Q#1 a. b. c. d. One-fourth of the work related to $11,000 cash received in advance is performed this period. Wages of $7,000 are earned by workers but not paid as of December 31, 2016. Depreciation on the company’s equipment for 2016 is $11,920. The Office Supplies account had a $470 debit balance on December 31, 2015. During 2016, $5,051 of office supplies are purchased. A physical count of supplies at December 31, 2016, shows $555 of supplies available. e. The Prepaid Insurance account had a $5,000 balance on December 31, 2015. An analysis of insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2016. f. The company has earned (but not recorded) $550 of interest from investments in CDs for the year ended December 31, 2016. The interest revenue will be received on January 10, 2017. g. The company has a bank loan and has incurred (but not recorded) interest expense of $5,000 for the year ended December 31, 2016. The company must pay the interest on January 2, 2017. For each of the above separate cases, prepare adjusting entries required for financial statements for the year ended (date of) December 31, 2016. (Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) Q#2 Costanza Company experienced the following events and transactions during July. July 1 Received $3,000 cash in advance of performing work for Vivian Solana. 6 Received $7,500 cash in advance of performing work for Iris Haru. 12 Completed the job for Solana. 18 Received $8,500 cash in advance of performing work for Amina Jordan. 27 Completed the job for Haru. 31 None of the work for Jordan has been performed. a. Prepare journal entries (including any adjusting entries as of the end of the month) to record these events using the procedure of initially crediting the Unearned Fees account when payment is received from a customer in advance of performing services. b. Prepare journal entries (including any adjusting entries as of the end of the month) to record these events using the procedure of initially crediting the Fees Earned account when payment is received from a customer in advance of performing services. c. Under each method, determine the amount of earned fees reported on the income statement for July and the amount of unearned fees reported on the balance sheet as of July 31. Under the first method (and using entries from part a) - Unearned fees = XXXX - Fees earned = xxxx Under the second method (and using entries from part b) - Unearned fees = xxxx - Fees earned = xxxx Q#3 The following is the adjusted trial balance of Wilson Trucking Company. Account Title Cash Accounts receivable Office supplies Trucks Accumulated depreciation—Trucks Land Accounts payable Interest payable Long-term notes payable Common stock Retained earnings. Dividends Trucking fees earned Depreciation expense—Trucks Salaries expense Office supplies expense Repairs expense—Trucks Totals $ Debit 5,500 16,500 2,000 189,000 Credit $ 38,934 75,000 9,500 3,000 52,000 20,000 155,376 19,000 144,500 25,112 67,771 11,000 12,427 $ 423,310 $ 423,310 The Retained Earnings account balance is $155,376 at December 31, 2015. (1). Prepare the income statement for the year ended December 31, 2016. (2). Prepare the statement of retained earnings for the year ended December 31, 2016. Q#4 Cal Consulting initially records prepaid and unearned items in income statement accounts. Given this company’s accounting practices, which of the following applies to the preparation of adjusting entries at the end of its first accounting period? 1- Earned but unbilled (and unrecorded) consulting fees for the period were $1,900, which are recorded with a debit to Unearned Consulting Fees of $1,900 and a credit to Consulting Fees Earned of $1,900. 2- Unpaid salaries of $680 are recorded with a debit to Prepaid Salaries of $680 and a credit to Salaries Expense of $680. 3- Office supplies purchased for the period were $1,700. The cost of unused office supplies of $1,000 is recorded with a debit to Supplies Expense of $1,000 and a credit to Office Supplies of $1,000. 4- Unearned fees (on which cash was received in advance earlier in the period) are recorded with a debit to Consulting Fees Earned of $640 and a credit to Unearned Consulting Fees of $640. Q#5 Pablo Management has ten part-time employees, each of whom earns $105 per day. They are normally paid on Fridays for work completed Monday through Friday of the same week. Assume that December 28, 2016, was a Friday, and that they were paid in full on that day. The next week, the ten employees worked only four days because New Year’s Day was an unpaid holiday. Prepare the adjusting entry that would be recorded on Monday, December 31, 2016 and Friday, January 4, 2017. Q#6 Case X: Case Y: Case Z: Compute cash received from customers: Sales Accounts receivable, December 31, 2015 Accounts receivable, December 31, 2016 Compute cash paid for rent: Rent expense Rent payable, December 31, 2015 Rent payable, December 31, 2016 Compute cash paid for inventory: Cost of goods sold Inventory, December 31, 2015 Accounts payable, December 31, 2015 Inventory, December 31, 2016 Accounts payable, December 31, 2016 $ 760,000 40,000 55,200 $ 135,500 11,900 9,520 $ 566,000 175,460 73,693 143,877 91,379 For each of the above three separate cases, use the information provided about the calendar-year 2016 operations of Sahim Company to compute the required cash flow information. Q#7 On October 10, the stockholders’ equity of Sherm Systems appears as follows: Common stock–$10 par value, 73,000 shares authorized, issued, and outstanding $ 730,000 Paid-in capital in excess of par value, common stock 221,000 Retained earnings 872,000 Total stockholders’ equity $ 1,823,000 1. Prepare journal entries to record the following transactions for Sherm Systems. a. Purchased 5,100 shares of its own common stock at $26 per share on October 11. b. Sold 1,025 treasury shares on November 1 for $32 cash per share. c. Sold all remaining treasury shares on November 25 for $21 cash per share. 2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase. Q#8 a. b. c. d. e. f. Net income was $470,000. Issued common stock for $71,000 cash. Paid cash dividend of $11,000. Paid $105,000 cash to settle a note payable at its $105,000 maturity value. Paid $116,000 cash to acquire its treasury stock. Purchased equipment for $89,000 cash. Use the above information to determine this company's cash flows from financing activities. Q#9 Lansing Company’s 2016 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2015 and 2016, follow. LANSING COMPANY Income Statement For Year Ended December 31, 2016 Sales revenue $60,000 Expenses Cost of goods sold 19,000 Depreciation expense 5,000 Salaries expense 9,000 Rent expense 2,000 Insurance expense 1,800 Interest expense 1,300 Utilities expense 1,000 Net income $20,900 LANSING COMPANY Selected Balance Sheet Accounts At December 31 2016 2015 Accounts receivable $ 3,600 $ 3,740 Inventory 950 805 Accounts payable 1,200 1,300 Salaries payable 450 320 Utilities payable 130 110 Prepaid insurance 120 140 Prepaid rent 160 140 Required: Prepare the cash flows from operating activities section only of the company’s 2016 statement of cash flows using the indirect method.