Question :
33) Data from the accounting system of Quiche and Tell, : 1253176
33) Data from the accounting system of Quiche and Tell, Inc. are provided below. All amounts are before the current year’s adjustments are made. All adjustments are made at yearend.
Quiche and Tell, Inc.
Balance Sheet
December 31, 2011
Assets
Liabilities and shareholders’ equity
Cash
$350,000
Accounts payable
$15,000
Inventory
500,000
Salaries payable
50,000
Supplies
20,000
Notes payable
35,000
Prepaid rent
30,000
Contributed capital
1,000,000
Equipment
500,000
Retained earnings
200,000
Accumulated depreciation
(100,000)
Total liabilities and
Total Assets
1,300,000
shareholders’ equity
$1,300,000
Required:
Prepare the balance sheet after year-end adjustments given the following additional information.
a.A count of supplies reveals $4,000 on hand at the end of the year.
b.One-third of the prepaid rent was used up during the year.
c.One-fifth of the equipment is depreciated each year.
d.$40,000 of work for customers has been completed, but not yet billed or collected.
e.Salaries of $20,000 have been earned by employees but not yet paid.
f.The notes payable are for amounts borrowed on January 1 of this year at 12% interest.
Answer: Quiche and Tell, Inc.
Balance Sheet
December 31, 2011
Assets
Liabilities and shareholders’ equity
Cash
$ 350,000
Accounts payable
$15,000
Accounts receivable
40,000
Salaries payable
70,000
Inventory
500,000
Notes payable
35,000
Supplies
4,000
Interest payable
4,200
Prepaid rent
20,000
Contributed capital
1,000,000
Equipment
500,000
Retained earnings
89,800
Accum. depreciation
(200,000)
Total liabilities and
Total Assets
$1,214,000
shareholders’ equity
$1,214,000
Supplies $20,000 – 16,000 used up = $4,000 left over
Prepaid rent $30,000 – 10,000 used up = $20,000 left over
Accumulated depreciation increases by 1/5 of $500,000.
Salaries payable and Notes payable go up by the amount accrued.
Retained earnings ending balance =
$200,000 – 16,000 – 10,000 – 100,000 + 40,000 — 20,000 — 4,200 = $89,800
Diff: 3
Skill: Analytic skills
34) On May 1, 2009 Canseco Oil Drilling Company paid $4,500,000 for a 3-year insurance policy that covers all of its drilling equipment around the world. The company recorded the purchase as prepaid insurance. Complete the chart below:
Cash Paid
Insurance
Expense
Prepaid
Insurance
Year ended Dec. 31, 2009
$
$
$
Year ended Dec. 31, 2010
$
$
$
Year ended Dec. 31, 2011
$
$
$
Year ended Dec. 31, 2012
$
$
$
35) Lacy & Jacobs, Attorneys at Law, purchased office computers for $24,600 on February 1, 2009. The computers are estimated to have a $3,000 salvage value and to last for a total of 3 years. The firm has a December 31 yearend and prepares annual financial reports at that time.
Required:
1. Determine the depreciation expense that will be reported on the income statement for the year ended December 31, 2009.
2. Determine the balance sheet carrying value (also known as book value) of the computers on December 31, 2009, 2010 and 2011.
