Jamisumm
Mar 7, 2007, 11:00 AM
Selected amounts (at Dec. 31 2006) from The J & J's Company information system appear as follows.
1. Cash paid employees for salaries and wages...$300,000.00
2. Cash collected from sales customers............$1,850,000.00
3. Bonds payable..............................................$500,000.00
4. Cash............................................................$150,000.00
5. Common Stock...............................................$60,000.00
6. Equipment....................................................$840,000.00
7. Prepaid insurance...........................................$30,000.00
8. Inventory....................................................$250,000.00
9. Prepaid rent.................................................$140,000.00
10. Retained earnings.......................................$130,000.00
11. Salaries and wages expense........................$328,000.00
12. Sales......................................................$2,000,000.00
Part A:
There are five adjustments that need to be made before the financial statements can be prepared at year end. Show the effect of each of the following (A to E) on the accounting equation.
A. The equipment (purchased on Jan. 1, 2006) has a useful life of 12 years with no salvage value. (Straight-line method is used.)
B. Interest accrued on the bonds payable is $20,000.00 as of Dec. 31 2006.
C. Unexpired insurance at Dec. 31, 2006 is $7,000.00
D. The rent payment of $140,000.00 covered the 4 months from Dec. 1,2006 through March 31,2007.
E. Salaries and wages of $28,000.00 were earned but unpaid at Dec. 31,2006.
Part B:
Indicate the proper balance sheet classification of each of the preceding 12 financial statement items on the Dec. 31, 2006 balance sheet. If the account title would not appear on the balance sheet, indicate the financial statement on which is would be found.
A. Current assets
B. Property, plant, and equipment
C. Current liabilities
D. Long-term liabilities
E. Stockholders' equity
The answers to Part A and Part B are?
1. Cash paid employees for salaries and wages...$300,000.00
2. Cash collected from sales customers............$1,850,000.00
3. Bonds payable..............................................$500,000.00
4. Cash............................................................$150,000.00
5. Common Stock...............................................$60,000.00
6. Equipment....................................................$840,000.00
7. Prepaid insurance...........................................$30,000.00
8. Inventory....................................................$250,000.00
9. Prepaid rent.................................................$140,000.00
10. Retained earnings.......................................$130,000.00
11. Salaries and wages expense........................$328,000.00
12. Sales......................................................$2,000,000.00
Part A:
There are five adjustments that need to be made before the financial statements can be prepared at year end. Show the effect of each of the following (A to E) on the accounting equation.
A. The equipment (purchased on Jan. 1, 2006) has a useful life of 12 years with no salvage value. (Straight-line method is used.)
B. Interest accrued on the bonds payable is $20,000.00 as of Dec. 31 2006.
C. Unexpired insurance at Dec. 31, 2006 is $7,000.00
D. The rent payment of $140,000.00 covered the 4 months from Dec. 1,2006 through March 31,2007.
E. Salaries and wages of $28,000.00 were earned but unpaid at Dec. 31,2006.
Part B:
Indicate the proper balance sheet classification of each of the preceding 12 financial statement items on the Dec. 31, 2006 balance sheet. If the account title would not appear on the balance sheet, indicate the financial statement on which is would be found.
A. Current assets
B. Property, plant, and equipment
C. Current liabilities
D. Long-term liabilities
E. Stockholders' equity
The answers to Part A and Part B are?