90.2K

Verified Solution

Link Copied!

solve m, n, and q

Your required tasks are as follows: 1. Read the below information and follow steps #2 through #9 2. On the Adjusting Journal Entries worksheet, prepare in journal entry form all adjusting and correcting joumal entries based on the following information. All information was provided to you as of 12/31/2020. (Round all numbers to the nearest dollar). Label journal entries a through q. a. DeeDee does banking at three different financial institutions. The details are as follows: Bank Account # Balance Coterica 123456 90,800 Coterica 123457 (5,000 4Bank 345689 89,000 Bank Two 397567 (9,000) 1 6. DeeDee properly wrote off uncollectible accounts during the year. Based on an aging schedule, they have determined that $80,000 of Accounts Receivable will not be collectible. c. On May 1, 2020, DeeDee renewed a 12-month insurance policy for $9,000. All cash was paid at the time the policy was signed and prepaid insurance was increased. All other transactions involving insurance were properly recorded. d On August 31, 2020 DeeDee paid ABC Advertising $8,000 for a five-month campaign of advertising services. Equal services are provided each month. All other advertising paid for during the year has been consumed. e. Because of strong demand and a need for additional inventory, DeeDee needed some temporary additional storage space so on July 1, 2020 they rented a unit for an annual rate of $19,200 and they paid the entire amount up front. The entire amount was expensed on July 1. k On April 1, 2020, DeeDee purchased the copyrights of some accounting games for $100,000. They believe the useful life will be 10 years. The company's amortization policy is that amortization should be calculated based on partial year if an acquisition is made during the year. Internally, DeeDee also developed some new accounting games and capitalized $50,000 of research and development costs in the copyright account. 1 Office salaries and sales salaries for the last week of 2020 of $18,000 and $22,000 remained unpaid at 12/31/2020 and have not been accrued. The employer portion of FICA expense is 7.65% and no employee has reached the maximum Dee Dee records payroll tax expenses in salary expense. m On June 1, 2020, DeeDee rented a portion of one store to Marketing Majors Inc. The contract was for 24 months and DeeDee required all of the cash up front. The rent is being eamed equally each month. This is the only item in which rent is being eamed by the company n DeeDee Double Entry has a loan outstanding as of 12/31/2020. Interest is paid annually on January 1*. The facts for the loan is: Coldstar Bank Loan outstanding all of 2020 with a 5.0% interest rate. Interest is due on January 1* of each year. Principle is due in Eight years on January 1, 2028. Since interest will not be paid to the Bank until Jamiary 1, Dee Dee's office staff did not accrue any interest o. DeeDee uses the FIFO Inventory Method in valuing inventory. The inventory balance of $372,500 was based on a physical count at 12/31/2020. Based on your analysis, you have noted that $6,000 of marketing games that belonged to Marketing Majors Inc. and being held by DeeDee on consignment was included in the physical account at year end. You also note that goods were in transit from a vendor on December 31, 2020 and were not included in ending inventory. The cost of the inventory was $18,000 and the goods were shipped fo.b. shipping point on December 29, 2020. p. DeeDee has been authorized to issue 1,000,000 shares of $1 par Common Stock. At the end of 2018, they had issued 50,000 shares for $25. They had properly accounted for this issuance. On January 2, 2020, they issued an additional 30,000 shares of Common Stock for $24 per share. The previous account recorded this transaction as a debit to Cash for $720,000 and a credit to Common Stock $720,000. q. DeeDee has a straight tax rate of 24%. Income tax expense is Net Income before taxes times 24%. (Hint: Prepare the Income Statement up to Net Income before Taxes and then record this adjusting journal entry.) f. Per a physical count of office supplies, $8.000 supplies remained at the end of 2020. The balance on the worksheet in the office supplies account represents last years ending balance. During the year. $17,000 of office supplies were purchased and immediately expensed. g. On April 1, 2020, DeeDee loaned a key supplier, $180,000. A promissory note was signed and issued. The agreed upon interest rate was 6% and the key supplier has agreed to pay interest and the note receivable on March 31, 2021. The note was recorded in Notes Receivable and is the only note outstanding. At December 31, 2020, no interest has been accrued. h The office building was bought in January 1, 2018 by Dee Dee and DeeDee plans to use the building for 40 years with no estimated salvage value. DeeDee depreciates the building on a straight-line basis. i. DeeDee uses the DDB method to depreciate office equipment. No office equipment was added during 2020. It is estimated that the office equipment has a useful life of 20 years with a salvage value of $10,000. Prior depreciation was correctly calculated based on period of time held j. As of 12/31/2020 the Available for Sale Equity Investments have a fair value of $380,000 and the fair value of the Available for Sale Debt Investments have a fair value of $130,000. Due to the market conditions, the company does not plan on selling the assets in 2020, but their intent is to sell at some point in time. You can ignore the tax effect on unrealized gains and losses. (Hint: Unrealized Gains and Losses - OCI are closed to Accumulated Other Comprehensive Income at the end of the year.) 2 