Czar was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued 520,000 shares of common stock as of 12/31/2018. No new shares were issued during 2018.
1. On the “Adjusting Journal Entries” worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018. (Round all numbers to the nearest dollar). Label journal entries a through t.
G- Because of a new product line, Czar needed some temporary additional storage space so on 3,1, 2018 they rented a unit for an annual rate of $13,600 and they paid the entire amount up front.
H- The storage building was self-constructing this year by Czar. The Company had their initial expenditure of $400,000 on January 1. They paid an additional $300,000 on May 1st, $200,000 on August 1st, and then the final payment of $120,000 on December 1st when the building was completed, and occupancy occurred. The company has decided to use S/L method for depreciation. The storage building is estimated to have a life of 40 years and a salvage value of $56,615. The company depreciates using partial years.
I- Czar has two loans outstanding as of 12/31/2018. Interest is paid annually on January 1st. The facts on each loan are as follows: First Trust Bank Loan – outstanding since January 1, 2018 with a 6.0% interest rate. This loan was taken out to finance the construction of the Storage Building. Interest for the year and 10% of the principle will be paid to the bank on January 1, 2019. Except for recording the initial cash received and loan, no additional entries have been made.Coldwell Bank Loan – also outstanding all of 2018 with 5.05 % interest rate Interest is due on January 1, 2019. Principle is due on January 1, 2025. Since interest will not be paid to the Bank until 2019, Czar’ office staff did not accrue any interest.
Czar Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December 31, 2018 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 264,000 | - | ||||
Accounts Receivable | 555,984 | - | ||||
Allowance for Doubtful Accounts | - | 13,600 | ||||
Interest Receivable | - | - | ||||
Merchandise Inventory | 340,000 | - | ||||
Prepaid Insurance | - | - | ||||
LIFO Reserve | - | 25,600 | ||||
Prepaid Advertising | - | - | ||||
Prepaid Rent | 13,600 | - | ||||
Office Supplies | 4,800 | - | ||||
Note Receivable | 20,000 | |||||
Available for Sale Securities | 300,000 | - | ||||
Office Building | 3,000,000 | - | ||||
Accumulated Depreciation - Office Building | - | 70,000 | ||||
Storage Building | 1,020,000 | - | ||||
Accumulated Depreciation - Storage Building | - | - | ||||
Land | 600,000 | - | ||||
Leasehold Improvements | 180,000 | - | ||||
Accumulated Depreciation - Leasehold Improvements | - | - | ||||
Office Equipment | 260,000 | - | ||||
Accumulated Depreciation - Office Equipment | - | 52,000 | ||||
Patent | 120,000 | - | ||||
Accounts Payable | - | 276,000 | ||||
Sales Tax Payable | - | - | ||||
Salaries Payable | - | 113,600 | ||||
Payroll Taxes Payable | - | 20,000 | ||||
Interest Payable | - | - | ||||
Income Tax Payable | - | - | ||||
Unearned Rent Revenue | - | - | ||||
Loan Payable - First Trust | - | 520,000 | ||||
Loan Payable - Coldwell Bank | - | 1,600,000 | ||||
Common Stock | - | 520,000 | ||||
Additional Paid in Capital | - | 1,599,000 | ||||
Retained Earnings | - | 736,000 | ||||
Accumulated Other Comprehensive Income | - | 20,000 | ||||
Dividends | 67,800 | - | ||||
Sales | - | 3,622,560 | ||||
Sales Returns and Allowances | 33,800 | - | ||||
Sales Discounts | 15,400 | - | ||||
Cost of Goods Sold | 1,583,600 | - | ||||
Sales Salaries Expense | 349,120 | - | ||||
Office Salaries Expense | 219,200 | - | ||||
Advertising Expense | 12,800 | - | ||||
Depreciation Expense - Office Building | - | |||||
Depreciation Expense - Leasehold Improvements | - | - | ||||
Depreciation Expense - Office Equipment | - | - | ||||
Leasing Expense - Stores | 105,600 | - | ||||
Miscellaneous Selling Expense | 18400 | - | ||||
Research & Development Expense | 12,000 | |||||
Rent Expense - Storage Facility | - | - | ||||
Insurance Expense | 12,000 | - | ||||
Office Supplies Expense | 28,000 | - | ||||
Miscellaneous Administrative Expense | 7,336 | - | ||||
Rent Revenue | - | 60,000 | ||||
Interest Revenue on Note Receivable | - | - | ||||
Dividend Revenue on AFS Securities | - | 20,000 | ||||
Interest Expense | - | - | ||||
Bad Debt Expense | 28,000 | - | ||||
Amortization Expense | - | - | ||||
Income Tax Expense | - | - | ||||
Payroll Taxes Expense | 96,920 | - | ||||
Rebate Expense | - | - | ||||
Unrealized holding loss | - | - | ||||
Depreciation Expense-Storage Building | - | - | ||||
Loss on Impairment | - | - | ||||
Rebate Liability | - | - | ||||
Restricted Cash for Future Expansion | - | - | ||||
9,268,360 | 9,268,360 | |||||
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