Winterschid Company’s trial balance at December 31, 2012, is presented below. All 2012 transactions have been recorded except for the items described on page 500.
|
Cash |
Debit |
|
|
Accounts Receivable |
$ 28,000 |
|
|
Notes Receivable |
36,800 |
|
|
Interest Receivable |
10,000 |
|
|
Inventory |
–0– |
|
|
Prepaid Insurance |
36,200 |
|
|
Land |
3,600 |
|
|
Buildings |
20,000 |
|
|
Equipment |
150,000 |
|
|
Patents |
60,000 |
|
|
Allowance for Doubtful Accounts |
9,000 |
|
|
Accumulated Depreciation—Buildings |
$ 500 |
|
|
Accumulated Depreciation—Equipment |
50,000 |
|
|
Accounts Payable |
24,000 |
|
|
Salaries and Wages Payable |
27,300 |
|
|
Unearned Rent Revenue |
–0– |
|
|
Notes Payable (due in 2013) |
6,000 |
|
|
Interest Payable |
11,000 |
|
|
Notes Payable (due after 2013) |
–0– |
|
|
Owner’s Capital |
35,000 |
|
|
Owner’s Drawings |
113,600 |
|
|
Sales Revenue |
900,000 |
|
|
Interest Revenue |
–0– |
|
|
Rent Revenue |
–0– |
|
|
Gain on Disposal of Plant Assets |
–0– |
|
|
Bad Debts Expense |
–0– |
|
|
Cost of Goods Sold |
630,000 |
|
|
Depreciation Expense |
–0– |
|
|
Insurance Expense |
–0– |
|
|
Interest Expense |
–0– |
|
|
Other Operating Expenses |
61,800 |
|
|
Amortization Expense |
–0– |
|
|
Salaries and Wages Expense |
110,000 |
|
|
Total |
$1,167,400 |
$1,167,400 |
Unrecorded transactions:
1. On May 1, 2012, Winterschid purchased equipment for $13,200 plus sales taxes of $600 (all paid in cash).
2. On July 1, 2012, Winterschid sold for $3,500 equipment which originally cost $5,000.
Accumulated depreciation on this equipment at January 1, 2012, was $1,800; 2012 depreciation prior to the sale of the equipment was $450.
3. On December 31, 2012, Winterschid sold for $9,000 on account inventory that cost $6,300.
4. Winterschid estimates that uncollectible accounts receivable at year end is $4,000.
5. The note receivable is a one year, 8% note dated April 1, 2012. No interest has been recorded.
6. The balance in prepaid insurance represents payment of a $3,600 6 month premium on September 1, 2012.
7. The building is being depreciated using the straight line method over 30 years. The salvage value is $30,000.
8. The equipment owned prior to this year is being depreciated using the straight line method over 5 years. The salvage value is 10% of cost.
9. The equipment purchased on May 1, 2012, is being depreciated using the straight line method over 5 years, with a salvage value of $1,800.
10. The patent was acquired on January 1, 2012, and has a useful life of 10 years from that date.
11. Unpaid salaries and wages at December 31, 2012, total $2,200.
12. The unearned rent revenue of $6,000 was received on December 1, 2012, for 3 months rent.
13. Both the short term and long term notes payable are dated January 1, 2012, and carry a 9% interest rate. All interest is payable in the next 12 months.
Instructions
(a) Prepare journal entries for the transactions listed above.
(b) Prepare an updated December 31, 2012, trial balance.
(c) Prepare a 2012 income statement and an owner’s equity statement.
(d) Prepare a December 31, 2012, classified balance sheet.