MGMT 3306-Stark Industries BALANCE SHEET

Stark IndustriesBALANCE SHEETDECEMBER 31, 2015Current AssetsCashNotes ReceivableAccounts ReceivableLess: Allowance for Doubtful AccountsInventoriesPrepaid InsurancePrepaid RentTotal Current AssetsNon-Current AssetsLong-term InvestmentsInvestments in held-for-maturity securitiesLand held for future developmentProperty, Plant, and EquipmentLandBuildingsLess: Accumulated DepreciationIntangible AssetsCapitalized Development CostsGoodwillOther Identifiable Intangible AssetsTotal Non-Current AssetsTotal AssetsCurrent LiabilitiesNotes PayableAccounts PayableUnearned RevenuesIncome Taxes PayableProperty Taxes PayableInterest PayableTotal Current LiabilitiesNon-Current LiabilitiesProvisions Related to PensionsBonds PayableTotal Non-Current LiabilitiesTotal LiabilitiesStockholders’ EquityCommon StockPreferred StockPaid-in-capital – Common StockPaid-in-capital – Preferred StockRetained EarningsAccumulated Other Comprehensive IncomeLess: Treasury Stock 42,20016,00041,800(3,000)38,800540600136,940 52,00045,50085,000675,000(187,500)8,00076,70048,000802,700939,640 110,00032,00013,5008,4406,6001,500172,04084,100300,000384,100556,140100,000100,00027,50010,000152,7506,000(12,750) Total Stockholders’ EquityTotal Liabilities and Stockholders’ Equity 383,500939,640 The 2015 balance sheet of Stark Industries is attached. During 2016, the following events occurred.1. On January 10, sold merchandise on account to Rayms $9,800 and Fischer $8,600. Terms 1/10, n/30. Freight $100 for each s2. On January 12, purchased merchandise on account from Zapfel $3,000 and Liotta $2,400. Terms 2/10, n/30. Freight for each3. On January 13, received checks, $4,000 from Longhini and $2,000 from Hall, for sales on account after discount period has la4. On January 15, sent checks to Joosten for 9,000 less 2% cash discount, and to Maida for $11,000 less 1% cash discount.5. On January 16, issued credit of $200 to Fischer for merchandise returned.6. On January 18, summary daily cash sales total $17,5207.. On January 21, pay off the balances to Zapfel and Liotta for the purchases made on January 12.8. On Feburary 9, received payment in full from Rayms and Fischer.(1% discount on sales (9800+8600) * .01) =9. On January 1, paid rent of $6,000 for a two-year term.10. On April 1, sell merchandise on account to Dunlap $1,600, term 2/10, n/30. Frieght $100 FOB shipping point11.Pay $500 cash for office supplies on May 1.12. Cash dividends totaling $900 were declared on June 13 and paid to stockholders on June 23.13. Issued a note of $120,000 to bank (one year, annual interest rate 2%) for cash on July 1.14. On July 5, purchased merchandise from Maida $33,000, terms 2/10, n/30.15. On July 7, issued common stock 1000 shares, $10 par, in exchange of a land with a fair market value of $15,000.16. On July 8, returned $200 of merchandise to Maida and received credit.17. On August 1, sell merchandise to Lachey on account $80,000, term 1/10, n/30. Freight $1,500 FOB shipping point18. On August 4, pay off the balance to Maida.