1. The equipment is made up of the following purchases: 8/1/2009 $3,800 4/1/2010
ID: 2372851 • Letter: 1
Question
1. The equipment is made up of the following purchases:
8/1/2009 $3,800
4/1/2010 $3,500
2. The buildings were purchased on 7/1/09
3. Depreciation is recorded using straight line and a 25 year life for the buildings and double declining balance with a 5 year life for the equipment. No salvage is expected.
4. The beginning inventory is recorded using LIFO and is made up of as:
275 units @ 11.00 3,025
225 units @ 11.15 2,509
5. The allowance for doubtful accounts is calculated using 10% of accounts receivable.
6. The note payable is due on 10/31/2012. It was issued on 11/1/2011. It bears interest at 9% which is due on Feb 1, May 1, Aug 1 and Nov 1.
7. The prepaid insurance policy was issued on 10/1/11 and was a 12 month policy.
8. The bonds are 10 year bonds which were sold on 1/1/08 for 6,000, par was 6,000. They bear interest at 6% and interest is paid on Jan 1 and July 1. Principal is retired each July 1 (1/10 each year)
During the year the following transactions transpired:
9. Sales were 1,000 units for 30,000, all credit, terms net 30
10. Cash collections on accounts receivable were 26,000
11. Purchases of inventory on credit:
230 units @ 11.25
300 units @ 11.40
360 units @ 11.50
12. Salaries of 6,000 were paid in cash
13. On Sep 30, 2012 a 12 month insurance policy was purchased for 4,800 in cash
14. Payments to vendors on account were 5,750
15. 40 shares of common stock were sold for 735 cash
16. Dividends of 1,000 cash were paid
17. New equipment costing $6,000 was purchased on 11/1/12 for cash
18. The equipment purchased on 8/1/09 was sold for 3,000 cash on 9/1/2012
19. Accounts receivable in the amount of 900 were written off during the year.
Required:
1. Prepare all journal entries and accruals necessary for the year 1/1/12 to 12/31/12
2. Prepare an income statement, statement of retained earnings and cash flow statement for the year ende December 31, 2012. Prepare a classified balance sheet at December 31, 2012
Explanation / Answer
I need help with this as well. The answers posted dont seem completely correct to me
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