of cash flows. Brian Burns Technology Corp. uses the following chart of accounts (note that you may not use all these accounts): Account NumberAccount Title 100Cash 110Accounts Receivable 115Allowance for Doubtful Accounts (AFDA) 120Interest Receivable 130Inventory 135Supplies 140Prepaid Rent 145Prepaid Insurance 150Available for Sale Investments (non-current) 160Land 170Buildings 175Accumulated Depreciation – Buildings 180Equipment 185Accumulated Depreciation – Equipment 190Patents 210Accounts Payable 220Salaries Payable 225Utilities Payable 230Interest Payable 235Unearned Rent 240Income Taxes Payable 245Dividends Payable 250Notes Payable 255 Discount on Notes Payable 300Common Stock 310Additional Paid-In Capital 320Retained Earnings 325Dividends 330Accumulated Other Comprehensive Income 350Treasury Stock 400Sales Revenue 410Interest Revenue 420Rent Revenue 430Dividend Revenue 500Cost of Goods Sold 510Salaries Expense 515Bad Debt Expense 520Rent Expense 525Supplies Expense 530Depreciation Expense – Buildings 535Depreciation Expense – Equipment 540Patent Amortization Expense 550Utilities Expense 560Insurance Expense 570Interest Expense 590Income Tax Expense In addition to the income statement, balance sheet, and statement of cash flows, compile the following: · General Ledger serves as a T-Account for each account. Post all journal entries to the general ledger to assist in forming the trial balance. · Adjusted Trial Balance lists ALL accounts after adjusting journal entries but before closing journal entries All students must prepare their own solution to this project; however, you may discuss your work with other students. Notes for Journal Entries: 1) Brian Burns uses perpetual inventory system and LIFO 2) All credit sales discounts are recorded using the net method – customers receive a 3 percent discount if they pay within 30 days. 3) Purchase discounts are recorded using the net method 4) All depreciation is straight line. Additional Information for Journal Entries Brian Burns records accruals for utilities expense as an adjusting journal entry at the end of each year. They pay utilities once a year on January 31st for the prior year. NOTE: There is no payment for utilities on January 31st of 2021 because January 1 of 2021 is the first day of operations. January 1Sold 10,000 shares of common stock for $95 per share. Borrowed $2,000,000 at 8 percent with interest payable semi-annually (on July 1 and January 1). Purchased 1,000 units of inventory at $150 a piece on credit from Biggie Smalls Inc. Terms are 2/10; n/60 Paid $480,000 for 2 years of rent in advance Purchased office supplies costing $10,000 with cash Jan 20Paid Biggie full amount owed Feb 10Sold 100 units inventory with a list price of $22,000 to M Jagger on credit. Sold 140 units of inventory for cash of $30,000. March 15Bought 1,000 units of inventory at $170 a piece from Wolfpack Corporation with cash April 30Sold 150 units of inventory for cash of $30,000 June 30Purchased land and a building. A $200,000 cash down payment was required and a $800,000 note was accepted by the seller for the balance (12 percent interest payable each year on June 30). The fair value of the land at the date of purchase was deemed to be 300,000 and the fair value of the building was 900,000. The building has an estimated residual value of $0 and a useful life of 30 years. September 1Brian Burns began subleasing extra space to DJ Moore. DJ Moore paid for $60,000 for six months’ in advance. October 1Purchased equipment for in exchange for a $30,000 non-interest bearing note due in one year. The equipment has an estimated residual value of $2,000 and a useful life of 8 years. Note: Assume an effective interest rate of 8 percent. October 1Purchased one year of insurance in advance for $12,000 October 14Sold 400 units of inventory to H Gilmore for $100,000 on credit October 30H Gilmore paid half of the amount owed Dec 1Repurchased 1,000 shares of stock for $120/share Dec 15Declared a dividend of $2/share. The dividend will be distributed to shareholders on January 19, 2021. Dec 15H Gilmore went bankrupt so Brian Burns wrote off the balance owed by H Gilmore as uncollectible (hint: Directly write-off this Account since no allowance has been made yet). Dec 20Purchased office supplies for $13,000 in cash. Dec 25Sold 150 units of inventory to J Lennon for $30,000 on Credit Dec 31Sold 1,000 units Inventory for $200,000 in Cash Information for Adjusting Entries as of 12/31/21 A count of office supplies revealed $12,000 in office supplies as of 12/31 Receive the 2021 utility bill for $25,000, payable on January 31st 2021. All depreciation is straight line. Brian Burns uses the balance sheet method for estimating bad debts and estimates that 5 percent of outstanding A/R at year-end will be uncollectible. The income tax rate for 2018 is 21%. *Remember to record any necessary accruals related to the transactions (e.g., interest expense, unearned rent) Brian Burns Technology Corp. – General Journal (2021 Transactions) – THIS IS A TEMPLATE, YOU WILL NEED MORE LINES Date Account Name/GL Account # Debit Credit EX Cash (100) XXX Sales Revenue (400) 1/1 Cash 950,000 Common Stock 950,000 1/1 Cash 2,000,000 Note Payable 2,000,000 1/1 Inventory 150,000 Accounts Payable 150,000 1/1 Prepaid Rent 480,000 Cash 480,000 1/1 Supplies 10,000 Cash 10,000 Brian Burns Technology Corp. – Adjusting Journal Entries - THIS IS A TEMPLATE, YOU WILL NEED MORE LINES Date Account Name/GL Account # Debit Credit EX Interest Expense XXX Interest Payable XXX Brian Burns Technology Corp. – Closing Journal Entries THIS IS A TEMPLATE, YOU WILL NEED MORE LINES Date Account Name/GL Account # Debit Credit EX Salaries Expense XXX EX Retained Earnings XXX EX Sales XXX EX Retained Earnings XXX Brian Burns Technology Corp. – General Ledger THIS IS A TEMPLATE, YOU WILL NEED MORE LINES · This is like a T-Account. Copy each journal entry relating to the account. After all debits and credits are posted to an account, the far right column will be your total. This will help you prepare the trial balance. Each account with a journal entry will appear on the General Ledger. Acct # Acct Name Debit Credit Balance – DR or (CR) 100 Cash XXXX Etc. Brian Burns Technology Corp. – Adjusted Trial Balance · There will be one line item for each account with the ending balance from the General Ledger. This will include all accounts – temporary and permanent PRIOR TO CLOSING TEMPORARY ACCOUNTS TO RETAINED EARNINGS (RETAINED EARNINGS ACCOUNT WILL JUST BE ZERO ON THIS) Account # Account Name Debit Balance Credit Balance 100 Cash XXXXX 110 Accounts Receivable XXXXX Etc. Prepare the following Financial Statements for 2021: · Income Statement · Balance Sheet · Statement of Cash Flows (Indirect Method) 10
Answered 8 days AfterMay 25, 2021ACC310University of the Sunshine Coast

