Question

Czar was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued...

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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