(33000*.02) =(3234019. On August 10 receive half of the payment from Lachey(40000*.01)=40020. On August 14, write off $1,300 bad debt on account, Tooket21.. On August 21, pay utilities expense, $10,09222. On August 31, Lachey pays off its balance23. On September 1, paid cash $7,500 to Farmington for merchandise purchased last year.24. On October 1, paid off notes payable $110,000 and associated interest $6,000 of which $1,500 was shown on the balance25. Over the year, sales and office employees earned $45,500 in salaries and wages, of which $1,500 remained as payable at th26. An unpaid utilities bill (December $1,250) is due on January 10 next year Additional Information at the end of the year:1 .Depreciation expense for the year was $13,250.2. The company estimated that it will pay federal income tax, $3,250.3. After physically counting, the company decided that the ending inventories was $40,164.4. Based on its historical data, the bad debts expense are about 1% of net credit sales.5. Unearned revenue was decreased by $12,000.6. The company expenses all of the supplies purchased during the year.7. No insurance policy was effective during the year.8. The company uses the gross method to record its purchases and sales on credit.(use discounts at the end for cost of go9. The company adopts the periodic inventory system.(cost of goods sold is expense at year end) Instructions:1. Prepare journal entries for each event.2. Prepare adjusting entries.3. Prepare adjusted trial balance.4. Prepare Income Statement, Retained Earnings Statement and Balance Sheet and Statement of Cash Flows. 5. Prepare closing entries. n/30. Freight $100 for each sale, FOB shipping points 2/10, n/30. Freight for each sale, FOB destination $120nt after discount period has lapsed.0 less 1% cash discount.(9000*.02) + (11000*.01) = (2% discount on purchases – (5400 * .02 = 108)s (9800+8600) * .01) =184shipping point value of $15,000. 0 FOB shipping point660 00 was shown on the balance sheet.500 remained as payable at the end of year. unts at the end for cost of good sold etc) Cash Flows. 290 General Journal EntriesDate1-Jan Account Adjusting EntriesDebit Prepaid Rent – (2 years)Cash Credit 60006000 10-JanAccounts receivable – RaymsAccounts receivable – FischerSales Revenue 98008600 PurchasesPurchases 30002400 18400 12-Jan Accounts payable 5400 13-JanCash 6000Accounts receivable 15-Jan 6000 (gross method) Accounts payable – JoostenAccounts payable – MaidaCashPurchase discount 90001100019710290 16-JanSales returns and allowancesAccounts receivable 200200 18-JanCash 17520Sales Revenue 17520 21-JanAccounts payable – ZapfelAccounts payable – LiottaCashPurchase discount 300024005292108 9-Feb 1-Apr1-May CashSales discountSales discountAccounts receivable – RaymsAccounts receivable -FischerAccounts receivable – DunlapSales RevenueOffice SuppliesCash 1821698869800860016001600500500 13-JunDividends declaredDividends payable 900 Dividends payableCash 900 900 23-Jun900 DateAccount31-Dec Salaries and Wages ExpenseSalaries and Wages PayableWages and Salaries payableCashUtilities expenseAccrued UtilitesRent ExpensePre-paid rentIncome Tax expenseIncome Tax payableInventory (ending)Cost of Goods SoldInventory (beginning)PurchasesDepreciation ExpenseAccumulated depreciationUnearned revenueSales revenue Debit45,500 Credit45,500 44,00044,0001,2501,2503,0003,0003,2503,25040,14640,54638,80038,40013,25013,25012,00012,000 1-JulCash 120,000 Notes payableInterest expense (120000*.02*.5)Interest payable 120,000120120 5-JulPurchases 33000Accounts payable – Maida 33000 7-JulLand (market value)Common stock $10 par (1000*10)Paid-In Capital in Excess of Par Value—Common 15000100005000 8-JulAccounts payable – MaidaPurchase returns and allowances 200200 1-AugAccounts receivable – LacheySales 80000 Accounts payable – MaidaPurchase discountCash 32800 