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ACC 301
Financial Reporting I
Attached is the unadjusted trial balance for Surfs Up, Inc.
Instructions:
Construct T-accounts and enter the balances shown.
The following adjusting entries have been identified:
Bad debt expense is estimated to be $8,000.
Annual depreciation expense on the Equipment is $16,000 and annual depreciation expense for building is $9,000.
Prepaid Insurance is for 2 years of insurance paid on 1/1/14. Record the amount for 2014.
The note payable ($270,000) has interest of 6% per year and the interest is payable on 1/1/15. Record the interest for 2014.
Salaries and wages earned but unpaid as of year-end are $10,750 (sales) and $4,950 (administrative).
At year-end, $1,660 of Supplies remain on hand.
$10,000 of the unearned rent revenue was earned as of 12/31/14.
Utilities expense incurred for December, but unpaid and unrecorded was $4,000.
Assume no income tax expense and do not calculate earnings per share.
Prepare the adjusting journal entries (include explanations) and post the entries to the appropriate T-accounts (construct additional T-accounts as necessary).
Prepare an adjusted trial balance.
Prepare a classified balance sheet and a multiple-step income statement in good form.
Prepare closing journal entries and post to the T-accounts.
Prepare a post-closing trial balance.
You should use Excel or a similar spreadsheet program to prepare your work. Your grade will be based on both the accuracy and the organization of your work product. Please submit a hard copy of your work. (Submit adjusting journal entries, adjusted trial balance, classified balance sheet, multistep income statement, closing journal entries, post closing trial balance and your final T-accounts after posting closing entries)
| Surfs Up, Inc. | |||||||
| Trial Balance | |||||||
| Debit | Credit | ||||||
| Cash | $45,760 | ||||||
| Accounts Receivable | $83,350 | ||||||
| Allowance for Doubtful Accounts | $4,000 | ||||||
| Supplies | $7,110 | ||||||
| Inventory | $315,240 | ||||||
| Prepaid Insurance | $14,000 | ||||||
| Equipment | $422,000 | ||||||
| Accumulated Depreciation - Equipment | $118,000 | ||||||
| Building | $500,000 | ||||||
| Accumulated Depreciation - Building | $15,000 | ||||||
| Land | $100,000 | ||||||
| Notes Payable | $270,000 | ||||||
| Accounts Payable | $89,500 | ||||||
| Unearned Rent Revenue | $18,000 | ||||||
| Common Stock | $110,000 | ||||||
| Retained Earnings | $265,000 | ||||||
| Sales Revenue | $2,100,000 | ||||||
| Rent Revenue | $64,000 | ||||||
| Cost of Goods Sold | $937,440 | ||||||
| Salaries and Wages Expense - sales | $273,500 | ||||||
| Advertising Expense-Sales | $78,100 | ||||||
| Utilities Expense-Administrative | $49,000 | ||||||
| Telecommunications -Administrative | $32,000 | ||||||
| Salaries and Wages Expense - administrative | $196,000 | ||||||
| $3,053,500 | $3,053,500 | ||||||