Your required tasks are as follows: 1. Read the below information and follow steps #2 through #9 2. On the Adjusting Journal Entries worksheet, prepare in journal entry form all adjusting and correcting joumal entries based on the following information. All information was provided to you as of 12/31/2020. (Round all numbers to the nearest dollar). Label journal entries a through q. a. DeeDee does banking at three different financial institutions. The details are as follows: Bank Account # Balance Coterica 123456 90,800 Coterica 123457 (5,000 4Bank 345689 89,000 Bank Two 397567 (9,000) 1 6. DeeDee properly wrote off uncollectible accounts during the year. Based on an aging schedule, they have determined that $80,000 of Accounts Receivable will not be collectible. c. On May 1, 2020, DeeDee renewed a 12-month insurance policy for $9,000. All cash was paid at the time the policy was signed and prepaid insurance was increased. All other transactions involving insurance were properly recorded. d On August 31, 2020 DeeDee paid ABC Advertising $8,000 for a five-month campaign of advertising services. Equal services are provided each month. All other advertising paid for during the year has been consumed. e. Because of strong demand and a need for additional inventory, DeeDee needed some temporary additional storage space so on July 1, 2020 they rented a unit for an annual rate of $19,200 and they paid the entire amount up front. The entire amount was expensed on July 1. k On April 1, 2020, DeeDee purchased the copyrights of some accounting games for $100,000. They believe the useful life will be 10 years. The company's amortization policy is that amortization should be calculated based on partial year if an acquisition is made during the year. Internally, DeeDee also developed some new accounting games and capitalized $50,000 of research and development costs in the copyright account. 1 Office salaries and sales salaries for the last week of 2020 of $18,000 and $22,000 remained unpaid at 12/31/2020 and have not been accrued. The employer portion of FICA expense is 7.65% and no employee has reached the maximum Dee Dee records payroll tax expenses in salary expense. m On June 1, 2020, DeeDee rented a portion of one store to Marketing Majors Inc. The contract was for 24 months and DeeDee required all of the cash up front. The rent is being eamed equally each month. This is the only item in which rent is being eamed by the company n DeeDee Double Entry has a loan outstanding as of 12/31/2020. Interest is paid annually on January 1*. The facts for the loan is: Coldstar Bank Loan outstanding all of 2020 with a 5.0% interest rate. Interest is due on January 1* of each year. Principle is due in Eight years on January 1, 2028. Since interest will not be paid to the Bank until Jamiary 1, Dee Dee's office staff did not accrue any interest o. DeeDee uses the FIFO Inventory Method in valuing inventory. The inventory balance of $372,500 was based on a physical count at 12/31/2020. Based on your analysis, you have noted that $6,000 of marketing games that belonged to Marketing Majors Inc. and being held by DeeDee on consignment was included in the physical account at year end. You also note that goods were in transit from a vendor on December 31, 2020 and were not included in ending inventory. The cost of the inventory was $18,000 and the goods were shipped fo.b. shipping point on December 29, 2020. p. DeeDee has been authorized to issue 1,000,000 shares of $1 par Common Stock. At the end of 2018, they had issued 50,000 shares for $25. They had properly accounted for this issuance. On January 2, 2020, they issued an additional 30,000 shares of Common Stock for $24 per share. The previous account recorded this transaction as a debit to Cash for $720,000 and a credit to Common Stock $720,000. q. DeeDee has a straight tax rate of 24%. Income tax expense is Net Income before taxes times 24%. (Hint: Prepare the Income Statement up to Net Income before Taxes and then record this adjusting journal entry.) f. Per a physical count of office supplies, $8.000 supplies remained at the end of 2020. The balance on the worksheet in the office supplies account represents last years ending balance. During the year. $17,000 of office supplies were purchased and immediately expensed. g. On April 1, 2020, DeeDee loaned a key supplier, $180,000. A promissory note was signed and issued. The agreed upon interest rate was 6% and the key supplier has agreed to pay interest and the note receivable on March 31, 2021. The note was recorded in Notes Receivable and is the only note outstanding. At December 31, 2020, no interest has been accrued. h The office building was bought in January 1, 2018 by Dee Dee and DeeDee plans to use the building for 40 years with no estimated salvage value. DeeDee depreciates the building on a straight-line basis. i. DeeDee uses the DDB method to depreciate office equipment. No office equipment was added during 2020. It is estimated that the office equipment has a useful life of 20 years with a salvage value of $10,000. Prior depreciation was correctly calculated based on period of time held j. As of 12/31/2020 the Available for Sale Equity Investments have a fair value of $380,000 and the fair value of the Available for Sale Debt Investments have a fair value of $130,000. Due to the market conditions, the company does not plan on selling the assets in 2020, but their intent is to sell at some point in time. You can ignore the tax effect on unrealized gains and losses. (Hint: Unrealized Gains and Losses - OCI are closed to Accumulated Other Comprehensive Income at the end of the year.) 2

Answer & Explanation Solved by verified expert

See Answer