Answer To: ACC 310 Spring 2006 Practice Case ACC 310 Whited 2021 Accounting Practice Set This case is designed...

Shanu answered on Jun 02 2021
143 Votes
Brian Burns Technology Corp. – General Journal (2021 Transactions)
    Date
    Account Name/GL Account #
    Debit
    Credit
    1/1
    Cash (100)
    950,000
    
    
    Common Stock (300)
    
    950,000
    
    (Being common stock sold for cash)
    
    
    1/1
    Cash (100)
    2,000,000
    
    
    Note Payable (250)
    
    2,000,000
    
    (Being note issued in the market)
    
    
    1/1
    Inventory (130)
    147,000
    
    
    Accounts Payable (210)

    
    147,000
    
    (Good purchased from Biggie)
[(1000*150)-2%]=147000
    
    
    1/1
    Prepaid Rent (140)
    480,000
    
    
    Cash (100)
    
    480,000
    
    (Rent paid in advance for 2 years)
    
    
    1/1
    Supplies (135)
    10,000
    
    
    Cash (100)
    
    10,000
    
    (Office supplies purchased)
    
    
    1/20
    Accounts payable (210)
    147,000
    
    
    Inventory (130)
    3,000
    
    
    Cash (100)
    
    150,000
    
    (Amount paid to biggie, discount reversed since paid after 10 days)
    
    
    2/10
    Account Receivable (110)
    22,000
    
    
    Sales (400)
    
