ACT3391Spring2011TraditionalHomeworkChs3&4

ACT3391Spring2011TraditionalHomeworkChs3&4 -...

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HOMEWORK Spring 2011 ACT3391 ALL homework assignments must be completed by using some type of computer software program, e.g., word. NO CREDIT WILL BE GIVEN FOR LATE HOMEWORK. When completing your homework assignments, DO NOT use abbreviations, e.g., spell out Accounts Payable instead of simply writing AP. As discussed during class, you can work on these homework assignments in groups or as an individual. 1. (5 points) Pederson Service Company’s balance sheet as of 12-31-09 is presented below: 12-31-09 Current assets Cash $ 400,000 Accounts receivable $ 350,000 Prepaid insurance $ 50,000 Non-current assets Property, plant, and equipment – at cost $ 900,000 Accumulated depreciation $ 100,000 TOTAL ASSETS $1,600,000 Current liabilities Accounts payable $ 200,000 Accrued property taxes payable $ 300,000 Non-current liabilities Long-term debt $ 700,000 Stockholders’ equity Common stock and additional paid-in-capital $ 100,000 Retained earnings $ 300,000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,600,000 During the year ended 12-31-10, Pederson entered into the following events/transactions: a) Borrowed an additional $1,500,000 on a long-term basis. b) Purchased on account $250,000 of office furniture (property, plant, and equipment). c) Performed $800,000 of services for customers on an account basis. d) Performed $200,000 of services for customers on a cash basis. e) Incurred and paid wage expenses of $333,000. f) Paid off its outstanding accrued property taxes payable. g) Used up the prepaid insurance. h) Collected $950,000 of accounts receivable. i) Recorded $42,000 of depreciation expense. j) Incurred and paid $40,000 of interest expense. Required : Journalize the events/transactions describe in items a) through j). When you make the journal entries, make sure that you identify each account you debit and credit as EITHER an asset, a liability, an equity, a revenue, OR an expense account. In addition, prepare an income statement for the year ended 12-31-10 AND a balance sheet as of 12-31-10. Assume a 0% income tax rate. 1
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2. (1 point) Included in Engle Company’s December 31, 2009 trial balance was a note payable for $750,000. The note was a 9-month, 5% note dated September 30, 2009. Interest on the note will be paid when the note matures. Prepare Engle’s December 31, 2009 adjusting journal entry (AJE) to record accrued interest expense. In addition, prepare Engle’s July 1, 2010 journal entry to record the payment of the note and the interest. Assume that Engle only makes AJEs on December 31, 2009 AND that Engle does NOT making reversing entries. 3.
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ACT3391Spring2011TraditionalHomeworkChs3&4 -...

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