Question # 1
you are helping Frances Ltd. to prepare any SECOND QUARTER-end adjusting/correcting journal entries. The unadjusted trial balance is below:
France LTD.
Unadjusted Trial Balance
June 30, 2018
Account Debit Credit
Cash $5,300
Accounts receivable 33,900
Allowance for doubtful accounts $1,500
Inventory 19,000
Notes receivable 25,000
Bank loans 20,000
Account payable 7,950
Unearned sales revenue 4,100
Common shares 6,900
Retained earnings 28,366
Dividends 17,000
Sales revenue 240,768
Interest revenue 750
Cost of Goods sold 96,224
Rent expense 54,000
Salaries and wages expense 54,510
Property tax expense 3,000
Interest expense 1,300
Utilities expense 1,100
Total $310,334 $310,334
Based on the information above and additional information provided below, prepare all necessary adjusting and correcting entries at June 30, 2018 for Frances Ltd.
- State any assumption needed (if no adjustment is needed, state why.)
- Show all calculations.
Additional information relating to the SECOND QUARTER OF 2018:
a) After some analysis, management informs you that the Unearned Sale Revenue account should have a balance of $6,100.
b) No entry has been made for salaries for the last week of June (estimated at $5,000) since they will not be paid until July 7.
c) You find an error in that a customer invoice (still unpaid) was recorded for $959 instead of $599. No adjustment has yet been made.
d) Property taxes of $1,500 for the third quarter of 2018 was paid for and recorded in June.
e) Management has been going over the list of accounts receivable for possible accounts that are not collectible. One account for $200 still needs to be written off.
f) An analysis of the ending adjustment accounts receivable (ie. Factoring in all adjustments above) by management revels that %7 of this balance is expected to be uncollectible. The allowance account should reflect this fact. (Hint: remember to recalculate your accts receivable and allowance account first adjusting for (a)-(e) above).
Question # 2
an excerpt of certain Frankie ltd. 's account as of / for the year ended December 31, 2018 is presented below.
Amount
Accumulated other comprehensive income. Jan 1, 2018 $1,000
Cost of goods sold 4,900
Common shares ($1000 of shares were issued during the year) 8,500
Dividends declared – preferred shares 150
Gain on sale of building 100
Loss on sale of equipment of discontinued operation 60
Interest expense 45
Income tax payable 0
Loss from the operations of discontinued operation 220
Operating expenses 1,240
Preferred shares (no shares were issued of sold during the year) 2,000
Prepaid expenses 620
Retained earnings, Jan 1, 2018 4,800
Sales revenue 12,600
Unearned revenue 115
Unrealized gain – Other Comp Income (OCI) 80
a) Prepare a multi-step statement of comprehensive income in good form for Frankie Ltd. (Round all amounts to the nearest dollar).
b) Prepare the Statement of Changes in Equity in good form for Frankie Ltd. For the year ended December 31, 2018.
c) Calculate income taxes payable at December 31, 2018.
Sample Solution