    22,000
    2/10
    Cost of goods sold (500)
    15,000
    
    
    Inventory (130)
    
    15,000
    
    (100 units sold to customer, reduced the inventory by (100*150)
    
    
    2/10
    Cash (100)
    30,000
    
    
    Sales (400)
    
    30,000
    
    (140 units sold for cash)
    
    
    2/10
    Cost of goods sold (500)
    21,000
    
    
    Inventory (130)
    
    21,000
    
    (Inventory reduced by (140*150)
    
    
    3/15
    Inventory (130)
    170,000
    
    
    Cash (100)
    
    170,000
    
    (1000 units purchased in cash for 170 per unit)
    
    
    4/30
    Cash (100)
    30,000
    
    
    Sales (400)
    
    30,000
    
    (150 units sold for cash)
    
    
    4/30
    Cost of goods sold (500)
    25,500
    
    
    Inventory (130)
    
    25,500
    
    (As per LIFO, latest goods purchased sold first, reduced inventory by (170*150)
    
    
    6/30
    Land (160)
    250,000
    
    
    Building (170)
    750,000
    
    
    Cash (100)
    
    200,000
    
    Notes Payable (250)
    
    800,000
    
    (Purchased land and building, cost is pro rated based on total fair value of land and building)
    
    
    7/1
    Interest Expense (570)
    80,000
    
    
    Cash (100)
    
    80,000
    
    (Half yearly interest paid on notes issued in the beginning in the year) [(2,000,000*8%)*6/12]
    
    
    9/1
    Cash (100)
    60,000
    
    
    Unearned Rent (235)
    
    60,000
    10/1
    Equipment (180)
    30,000
    
    
    Notes payable (250
    
    30,000
    
    (Purchase of equipment)
    
    
    10/1
    Prepaid Insurance (145)
    12,000
    
    
    Cash (100)
    
    12,000
    
    (Paid for the insurance for 1 year)
    
    
    10/14
    Account Receivable (110)
    100,000
    
    
    Sales (400)
    
    100,000
    
    (Sold 400 units to H Gilmore)
    
    
    10/14
    Cost of goods sold (500)
    68,000
    
    
    Inventory (130)
    
    68,000
    
    (As per LIFO, latest goods purchased sold first, reduced inventory by (170*400)
    
    
    10/30
    Cash (100)
    50,000
    
    
    Account Receivable (110)
    
    50,000
    
    (Half amount received)
    
    
    12/1
    Treasury Stock (350)
    120,000
    
    
    Cash (100)
    
    120,000
    
    (Shares repurchased)
    
    
    12/15
    Retained Earnings (320)
    18,000
    
    
    Dividend Payable (245)
    
    18,000
    
    (Dividend declare for 9,000 shares, $2 per share)
    
    
    12/15
    Bad Debt Expenses (515)
    50,000
    
    
    Account Receivable
    
    50,000
    
    (Bad debts being recorded for H Gilmore)
    
    
    12/20
    Supplies (135)
    13,000
    
    
    Cash (100)
    
    13,000
    
    (Office supplies purchased)
    
    
    12/25
    Account receivable (110)
    30,000
    
    
    Sales (400)
    
    30,000
    12/25
    Cost of goods sold (500)
    25,500
    
    
    Inventory (130)
    
    25,500
    
    (As per LIFO, latest goods purchased sold first, reduced inventory by (170*400)
    
    
    12/31
    Cash (100)
    200,000
    
    
    Sales (400)
    
    200,000
    
    (Cash sale recorded)
    
    
    12/31
    Cost of goods sold (500)
    156,000
    
    
    Inventory (130)
    
    156,000
    
    (As per LIFO, latest goods purchased sold first, reduced inventory by [(170*300)+(150*700)]
    
    
    12/31
    Supplies Expense (525)
    11,000
    
    
    Supplies (135)
    
    11,000
    
    (Office supply used)
    
    
    12/31
    Utilities Expense (550)
    25,000
    
    
    Utilities Payable (225)
    
    25,000
    
    (Recorded the utility expense for 2021)
    
    
    12/31
    Interest Expense (570)
    128600
    
    
    Interest Payable...
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