9–130
Ending Cash Balance
$107,800
9–131
PROBLEM 9-20B (cont.)
d.
Barclay Co.
General Journal for 2016
Event
Account Title
Debit
Credit
Closing Entries
cl
Service Revenue
140,000
Retained Earnings
140,000
cl
Retained Earnings
85,875
Operating Expenses
84,000
Interest Expense
1,875
$50,000 x 5% x 9/12 = $1,875
Barclay Co.
T-Accounts for 2016
Assets
=
Liabilities
+
Stockholder’s Equity
Cash
Sales Tax Payable
Retained Earnings
Bal.107,800
Bal. 1,800
cl 85,875
cl 140,000
Bal. 54,125
Interest Payable
Bal. 1,875
Service Revenue
cl 140,000
Bal.
140,000
Notes Payable
Bal. -0-
Bal. 50,000
Operating Expenses
Bal. 84,000
cl 84,000
Bal. -0-
Interest Expense
Bal. 1,875
cl 1,875
Bal. -0-
9–132
9–133
PROBLEM 9-20B (cont.)
e.
Barclay Co.
Post Closing Trial Balance
As of December 31, 2016
Cash
$107,800
Sales Tax Payable
$ 1,800
Interest Payable
1,875
Notes Payable
50,000
Retained Earnings
54,125
Totals
$107,800
$107,800
9–134
PROBLEM 9-20B (cont.)
f.
Barclay Co.
General Journal for 2017
Event
Account Title
Debit
Credit
1.
Sales Tax Payable
1,800
Cash
1,800
2.
Cash ($155,000 x 1.06)
164,300
Sales Revenue
155,000
Sales Tax Payable
9,300
3a.
Interest Expense
625
Interest Payable
625
3b.
Interest Payable
2,500
Notes Payable
50,000
Cash
52,500
4.
Operating Expenses
96,000
Cash
96,000
5.
Sales Tax Payable ($135,000 x 6%)
8,100
Cash
8,100
9–135
PROBLEM 9-20B f. (cont.)
Barclay Co.
T-Accounts for 2017
Assets
=
Liabilities
+
Stockholder’s Equity
Cash
Sales Tax Payable
Retained Earnings
Bal.107,800
Bal. 1,800
Bal. 54,125
2. 164,300
1. 1,800
1. 1,800
2. 9,300
3b. 52,500
5. 8,100
Service Revenue
4. 96,000
Bal. 1,200
2. 155,000
5. 8,100
Bal.155,000
Bal.113,700
Interest Payable
Bal. 1,875
Operating Expenses
3b. 2,500
3a. 625
4. 96,000
Bal. -0-
Bal. 96,000
Notes Payable
Interest Expense
Bal. 50,000
3a. 625
3b. 50,000
Bal. 625
Bal. -0-
9–136
PROBLEM 9-20B (cont.)
f.
Barclay Co.
Income Statement
For the Year Ended December 31, 2017
Service Revenue
$155,000
Expenses
Operating Expenses
$96,000
Total Operating Expenses
(96,000)
Operating Income
59,000
Interest Expense
(625)
Net Income
$58,375
Barclay Co.
Statement of Changes of Stockholders’ Equity
For the Year Ended December 31, 2017
Common Stock
$ -0-
Beginning Retained Earnings
$54,125
Add: Net Income
58,375
Ending Retained Earnings
112,500
Total Stockholders’ Equity
$112,500
PROBLEM 9-20B f. (cont.)
Barclay Co.
Balance Sheet
As of December 31, 2017
Assets
Cash
$113,700
Total Assets
$113,700
Liabilities
Sales Tax Payable
$1,200
Total Liabilities
1,200
Stockholders’ Equity
Retained Earnings
$112,500
Total Stockholders’ Equity
112,500
Total Liabilities and Stockholders’ Equity
$113,700
Cash Flows From Operating Activities:
Inflow from Sales Tax
Outflow for Expenses
Outflow for Sales Tax
Outflow for Interest
Net Cash Flow from Operating Activities
$ 55,900
Cash Flows From Investing Activities
Outflow for Loan Payment
Net Cash Flow from Investing Activities
Cash Flows From Financing Activities
Net Change in Cash
Plus: Beginning Cash Balance
9–138
9–139
PROBLEM 9-20B
f.
Barclay Co.
General Journal for 2017
Event
Account Title
Debit
Credit
Closing Entries
cl
Service Revenue
155,000
Retained Earnings
155,000
cl
Retained Earnings
96,625
Operating Expense
96,000
Interest Expense
625
Barclay Co.
T-Accounts for 2017
Assets
=
Liabilities
+
Stockholder’s Equity
Cash
Sales Tax Payable
Retained Earnings
Bal.113,700
Bal. 1,200
Bal. 54,125
cl 96,625
cl 155,000
Bal. 112,500
Service Revenue
cl 155,000
Bal.
155,000
Bal. -0-
Operating Expenses
Bal. 96,000
cl 96,000
Bal. -0-
Interest Expense
Bal. 625
cl 625
Bal. -0-
9–140
9–141
PROBLEM 9-20B (cont.)
f.
