W3-T1, W3-T2, W3-T3

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1.Team #:

 
Problem:W3-T1, Multiple- and Single Step Income, Retained Earnings (Chapter 4)
       
       
The trial balance for ABC Corporation at September 30, 2014 is presented below.   
       
Sales Revenue $                 1,732,000     
Sales discounts                          45,000 Depreciation expense (office furniture and equipment) $    7,450  
Cost of goods sold                        932,000 Property tax expense       7,200  
Salaries and wages expense (sales)                          57,830 Bad debt expense (selling)       3,680  
Sales commissions                          98,600 Maintenance and repairs expense (administration)       8,230  
Travel expense (salespersons)                          29,830 Office expense       7,320  
Delivery expense                          22,300 Sales returns and allowances     65,100  
Entertainment expense                          15,620 Dividends received     40,000  
Telephone and internet expenses (sales)                            9,060 Bond interest expense     16,000  
Depreciation expense (sales equipment)                            4,980 Income tax expense   148,000  
Maintenance and repairs expense (sales)                            7,300 Depreciation understatement due to error - 2011 (net of tax)     18,300  
Miscellaneous selling expenses                            4,895 Dividends declared on preferred stock     10,000  
Office supplies used                            3,680 Dividends declared on common stock     38,000  
Telephone and internet expense (administration)                            2,910     
       
The retained earnings account had a balance of  $     423,000at October 1, 2013.  There are     85,000  
shares of common stock outstanding.     
       
a) Using the multiple-step form, prepare an income statement and a retained earnings statement for the year ending September 30, 2014   
       
       
       
       
  ABC Corporation      
  Income Statement      
 September 30, 2014     
       
Title Amount     
  Less:      
Title Amount      
Title Amount  Formula     
Net Sales  Formula     
Title Amount     
Gross Profit  Formula     
       
Operating Expenses      
   Selling Expenses      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount  Formula     
       
   Administrative Expenses      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount      
Title Amount  Formula     
       
Income from operations  Formula     
       
Other Revenues and Gains      
Title Amount     
   Formula     
       
Other Expenses and Losses      
Title Amount     
       
Income before income tax  Formula     
Title Amount     
Net income  Formula     
       
Earnings per share  Formula     
       
       
  ABC Corporation      
  Retained Earnings Statement      
 For the Year Ended September 30, 2014     
       
Retained earnings, October 1, 2013, as reported Amount     
Title Amount     
Title Formula     
Title Amount     
   Formula     
       
Less:      
Title Amount      
Title Amount  Formula     
       
Retained earnings, September 30, 2014 Formula     
       
       
b)  Using the single-step form, prepare an income statement for the year ended September 30, 2014.   
       
  ABC Corporation      
  Income Statement      
 September 30, 2014     
       
Revenues      
Title Amount     
Title Amount     
Total revenues  Formula     
       
Expenses      
Title Amount     
Title Amount     
Title Amount     
Title Amount     
Total expenses  Formula     
       
Income before income tax  Formula     
Title Amount     
Net income  Formula     
       
Earnings per share  Formula     
2.
Team #:  
Problem:W3-T2  Long-Term Contract with Overall Loss (Chapter 18) 
        
        
        
On July 1, 2013, Smith Construction Company, Inc. contracted to build an office building for ABC Corp. for a total contract price of $2,300,000.  On July 1, KDH estimated that it would take between 2 and 3 years to complete the building.  On December 31, 2015, the building was deemed substantially completed.  Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to ABC Corp. for 2013, 2014 and 2015. 3
        
        
    At 12/31/2013At 12/31/2014At 12/31/2015 
Contract costs incurred to date $   200,000 $ 1,500,000 $ 2,450,000 
Estimated costs to complete the contract   1,800,000        900,000-0- 
Billings to Trousdale      600,000    1,300,000    2,200,000 
        
        
Instructions:       
(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. (Ignore income taxes).
        
 2013  
        
 Costs to date (12/31/13)  Amount   
 Title  Amount   
  Estimated total costs  Formula   
        
 Percent Complete  Formula  
        
 Revenue recognized   Formula   
 Costs incurred  Amount  
 Profit recognized in 2013  Formula   
        
        
        
 2014  
        
 Costs to date (12/31/14)  Amount   
 Title  Amount   
  Estimated total costs  Formula   
 Contract price   Amount   
 Total loss    Formula   
        
 Total loss    Formula   
 Title  Amount   
 Profit (loss) recognized in 2014  Formula   
        
        
 2015  
        
 Costs to date (12/31/15)  Amount   
 Title  Amount   
  Estimated total costs  Formula   
 Contract price   Amount   
 Total loss    Formula   
        
 Total loss    Formula   
 Title Amount    
 Title Amount  Formula   
 Profit (loss) recognized in 2015  Formula   
        
        
        
(b)  Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 2013, 2014, 2015. (Ignore income taxes.) 
        
        
 2013  
        
 Profit (Loss) recognized in 2013  Amount   
        
        
        
 2014  
        
 Costs to date (12/31/14)  Amount   
 Title  Amount   
  Estimated total costs  Formula   
 Title  Amount   
 Profit (loss) recognized in 2014  Formula   
        
        
 2015  
        
 Costs to date (12/31/15)  Amount   
 Title  Amount   
  Total loss on contract  Formula   
 Title  Amount   
 Loss recognized in 2015  Formula   
  

 

 

   
  • 12 years ago
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