Green Bay Konkers Corporation prepares quarterly financial statements. The balance

Green Bay Konkers Corporation prepares quarterly financial statements. The balance sheet at 12/31/13 is presented below.

Balance Sheet

12/31/2013

Cash                           $  26,500        Accounts payable $  36,200 

Accounts receivable     22,300        Common stock       130,000 

Allowance for doubtful accounts (2,000)Retained earnings     50,600 

Equipment     35,000

Accumulated depreciation - equipment    (25,000)

Land         40,000

Building160,000

Accumulated depreciation - building(40,000)

                                            $ 216,800          $216,800 

During the first quarter of 2014, the following transactions occurred:

1.   Green Bay Konkers performed services during the first quarter for $162,000 on account.

2.   On 2/1/14, Green Bay Konkers collected fees of $18,000 in advance for $1,500 of services to be performed each month from 2/1/14 to 1/30/15.

3.   On 2/1/14, Green Bay Konkers purchased computer equipment for $15,000 plus sales taxes of $750. $5,000 cash was paid with the rest on account. Check #455 was used.

4.   Green Bay Konkers collected $151,000 on 3/5/14 from customers on account.

5.   Green Bay Konkers paid $42,300 on accounts payable. Check #456 was used.

6.   Paid other operating expenses of $105,230. Check #457 was used.

7.   Acquired a patent with a 10-year life for $12,000 cash on 3/1/14.  Check #458 was used.

8.   Wrote off a customer receivable of $500 who went bankrupt.

9.   On 3/31/14, Green Bay Konkers sold for $2,780 cash equipment which originally cost $16,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of 12/31/13 was $13,500 using the straight line method. Record depreciation on the equipment sold, then record the sale. 

10.   AJE 3/31/14: Record revenue earned from item 2 above.

11.   AJE 3/31/14: $27,800 of accounts receivable at 3/31/14 are not due yet. The bad debt percentage for these is 5%. The balance of A/R are past due. The bad debt percentage for these is 48.5%. Record bad debt expense.

HINT: You will need to compute the balance in accounts receivable and the unadjusted allowance for doubtful accounts before calculating this.

12.  AJE 3/31/14: Depreciation is recorded on the equipment still owned at 3/31/14. The new equipment purchased in February is being depreciated on a double declining basis over 5 years and salvage value was estimated at $2,000.  The old equipment still owned is being depreciated over a 10 year life using straight line with no salvage value.

13. AJE 3/31/14: Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000.

14. AJE 3/31/14: Amortization is recorded on the patent.

15. The company reconciles its bank statement every quarter. Information from the 12/31/13 Bank Reconciliation is:

           Deposit in transit:                                   12/30/08          $1,000

           Outstanding Checks                               #440                  2,345

                                                                           #452                 2,030

                                                                           #453                    890

                                                                           #454                 6,555

   The Bank statement received for the quarter ended 3/31/14 is as follows:

   Beginning balance per bank                                                                             $     37,320

      Deposits: 1/2/14  $1,000, 2/2/14 $18,000, 3/6/14 $151,000                                   170,000

      Checks: #452 $2,030, #453 $890, #456 $42,300, #457 $105,230                       (150,450)

      Debit memo: Bank service charge (Record as operating expense)                      (         75)

   Ending bank balance                                                                                        $   56,795

16. AJE: The income tax rate is 30%. This amount will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.

REQUIRED: Print out the solution pages for the general ledger, journal and worksheet that follow and enter the following transactions. I suggest that you use a pencil.

a.Enter the transactions 1-9 in the general journal provided on the following pages.

b.Enter the 12/31/13 balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages.

c.Post the journal entries to the ledger accounts for items 1 – 9.

d.Prepare an unadjusted trial balance at March 31 and enter on the worksheet. Then complete the other worksheet columns. (See below.) 

Worksheet requirement: Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet similar to the one in the chapter 4 appendix of your text.

e.Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE.  

f.Journalize and post all other adjusting entries. (Items 10 - 16)

g.Prepare an income statement and a retained earnings statement for the quarter ended 3/31/14 and a classified balance sheet at 3/31/14. Use your own paper. (No formatted sheets are supplied as we did for the other items.)