Barclay Co.
Post Closing Trial Balance
As of December 31, 2017
Cash
$113,700
Sales Tax Payable
$ 1,200
Retained Earnings
112,500
Totals
$113,700
$113,700
9–142
PROBLEM 9-21B
a. This contingent liability would be recorded on the books and
reported on the financial statements inclusive of note disclosure.
PROBLEM 9-22B
a. (1) Cash paid for interest: $60,000 x 6% x 6/12 = $1,800
(3) Warranty Expense: $240,000 x 2% = $4,800
b.
Interest Payable
Sales Tax Payable
6.1 875
4.3 14,000
2.2 16,800
Bal. 875
Bal. 2,800
Bal. 1,000
Bal. 50,000
Current Liabilities
Interest Payable
Warranty Payable
Notes Payable
Total Current Liabilities
9–144
PROBLEM 9-22B (cont.)
c.
Event
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
1.
+
+
NA
NA
NA
NA
+ FA
2.
+
+
+
+
NA
+
+ OA
3.
NA
+
−
NA
+
−
NA
4.
−
−
NA
NA
NA
NA
− OA
5.
−
−
−
NA
+
−
− OA
− FA
6.
+
+
NA
NA
NA
NA
+ FA
7.
−
−
NA
NA
NA
NA
− OA
8.
NA
NA
NA
NA
NA
NA
NA
9–145
PROBLEM 9-23B
Maddox Co.
General Journal for 2016
Date
Account Title
Debit
Credit
1. 12/31
Administrative Salaries Expense
85,000
Sales Salaries Expense
66,000
Office Salaries Expense
48,000
Employee Fed. Income Tax Payable
24,500
Employee State Income Tax Pay.
7,200
FICA Tax Payable – Soc. Sec.1
11,280
FICA Tax Payable – Medicare2
2,985
Employee Savings Plan
3,000
Cash
150,035
2. 12/31
Payroll Tax Expense
14,265
FICA Tax Payable – Soc. Sec.
11,280
FICA Tax Payable – Medicare
2,985
9–146
PROBLEM 9-24B
a.
Computation of Gross Earnings
Employee
Hours Worked
x
Wage Rate
per Hour
=
Gross Pay
Sam
Reg. 40
32
$1,280.00
OT 6
48
288.00
Total
46
$1,568.00
Sam
Gross Earnings
$1,568.00
Deductions:
Federal Income Tax
$156.80
FICA Tax – SS ($1,568 x 6%)
94.08
FICA Tax – Medicare ($1,568 x 1.5%)
23.52
Total Deductions
(274.40)
Net Pay
$1,293.60
Adam
Gross Earnings
$1,200.00
Deductions:
Federal Income Tax
$180.00
FICA Tax – SS ($1,200 x 6%)
72.00
FICA Tax – Medicare ($1,200 x 1.5%)
18.00
Total Deductions
(270.00)
Net Pay
930.00
9–147
PROBLEM 9-24B (cont.)
c.
Yui Company
General Journal Entries for 2016
Date
Account Titles
Debit
Credit
Jan.
Salaries Expense ($1,568 + $1,200)
2,768.00
Income Tax Payable ($156.80 + $180)
336.80
FICA Tax – SS Payable ($94.08 + $72.00)
166.08
FICA Tax – Med. Payable ($23.52 + $18.00)
41.52
Cash
2,223.60
d.
Yui Company
General Journal Entries for 2016
Date
Account Titles
Debit
Credit
Jan.
Payroll Tax Expense
373.68
FICA Tax – SS Payable ($2,768 x 6%)
166.08
FICA Tax – Med. Payable ($2,768x 1.5%)
41.52
Fed. Unemp. Tax Expense ($2,768 x .6%)
16.61
State Unemp. Tax Expense ($2,768 x 5.4%)
149.47
Jan.
Vacation Pay Expense1
428.00
Employee Medical Insurance Expense
185.00
Employee Pension Expense
150.00
Vacation Pay Payable
428.00
Employee Medical Insurance Payable
185.00
Employee Pension Payable
150.00
1$32 x ¼ = $8; $8 x 46 = $368; $368 + $60 = $428
e.
Total Compensation Costs
Salary Expense
$2,768.00
Payroll Tax Expense
373.68
Vacation Pay, Medical Insurance, and Pension expenses
763.00
9–148
Total Compensation Expense
$3,904.68
9–149
PROBLEM 9-25B
Brown Company
Income Statement
For the Year Ended December 31, 2016
Sales Revenue
$900,000
Cost of Goods Sold
(575,000)
Gross Margin
325,000
Operating Expenses
Salaries Expense
$102,000
Operating Expenses
45,000
Warranty Expense
7,200
Uncollectible Accounts Expense
25,000
Total Operating Expenses
(179,200)
Operating Income
145,800
Non-Operating Items
Interest Revenue
4,200
Interest Expense
(16,000)
Gain on Sale of Equipment
7,000
Total Non-Operating Items
(4,800)
Net Income
$141,000