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Financial Accounting: Assignment#3

Q1) The unadjusted trial balance is provided for Links Resorts for the year ending December 31, 20X2. Adjusting entries need to be made for various expenses and revenues. The adjusted trial balance then needs to be prepared to calculate the correct net income for the year. Q2) Miami Juice's balance sheet as of December 31, 2018 needs to be prepared by separating current and long-term liabilities based on the information provided about various liability accounts. Q3) Depreciation schedules need to be prepared for equipment purchased by Arif Habib Company on August 1, 2015 using straight line and reducing balance methods of depreciation over its estimated 5 year life. The cost of the

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81 views

Financial Accounting: Assignment#3

Q1) The unadjusted trial balance is provided for Links Resorts for the year ending December 31, 20X2. Adjusting entries need to be made for various expenses and revenues. The adjusted trial balance then needs to be prepared to calculate the correct net income for the year. Q2) Miami Juice's balance sheet as of December 31, 2018 needs to be prepared by separating current and long-term liabilities based on the information provided about various liability accounts. Q3) Depreciation schedules need to be prepared for equipment purchased by Arif Habib Company on August 1, 2015 using straight line and reducing balance methods of depreciation over its estimated 5 year life. The cost of the

Uploaded by

Rameen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Assignment#3

Financial Accounting

Q No.1 Data for the unadjusted trial balance of Links Resorts at December 31, 20X2, follow:

Cash $  3,000      Horst Schulz, capital $49,100


Other current assets     9,400 Horst Schulz, withdrawals 51,800
Property, plant, Service revenue 93,600
    and equipment 66,200 Salary expense 42,700
Accumulated depreciation 21,800 Depreciation expense
Accounts payable 6,100 Supplies expense
Salary payable Insurance expense
Unearned service revenue 5,300 Utilities expense 2,800

Adjusting data at the end of the year include the following:

a. Unearned service revenue that has been earned, $3,600.


b. Accrued service revenue, $8,100
c. Supplies used in operations, $600.
d. Accrued salary expense, $1,400.
e. Insurance expense, $1,800.
f. Depreciation expense, $2,900.

Prepare adjusting entries and arrive correct net income for the year.

Q No.2

Balance Sheet Presentation of Liabilities

The following are selected items from the accounting records of Miami Juice for the year ended
December 31, 2018:

Note payable to Southeast Bank....................................................................$ 300,000


Income taxes payable..................................................................................... 25,000
Accrued expenses and payroll taxes.............................................................. 33,000
Mortgage note payable................................................................................... 880,000
Accrued interest on mortgage note payable................................................... 6,000
Trade accounts payable.................................................................................. 340,000
Unearned revenue.......................................................................................... 28,000
Potential liability in pending lawsuit............................................................. 1,000,000

Other Information
1. The note payable to Southeast Bank is due in 90 days. Arrangements have been made to
renew this note for an additional 24 months.
2. The mortgage requires payments of $8,000 per month. An amortization table shows that its
balance will be paid down to $865,000 by December 31, 2019.
3. Accrued interest on the mortgage note payable is paid monthly. The next payment is due
near the end of the first week in January 2019.
4. Miami Juice has been sued for $1,000,000 in a product damage case. It is not possible at this
time, however, to make a reasonable estimate of the possible loss, if any, that the company
may have sustained.

Instructions
a. Using the information provided, prepare the current and long-term liability sections of the
company’s balance sheet dated December 31, 2018. (Within each classification, items may be
listed in any order.)

Q No.3

Arif Habib Company purchased equipment on August 1,2015at a list price of Rs.600,000. paid
transportation charges Rs.36000 and installation charges Rs.60000. Estimated life is 5 years and
estimated salvage value Rs.56000. Following method were decided to use for calculating depreciation:

1. Straight line method


2. Reducing balance method (25%)

Prepare schedule of depreciation under each method separately for three years showing cost,
depreciation, accumulated depreciation and book value.

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