CH2 Homework Solutions

Intermediate Accounting, Fifth Edition

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Student Name: Class: ACC 307 Problem 02-03 PASTINA COMPANY General Journal Date Account Debit Credit (1) Depreciation Expense 10,000 Accumulated Depreciation 10,000 (2) Bad debt expense 2,500 Allowance for uncollectable accts 2,500 (3) Wage expense 1,500 Wages payable 1,500 (4) Interest expense 1,500 Interest payable 1,500 (5) Interest receivable 1,333 Interest revenue 1,333 (6) Prepaid insurance 3,750 Insurance expense 3,750 (7) Supplies expense 700 Supplies 700 (8) Sales revenue 2,000 Unearned revenue 2,000 (9) Rent expense 1,000 Prepaid rent 1,000
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Given Data P02-03: PASTINA COMPANY Unadjusted Trial Balance December 31, 2009 Account Title Debits Credits Cash 30,000 Accounts receivable 40,000 Allowance for uncollectible accounts 3,000 Supplies 1,500 Inventory 60,000 Note receivable 20,000 Interest receivable 0 Prepaid rent 2,000 Prepaid insurance 0 Equipment 80,000 Accumulated depreciation-equipment 30,000 Accounts payable 28,000 Wages payable 0 Note payable 50,000 Interest payable 0 Unearned revenue 0 Common stock 60,000 Retained earnings 24,500 Sales revenue 148,000 Interest revenue 0 Cost of goods sold 70,000 Wage expense 18,900 Rent expense 11,000 Depreciation expense 0 Interest expense 0 Supplies expense 1,100 Insurance expense 6,000 Bad debt expense 3,000 Totals 343,500 343,500 Additional information: Depreciation on equipment $10,000 Accounts receivable outstanding 40,000 Uncollectible 5,500 Wages earned 12/16-12/31 1,500 Cash borrowed 10/1 50,000 Annual interest on note 12% Principal due in 10 years Cash lent 3/1 $20,000 Interest on note 8% Insurance paid (2 years) $6,000 Supplies remaining on hand 800 Customer paid 2,000 for spaghetti 1,500 pounds Rent paid for December & January $2,000
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Rent per month 1,000
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Student Name: Class: ACC 307 Problem 02-04 HINT: You can use the data under the "Given P02-04" tab below to copy and paste information into the problem fields. Requirement 3: PASTINA COMPANY Adjusted Trial Balance December 31, 2009 Account Title Debits Credits Cash 30,000 Accounts receivable 40,000 Allowance for uncollectible accounts 5,500 Prepaid rent 1,000 Prepaid insurance 3,750 Supplies 800 Inventory 60,000 Note receivable 20,000 Interest receivable 1,333 Equipment 80,000 Accumulated depreciation-equipment 40,000 Accounts payable 28,000 Wages payable 1,500 Note payable 50,000 Interest payable 1,500 Unearned revenue 2,000 Common stock 60,000 Retained earnings 24,500 Sales revenue 146,000 Interest revenue 1,333 Cost of goods sold 70,000 Wage expense 20,400 Rent expense 12,000 Depreciation expense 10,000 Interest expense 1,500 Supplies expense 1,800 Insurance expense 2,250 Bad debt expense 5,500 Totals 360,333 360,333 Correct! Correct!
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Student Name: Class: ACC 307 Problem 02-04 Requirement 4: PASTINA COMPANY Income Statement For the Year Ended December 31, 2009 Sales revenue $146,000 Cost of goods sold 70,000 Gross profit $76,000 Operating expenses: Wages $20,400 Rent 12,000 Depreciation 10,000 Supplies 1,800 Insurance 2,250 Bad debt 5,500 Total operating expenses 51,950 Operating Income 24,050 Other income (expense): Interest revenue 1,333 Interest expense (1,500) (167) Net income $23,883 Correct! PASTINA COMPANY Statement of Shareholders' Equity For the Year Ended December 31, 2009 Total Common Retained Shareholders' Stock Earnings Equity Balance at January 1, 2009 $60,000 $28,500 $88,500 Issue of common stock 0 0 0 Net income for 2009 0 23,883 23,883 Less: Dividends 0 (4,000) (4,000) Balance at December 31, 2009 $60,000 $48,383 $108,383 Correct! Correct! Correct!
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Student Name: Class: ACC 307 Problem 02-04 PASTINA COMPANY
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