149)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
The estimated
uncollectible accounts
receivable is now
zero and should be
$25,000.
Additional
Information
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
The estimated
uncollectible accounts
receivable is now
zero and should be
$25,000.
150)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
$10,000 of the paid
and recorded rent
expense pertains to
the year 2019.
Additional
Information
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
expense pertains to
the year 2019.
151)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
$20,000 in
depreciation on some
equipment was still
unrecorded.
Additional
Information
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
depreciation on some
equipment was still
unrecorded.
152)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
$4,000 in cash
dividends declared
and paid in December
2018 were
unrecorded.
Additional
Information
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
2018 were
unrecorded.
Use this information to answer the following questions:
You are reviewing O’Brian Co.’s adjusted trial balance for the year ended 12/31/18. You notice
several omissions and incorrect items during your review, some of which are noted below. For
each one, you are to determine what effect, if any, these items would have on the stated
components of O’Brian Co.’s 2018 Income Statement and 12/31/18 Balance Sheet if they are not
corrected or updated. Assume no income taxes.
Use the following code for your answers. You need not include any dollar amounts.
N = No Effect
O = Overstated
U = Understated
153)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
Uncollectible
accounts of $7,000, as
a percentage of sales,
are estimated at the
end of the year. The
entry has not been
recorded.
Additional
Information
12/31/18
Owners’ Equity
2018
Net Income
Uncollectible
accounts of $7,000, as
a percentage of sales,
are estimated at the
end of the year. The
entry has not been
recorded.
154)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
The journal entry for
depreciation on
equipment for 2018
was recorded for
$48,000. The amount
should have been
$66,000.
Additional
Information
12/31/18
Owners’ Equity
2018
Net Income
The journal entry for
depreciation on
equipment for 2018
was recorded for
$48,000. The amount
should have been
155)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
Cash dividends
declared and paid on
December 15, 2018,
were not recorded.
Additional
Information
12/31/18
Owners’ Equity
2018
Net Income
declared and paid on
December 15, 2018,
were not recorded.
156)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
$10,000 of the rent
revenue collected and
recorded as revenue
this year pertains to
2019.
Additional
Information
12/31/18
Owners’ Equity
2018
Net Income
this year pertains to
2019.
157)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
Interest recognized
during the year on a
note receivable was
not yet collected or
recorded.
Additional
Information
12/31/18
Owners’ Equity
2018
Net Income
Interest recognized
during the year on a
note receivable was
not yet collected or
158)
Additional
Information
12/31/18
Assets
12/31/18
Liabilities
12/31/18
Owners’ Equity
2018
Net Income
Supplies purchased
during the year for
$1,000 cash were
recorded by a debit to
Supplies Expense and
a credit to Cash. Only
$200 of supplies
remain at the end of
the year, but no
further entries have
been recorded.
Additional
Information
12/31/18
Owners’ Equity
2018
Net Income
been recorded.
Use this information to answer the following questions:
The adjusted trial balance for China Tea Company at December 31, 2018, is presented below:
Debit
Cash
10,500
Accounts receivable
150,000
Prepaid rent
5,000
Inventory
25,000
Equipment
300,000
Accumulated depreciation—equipment
Accounts payable
Notes payable—due in three months
Salaries payable
Interest payable
Common stock
Retained earnings
Sales revenue
Costs of goods sold
180,000
Salaries expense
120,000
Rent expense
15,000
Depreciation expense
30,000
Interest expense
2,000
Advertising expense
2,500
Totals
840,000
159) Prepare the closing entries for China Tea Company for the year ended December 31, 2018.
1.
Sales revenue
400,000
400,000
2.
Income summary
349,500
180,000
120,000
15,000
2,000
2,500
3.
Income summary
50,500
50,500
160) Prepare an income statement for China Tea Company for the year ended December 31,
2018.
161) Prepare a classified balance sheet for China Tea Company as of December 31, 2018.
71
Use this information to answer the following questions:
The following information, based on the 12/31/18 Annual Report to Shareholders of Krafty
Foods ($ in millions):
Accounts payable
1,897
Accounts receivable (net)
3,131
Accrued liabilities and taxes
4,105
Cash and cash equivalents
162
Cost of sales
17,531
Current payables to parent and affiliates
1,652
Current portion of long-term debt
540
Deferred income taxes and other liabilities
10,311
Retained earnings as of 12/31/18
2,391
Goodwill and other intangible assets (net)
35,957
Income tax expense
1,565
Interest and other debt expense, net
1,437
Inventories
3,026
Long-term debt
8,134
Long-term notes payable to parent and
affiliates
5,000
Marketing, general and administration
expenses
11,460
Operating revenues
33,875
Other current assets
687
Other noncurrent assets
3,726
Other stockholders’ equity
(2,568)
Paid-in capital for common and preferred
stock
23,655
Property, plant and equipment (net)
9,109
Short-term borrowings
681
162) Based on the information presented above, prepare the Income Statement for Krafty Foods
for the year ended December 31, 2018.
163) Based on the information presented above, prepare the 12/31/18 Balance Sheet for Krafty
Foods.