You are a Junior Accountant for X-RAY Inc., and you receive from the CFO the following information which affects the Financial Statements of the company.
X-RAY Incorporate
Unadjusted Trial Balance 31.12.2016 Debit Credit
Cash |
43.820 |
|
Accounts receivable |
22.000 |
|
Supplies |
1.230 |
|
Prepaid Expenses |
5.200 |
|
Prepaid Interests |
18.750 |
|
Vehicles |
10.000 |
|
Computers |
3.000 |
|
Furniture |
8.000 |
|
Building |
55.000 |
|
Accumulated Depreciation |
7.000 |
|
ST Debt (Loan) |
25.000 |
|
LT Debt (Loan) |
100.000 |
|
Accounts payable |
2.000 |
|
Unearned Revenue |
10.000 |
|
Common stock |
5.000 |
|
Retained earnings |
18.000 |
|
Loss/Profit |
||
Total |
167.000 |
167.000 |
Required: Prepare the Journal, the Ledger, the adjusted Trial Balance, the Balance Sheet & Income Statement at 31/12/2016 considering the following business events not recorded yet in the financial statements.
Depreciation
Tangible Assets |
Cost of Acquisition |
Useful Life (Years) |
RV |
Date of Acquisition |
Vehicles |
10.000 |
5 |
2.500 |
01/03/2015 |
Buildings |
55.000 |
50 |
- |
01/06/2010 |
Computers |
3.000 |
3 |
- |
30/08/2016 |
Furniture |
8.000 |
10 |
1.000 |
30/04/2016 |
You are performing the year-end adjustments at 31/12/2016
Journalize the necessary entries for the transactions listed below at 31/12/2016 closing.
Calculate the Annual Depreciation Expense for all the Tangible Assets listed in the table before.
Journalize the Depreciation adjustments entries.
Accruals & Deferrals
Journalize the necessary entries for the transactions listed below at 31/12/2016 closing.
X-Ray Inc., where you work pays in advance 5.000 € of Rent Expense. The Rent contract is annual, and is signed every 30/04.
X-Ray Inc., receives and pays in advance every two months the Water Supply bill. The last bill was dated on 01/12/2016 for the Water consumption of December’16 and January’17, for 250
€.
Collects from a good client, 30.000 €, for a sales project to be started during the month of January 2017.
In 2015, signed a Sales contract of 10.000 €, and was fully paid in advance. The X-Ray Inc. Chief Financial Officer (CFO), estimates that at 31/12/2016 the project is 50% done.
In December 2016, the Company is informed that one of its vehicles has received a fine of 140
€ because of high speed driving. The due-date of the fine is at 30/03/2017.
Accounts Receivables
In the following graph, you can see a break-down of Accounts Receivables, along with its due dates.
Accounts Receivable |
Amount |
Due Date |
ECO 1, Ltd. |
2.500 |
30/06/2016 |
RESOMAG, Inc |
4.000 |
15/11/2016 |
TEKPLUS, S.A. |
5.500 |
15/02/2017 |
GIANT Inc. |
10.000 |
30/03/2017 |
Total |
22.000 |
Required:
Your boss, the CFO, asks you to perform the Bad-Debts calculations at year end 31/12/2016. He gives you the following instructions. Journalize the following events at 31.12.2016, following the CFO instructions:
1-) All the Accounts Receivables which are unpaid for more than 90 days, must be written-off. 2-) Allocate an Allowance for Doubtful accounts of 50%, for all the remaining unpaid accounts. 3-) Allocate an Allowance for Doubtful accounts for 5% for the remaining amount of Accounts Receivables.
Notes Receivables
Ray Inc. experiences the following business events regarding some Notes Receivables:
At 01/09/2016, performs two Sale Projects to INKJET SL: Project A for 35.000 €, and Project B for 15.000 €. We agree to receive both payments with a Notes Receivable with a maturity of 60 days.
As we need Cash, the CFO decides to discount Project A Notes, with the Bank. The expenses for bank services were €100, and the interest for discounting the notes was 3% of the total Amount.
At the maturity date, the Bank informs us that the client has paid 50% of the Notes Receivables of Project A. Project B remains fully unpaid.
The CFO decides to allocate 100% of Allowance of Bad Debts for the remaining amounts because he has red in the newspaper that INKJET SL went bankrupt.
Loans
At 01/01/2016, your company signs a Loan contract with CAIXABANK to fund a new project, with the following conditions:
Loan Amount: 125.000 €. Interest Rate: 5%. Term: 5 years. Payment of Interests: In advance the day of the loan signature.
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