Can someone please please help me solve this problem step-by-step in its entiret
ID: 2469936 • Letter: C
Question
Can someone please please help me solve this problem step-by-step in its entirety?
Comprehensive Problem: Quigley Corporation’s trial balance at December 31, 2017, is presented below. All 2017 transactions have been recorded except for the items described below.
Cash - $25,500 DR
Accounts Receivable - 51,000 DR
Inventory - 22,700 DR
Land - 65,000 DR
Buildings - 95,000 DR
Equipment - 40,000 DR
Allowance for Doubtful Accounts - $ 450 CR
Accumulated Depreciation – Buildings - 30,000 CR
Accumulated Depreciation – Equipment - 14,400 CR
Accounts Payable - 19,300 CR
Interest Payable - -0- CR
Dividends Payable - -0- CR
Unearned Rent Revenue - 8,000 CR
Bonds Payable (10%) - 50,000 CR
Common Stock ($10 par) - 30,000 CR
Paid-in Capital in Excess of Par – Common Stock - 6,000 CR
Preferred Stock ($20 par) - -0- CR
Paid-in Capital in Excess of Par – Preferred Stock - -0- CR
Retained Earnings - 75,050 CR
Treasury Stock - -0- DR
Cash Dividends - -0- DR
Sales Revenue - 570,000 CR
Rent Revenue - -0- CR
Bad Debt Expense - -0- DR
Interest Expense - -0- DR
Cost of Goods Sold- 400,000 CR
Depreciation Expense - -0- DR
Other Operating Expenses - 39,000 CR
Salaries and Wages Expense - 65,000 CR
TOTAL $803,200 DR $803,200 CR
Unrecorded transactions and adjustments:
1. On January 1, 2017, Quigley issued 1,000 shares of $20 par, 6% preferred stock for $22,000.
2. On January 1, 207, Quigley also issued 1,000 shares of common stock for $23,000.
3. Quigley reacquired 300 shares of its common stock on July 1, 2017, for $49 per share.
4. On December 31, 2017, Quigley declared the annual cash dividend on the preferred stock and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2018.
5. Quigley estimates that uncollectible accounts receivable at year-end is $5,100.
6. The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000.
7. The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000.
8. The unearned rent was collected on October 1, 2017. It was the receipt of 4 months’ rent in advance (October 1, 2017 through January 31, 2018).
9. The 10% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2017, has not been paid or recorded.
Instructions
(Ignore income taxes.)
(a). Prepare journal entries for the transactions and adjustment listed above.
(b). Prepare an updated December 31, 2017, trial balance, reflecting the journal entries in (a). (b) Total $871,200
(c ). Prepare a multiple-step income statement for the year ending December 31, 2017.
(d). Prepare a retained earnings statement for the year ending December 31, 2017.
(e). Prepare a classified balance sheet as of December 31, 2017. (e). Total assets $273,400.
Explanation / Answer
Quigley Corporation All Amounts in $ (a) Journal Entries for unrecorded transactions Date Particulars Debit Credit 01/01/2017 Cash A/c 22000 To 6% Preferred Stock A/c 20000 To Excess Over Paid-in Capital A/c 2000 01/01/2017 Cash A/c 23000 To Common Stock A/c 10000 To Excess Over Paid-in Capital A/c 13000 01/07/2017 Common Stock A/c 3000 Excess Over Paid-in Capital A/c 11700 To Cash A/c 14700 31/12/2017 Cash Dividends A/c 6750 To Dividend Payable A/c 6750 31/12/2017 Bad Debt Expense A/c 5100 To Allowance for Doubtful Accounts A/c 5100 31/12/2017 Depreciation Expense A/c 3000 (95,000 Cost - 5,000 Salvage Value) / 30 years To Accumulated Depreciation - Building A/c 3000 31/12/2017 Depreciation Expense A/c 3600 (40,000 Cost - 4,000 Salvage Value) / 10 years To Accumulated Depreciation - Equipment A/c 3600 01/10/2017 Unearned Rent Revenue A/c 8000 To Rent Revenue A/c 8000 31/12/2017 Rent Revenue A/c 2000 To Rent Received in Advance A/c 2000 31/12/2017 Interest Expense A/c 5000 To Interest on Bonds Payable A/c 5000 (b) Updated Trial Balance as on December 31, 2017 Particulars Debit Credit Cash 55800 Accounts Receivable 51000 Inventory 22700 Land 65000 Buildings 95000 Equipment 40000 Allowance for Doubtful Accounts 5550 Accumulated Depreciation - Buildings 33000 Accumulated Depreciation - Equipment 18000 Accounts Payable 19300 Interest Payable 5000 Dividends Payable 6750 Unearned Rent Revenue 0 Rent Received in Advance 2000 Bonds Payable (10%) 50000 Common Stock ($10 par) 37000 Paid in Capital in excess of par - Common Stock 7300 Preferred Stock ($20 par) 20000 Paid in Capital in excess of par - Preferred Stock 2000 Retained Earnings 75050 Treasury Stock Cash Dividends 6750 Sales Revenue 570000 Rent Revenue 6000 Bad Debt Expense 5100 Interest Expense 5000 Cost of Goods Sold 400000 Depreciation Expense 6600 Other Operating Expense 39000 Salaries and Wages Expense 65000 856950 856950 (c) Multi Step Income Statement as on December 31, 2017 Sales Revenue 570000 Cost of Goods Sold 400000 Contribution Margin 170000 Rent Revenue 6000 176000 Salaries and Wages Expense 65000 Other Operating Expense 39000 Bad Debt Expense 5100 Interest Expense 5000 Depreciation Expense 6600 120700 Net Income before dividends 55300 Cash Dividends declared 6750 Transfer to Retained Earnings 48550 (d) Statement of Retained Earnings as on December 31, 2017 Opening Balance in Retained earnings 75050 Net Income for the year 48550 Closing Balance of Retained Earnings 123600 (e) Classified Balance Sheet as on December 31, 2017 Assets Current Assets Cash 55800 Accounts Receivable (less Allowance for Doubtful Accounts) 45450 Inventory 22700 Total Current Assets 123950 Fixed Assets Land 65000 Buildings (net of accumulated depreciation) 62000 Equipment (net of accumulated depreciation) 22000 149000 Total Assets 272950 Liabilities Current Liabilities Accounts Payable 19300 Interest Payable 5000 Dividends Payable 6750 Rent Received in Advance 2000 Total Current Liabilties 33050 Long Term Liabilities Bonds Payable (10%) 50000 Shareholders' Equity Common Stock ($10 par) 37000 Paid in Capital in excess of par - Common Stock 7300 Preferred Stock ($20 par) 20000 Paid in Capital in excess of par - Preferred Stock 2000 Retained Earnings 123600 Total Liabilities and Shareholders' Equity 272950