You have been given the unadjusted trial balance for Hullie & Oates Company as o
ID: 2460604 • Letter: Y
Question
You have been given the unadjusted trial balance for Hullie & Oates Company as of 12/31/13. Hullie & Oates Company prepare financial statements annually.
Your required tasks are as follows:
On the designated worksheet, prepare in journal entry form the adjusting journal entries for the following items. (Round all numbers to the nearest dollar, 0.2 points each)
On June 1, 2013 a 36-month insurance policy was purchased for $24,000.
On January 1, 2013 Hullie & Oates paid Gretsky Advertising $48,000 for three years of advertising services. Equal services are provided each year.
Hullie & Oates needed some additional storage space so on November 1, 2013 they rented a unit for an annual rate of $18,500. The entire amount was expensed when paid.
$5,800 of store supplies were purchased during the year and the asset store supplies was increased. $3,200 of these supplies were used during the year.
$7,775 of office supplies were purchased during the year and were immediately expensed. $1,250 of these supplies remained at the end of 2013.
On August 1, 2013, Hullie & Oates issued a 9-month note receivable to Shanahan Co. at an annual interest rate of 5%. Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.
Depreciation for the year is based on the following:
Straight line depreciation
Store equipment – Assets were held for the entire year; Residual Value = $15,000; Service life is estimated to be 10 years.
Office equipment – Assets were held for the entire year; Residual Value = $8,000; Service life is estimated to be 2 years.
Sales salaries of $8,400 and office salaries of $6,500 remained unpaid at 12/31/13.
On October 1, 2013, Hullie & Oates rented a portion of one store to Twist & Chase Co. The contract was for 6 months and Hullie & Oates required the 6 months of cash upfront on October 1st. The rent is being earned equally over the next 6 months. When cash was received, unearned rent was appropriately recorded.
The note payable was outstanding the entire year and a 6.5% interest rate exists on the note. No interest has been recorded for the year.
Based on past experience, Hullie & Oates calculates bad debt expense at 1% of net sales for the year.
After the above adjusting entries are entered on the adjustment worksheet, the amounts should be linked to the adjustments column of the worksheet. Your adjustment amounts should be a formula so if you change the debit/credit amount on the adjustments worksheet, the column amount will automatically change. (1.8 points)
Complete the adjusted columns by the use of the formula. Think about the best way to do this. Your last two columns should never contain constant numbers but will include formulas only. (1 point)
Prepare a multiple-step income statement on the proper worksheet. Your Income Statement should be in good form (proper titles, etc., use examples from your book) and well formatted. Do your best designating between selling and administrative expenses. You should use formulas in all cells, not constant numbers. (That means, your income statement should be linked to the adjusted numbers on your worksheet.) (1 point)
Prepare a Statement of Stockholder’s Equity on the proper worksheet. Your Statement should be formatted. You should use formulas in all cells, not constant numbers. (1 point)
6. On the designated worksheet, prepare in journal entry form the closing entries for Hullie & Oates at the end of 12/31/13. (1 point)
7. Prepare a Classified Balance Sheet on the proper worksheet as of 12/31/13. Your Statement should be formatted. You should use formulas in all cells, not constant numbers. (1 point)
8. Complete the Ratio Tab. You should use formulas in cells. (1 points)