CashSales discountAccounts receivable 39600400 65680000 4-Aug65632144 10-Aug 40000 14-AugBad debt ExpenseAllowance for doubtful accounts 13001300 21-AugUtilities expenseCash 10092 Cash 40000 10092 31-AugAccounts receivable 40000 1-Sep 1-Oct Accounts payable – FarmingtonCashNotes payableInterest payableInterest expenseCash 7500750011000015004500116000 Cash6,00017,52018,216120,00039,60040,000 241,336 Revenues (sales)6,00019,7105,29250090032,14410,0927,500116,00044,000 $ Supply Expenses 184001752016008000012000129,520 $ 500 500 242,138802 accounts receivable9,8006,0008,6002001,6009,80080,0008,60040,00040,000 Inventory3,0002,40033,000 38,400100,000 104,6004,600 Prepaid Rent6,000 3,000 3,000 Accounts payable9,0005,40011,00033,0003,0002,40020032,8007,50038,40065,90027,500 Interest payable1,500 1,380 120 Dividends payable900 900 Notes payable110,000120,000 Land15,000 10,00015,000 Cost of goods sold40,556 Sales returns and allowances2009886400784 depreciation expense13,250 13,250 accumulated depreciation13,250 13,250 Purchase returns and allowances2901082006561,254 Interest Expense1204,500 4,620 Utilities expense10,0921,250 Accured utilities(payable)1,250 common stock10,000 11,3421,250 paid in capital in excess of par Salaries and wages expense45,500 10,000 Salaries and wages payable44,00045,500 5,000 45,5001,5005,000 rent expense3,000 tax expense3,250 income tax payable3,250 3,0003,250- 3,250 unearned revenue12,000 12,000 bad debt expense1,300 allowance for doubtful accounts1,300 1,3001,300 UnadjustedTrial BalanceAccount TitleCashNotes ReceivableAccounts Receivable<Allowance for Doubtful Accounts>InventoryPrepaid InsurancePrepaid RentHeld-for-maturity securitiesLand for future developmentLandBuildings<Accumulated Depreciation>Capitalized Development CostsGoodwillOther Intangible AssetsSalaries and Wages PayableNotes PayableAccounts PayableUnearned RevenuesIncome Taxes PayableProperty Taxes PayableWages PayableInterest PayableUtilities PayableProvisions related to pensionsDividendsBonds PayableCommon StockPreferred StockPaid-in-capital – Common StockPaid-in-capital – Preferred StockRetained EarningsAccumulated Other Comp. Income<Treasury Stock>Sales revenue<Sales returns and allowances> $$$ Dr.42,00016,00041,800 $$$$$$$ 38,80060052,00045,50085,000675,000 $$$ 8,00076,70048,000 Cr. $ 3,000 $ 187,000 $$$$$ 110,00032,00013,5008,4406,600 $ 1,500 $ 84,100 $$$$$$$$ 300,000100,000100,00027,50010,000152,7506,000(12,750) Stark IndustriesEnd-of Period Spreadsheet (Work Sheet)For the Year Ended December 31, 2016AdjustedAdjustmentsTrial BalanceDr.Cr.Dr.Cr.$802 $41,198$16,000$4,600 $37,200$1,300$4,300$954$39,754###$3,000$3,600$52,000$45,500$15,000$100,000$675,000$13,250$200,250$8,000$76,700$48,000$$10,000$120,000$27,500$4,500$12,000$1,500$3,250$8,440$6,600$1,500$1,500$1,380$120$1,250$1,250$84,100$900$900$300,000$10,000$110,000$100,000$5,000$32,500$10,000$152,750$6,000$(12,750)$ 129,520$129,520$784$784 Income StatementDr.Cr. Dr. Balance SheetCr. Cost of Goods Sold $ 37,446 <purchase returns and allowances>Wages ExpenseUtilities ExpenseInterest ExpenseRent ExpenseBad debt ExpenseDepreciation ExpenseSupply ExpenseTax Expense $$$$$$$ 45,50011,3424,6203,0001,30013,2505003250 $ 181,726 $ $ 1,254 $$$$$$$$$ $ 1,254 45,50011,3424,6203,0001,30013,2505003,250 181,726 $ 1,227,398 $ 1,261,834- Stark IndustriesEnd-of Period Closing EntriesFor the Year Ended December 31, 2016 Date Account 31-Dec Sales Revenue- Income Summary31-Dec