Hullie & Oates Company End of Period Worksheet For the Year Ended December 31, 2013 Unadjusted Adjusted Account Title Trial Balance Adjustments Trial Balance DR CR DR CR DR CR Cash 36,000 - Accounts Receivable 72,850 - Allowance for Doubtful Accounts 4,000 Interest Receivable - Merchandise Inventory 160,500 - Prepaid Insurance 24,000 - 4,667 Prepaid Advertising 48,000 16,000 Prepaid Rent - 3,083 Store Supplies 5,800 - 3,200 Office Supplies - - 6,525 Note Receivable 30,000 Store Equipment 350,000 - Accumulated Depreciation - Store Equipment - 40,050 Office Equipment 125,000 - Accumulated Depreciation - Office Equipment - 17,200 Accounts Payable - 85,200 Salaries Payable - - Interest Payable - - Unearned Rent - 40,000 Note Payable (final payment due 2017) - 146,000 Common Stock - 60,000 Retained Earnings - 333,825 Dividends 25,000 - Sales - 788,350 Sales Returns and Allowances 12,800 - Sales Discounts 8,300 - Cost of Goods Sold 457,200 - Sales Salaries Expense 94,650 - Advertising Expense - 16,000 Depreciation Expense - Store Equipment - - Store Supplies Expense - - 3,200 Miscellaneous Selling Expense 2,600 - Office Salaries Expense 34,000 - Rent Expense 18,500 - 3,083 Insurance Expense - - 4,667 Depreciation Expense - Office Equipment - - Office Supplies Expense 7,775 - 6,525 Miscellaneous Administrative Expense 1,650 - Rent Revenue - - Interest Revenue Interest Expense - - Bad Debt Expense - - 1,514,625 1,514,625Explanation / Answer
Hullie & Oates Company Adjusting Entries End of Period Worksheet Date Accounts Title Dr Cr For the Year Ended December 31, 2013 Insurance expenses 4667 Unadjusted Adjusted Prepaid Insurance 4667 Account Title Trial Balance Adjustments Trial Balance (24000/36 months*7 months) DR CR DR CR DR CR Cash 36000 - 36000 Prepaid Rent 15417 Accounts Receivable 72850 - 72850 Rent expense (18500/12*10) 15417 Allowance for Doubtful Accounts 4000 7672.5 11672.5 (rent expense will be recorded for 2 months and the rest will be prepaid rent for 10 months Merchandise Inventory 160500 - 160500 StoreSupplies expense 3200 Prepaid Insurance 24000 - 4667 19333 Store Supplies 3200 Prepaid Advertising 48000 16,000 32000 Prepaid Rent 0 15,417 15417 Office Supplies 1250 Interest Receivable 625 625 Office supplies expense 1250 Store Supplies 5800 - 3,200 2600 (Beinfg whole amount expensed but $1250 is in inventory so we need to debit office supplies) Office Supplies 0 0 1250 1250 Note Receivable 30000 30000 Store Equipment 350000 - 350000 Interest Receivable 625 Accumulated Depreciation - Store Equipment - 40050 29495 69545 Interest revenue (30000*5%*5/12) 625 Office Equipment 125000 - 125000 Accumulated Depreciation - Office Equipment - 17200 46400 63600 Depreciation Expense - Store Equipment (350000-40050)-15000)/10 29495 Accounts Payable - 85200 85200 Depreciation Expense - Office Equipment (125000-17200)-8000)/2 46400 Salaries Payable - 0 14900 14900 Accumulated Depreciation - Store Equipment 29495 Interest Payable - 0 9490 9490 Accumulated Depreciation - Office Equipment 46400 Unearned Rent - 40000 20000 20000 (t is change in estimation of useful life so we have to take depreciation on purchase price less accumulated depreciation) Note Payable (final payment due 2017) - 146000 146000 Common Stock - 60000 60000 Retained Earnings - 333825 333825 Sales Salaries Expense 8400 Dividends 25000 0 0 25000 Office Salaries Expense 6500 Sales - 788350 788350 Salaries Payable 14900 Sales Returns and Allowances 12800 - 12800 Sales Discounts 8300 - 8300 Uneraned Rent 20000 Cost of Goods Sold 457200 - 457200 Rent Revenue (40000/6*3) 20000 Sales Salaries Expense 94650 - 8400 103050 Advertising Expense - 16,000 16000 Interest expense 9490 Depreciation Expense - Store Equipment 0 0 29495 29495 Interest Payable (146000*6.5%) 9490 Store Supplies Expense 0 0 3,200 3200 Miscellaneous Selling Expense 2600 0 2600 Bad Debt Expense 7672.5 Office Salaries Expense 34000 - 6500 40500 Allowance for doubtful debts (788350-12800-8300)*1% 7672.5 Rent Expense 18500 - 15417 3083 Insurance Expense 0 - 4667 4667 Depreciation Expense - Office Equipment 0 - 46400 46400 Office Supplies Expense 7775 0 1250 6525 Miscellaneous Administrative Expense 1650 - 1650 Rent Revenue 0 0 20000 20000 Interest Revenue 625 625 Interest Expense 0 0 9490 9490 Bad Debt Expense 0 0 7672.5 7672.5 1514625 1514625 169116.5 169116.2 1623208 1623208 Income Statement For the Year Ended 31 Dec Sales Revenue (Net) 767250 Rent Revenue 20000 Interest Revenue 625 Total Revenue 787875 Expenses Cost of Goods Sold 457200 Sales Salaries Expense 103050 Advertising Expense 16000 Depreciation Expense - Store Equipment 29495 Store Supplies Expense 3200 Miscellaneous Selling Expense 2600 Office Salaries Expense 40500 Rent Expense 3083.333333 Insurance Expense 4667 Depreciation Expense - Office Equipment 46400 Office Supplies Expense 6525 Miscellaneous Administrative Expense 1650 Interest Expense 9490 Bad Debt Expense 7672.5 Total Expenses 0 Net Income 787875 Dear Student there are various subparts I have answere first 4
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