Income Summary- Cost of Goods Sold- Wages Expense- Utilities Expense- Interest Expense- Rent Expense- Bad debt Expense- Supply Expense- Depreciation Expense- Income tax expense31-Dec Income Summary- Retained Earnings31-Dec Retained Earnings- Dividends Debit$$ $$ Credit 129,520$ 129,520 $$$$$$$$$ 40,54644,00010,0924,6203,0001,30050013,2503,250 $ 160,778 $ 900 120,558 160,778900 Stark IndustriesIncome StatementFor the Year Ended December 31, 2016 Merchandise Sales – creditMerchandise Sales – cash<Sales returns and allowances><Sales discounts>Total Sales $$$$$ $128,736 Cost of Goods Sold<purchase returns and allowances><purchase discounts> 112,00017,520129,520(200)(584) $$ 40,546(200)(1,054)$89,444 Gross ProfitWages ExpenseUtilities ExpenseInterest ExpenseRent ExpenseBad debt ExpenseSupply Expense $$$$$$ 44,00010,0924,6203,0001,300500 Total operating expenses $ 63,512 Operating profit before depreciation and taxesDepreciation ExpenseNet earnings before taxes $$$ 25,932(13,250)12,682 Income tax expense $ (3,250) Net Income $ 9,432 $ 88,974$ 25,462$ 8,962$34 $8,928$ 504 Stark IndustriesStatement of Retained EarningsFor the Year Ended December 31, 2016Beginning blance,retained earnings 1 Jan 2015Add net income for fiscal year 2016TotalLess dividends declared and paid fiscal year 2016Total dividends deductedEnding balance retained earnings 31 Dec 2016 $$ 152,7508,928$ 161,678 $ (900) $160,778 Stark IndustriesBALANCE SHEETDECEMBER 31, 2016Current AssetsCashNotes ReceivableAccounts ReceivableLess: Allowance for Doubtful AccountsInventoriesPrepaid InsurancePrepaid RentTotal Current AssetsNon-Current AssetsLong-term InvestmentsInvestments in held-for-maturity securitiesLand held for future developmentProperty, Plant, and EquipmentLandBuildingsLess: Accumulated DepreciationIntangible AssetsCapitalized Development CostsGoodwillOther Identifiable Intangible AssetsTotal Non-Current AssetsTotal AssetsCurrent LiabilitiesNotes PayableAccounts PayableUnearned RevenuesIncome Taxes PayableProperty Taxes PayableInterest PayableUtilities PayableTotal Current LiabilitiesNon-Current LiabilitiesProvisions Related to PensionsBonds PayableTotal Non-Current LiabilitiesTotal LiabilitiesStockholders’ EquityCommon StockPreferred StockPaid-in-capital – Common StockPaid-in-capital – Preferred StockRetained EarningsAccumulated Other Comprehensive Income 41,19816,00037,200(4,300)40,1463,000133,244 52,00045,500100,000675,000(200,250)8,00076,70048,000804,950938,194 120,0004,5001,5008,4406,6001201,250142,41084,100300,000384,100526,510110,000100,00032,500160,7786,000 Less: Treasury StockTotal Stockholders’ EquityTotal Liabilities and Stockholders’ Equity (12,750)396,528923,038 Stark IndustriesINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2016Cash Flows from Operating ActivitiesCash flow from customerscash paid to suppliersCash paid as wagesUtilities paidRents paidCash paid for suppliesInterest paidIncome tax paidNet Cash Flows from Operating ActivitiesCash Flows from Investing Activities 121,33664,64644,00010,0926,0005006,0000(9,902) Net Cash Flows from Investing ActivitiesCash Flows From Financing ActivitiesCash DividendsIssuing NotesIssuing common stockRetirement of Notes PayableNet Cash Flows from Financing ActivitiesNet Cash Flows from this yearCash, beginning of the yearCash, end of the year -9001200001100009,100(802)42,20041,398 Cash from customers600017520182163960040000121336 Cash to suppliers19710529232144750064646