You are the controller at Star Wars, Inc., a wholesale distributor of lightsabers and other interstellar weaponry. The corporation was founded in a galaxy far, far away a long time ago. The company has 420,000 shares of common stock authorized with a par value of $18. Currently, 28,000 shares are issued and outstanding. In your role as controller, you are responsible for the company's accounting records, financial statement preparation, and ensuring that the company has adequate internal controls. You also support management at Star Wars by providing required financial reports. You supervise a staff that takes care of the other aspects of accounting, but ultimately you oversee all the functions of the accounting department. Star Wars, Inc. maintains a calendar year-end (the books are closed on December 31 of each year). Adjusting entries are only prepared annually. Therefore, when you prepare the adjusting entries ,they will need to be for the entire year, not just for December. In orderto complete this practice set, you will need to record all regular transactions for the month of December, 2014 (all other regular transactions have already been recorded for the year) and all of the year-end adjusting entries. You will journalize all transactions and adjustments in the general journal, post them to the general ledger accounts, prepare an adjusted trial balance, prepare the financial statements, prepare closing entries, and finally a post-closing trial balance for the year ended December 31, 2014.

The following information pertains to the various accounting practices applicable to Star Wars, Inc.

1. Star Wars, Inc. maintains inventory using the perpetual method. All inventory costs are tracked using first in, first out (FIFO) cost flows. (See the cost of goods sold sheet for details regarding inventory).

2. Purchases of inventory are recorded at the net amount (discounts are recognized on the date of purchase, if applicable). The purchase terms are different for each supplier. Forfeited discounts are recorded separately as cost of goods sold.

3. Sales on account are subject to terms 2/15, n/40 and are recorded at gross value.

4. The company utilizes a general journal and general ledger, but also tracks detailed information on suppliers and customers in accounts payable and accounts receivable subsidiary ledgers, respectively. You will need to maintain the subsidiary ledgers.

5. Salaried employees are paid monthly at the end of the month (on the last day of the month). Hourly employees are paid every two weeks. Each two week pay period ends on the Friday of the second week.

6. The Company's chart of accounts is listed on the right side of this spreadsheet.

7. The Company uses the Allowance Method of accounting for bad debt. The Company calculates bad debt expense at the end of the fiscal year at 5% of ending A/R (using the % of receivables method).

Record the following journal entries:

1- Dec Paid off balance of $45,800 owed to Ewok Inc. No discount applies. Record accounts receivable, sales revenue, cost of goods sold, inventory.

11-Dec Paid bi-weekly wages via payroll checks. The payroll summary is below:

Employee wages (gross) $5,210

FICA taxes withheld 399

Federal income taxes withheld 980

State income taxes withheld 240

Net pay $3,591

Employer's payroll taxes:

FICA tax $399

(no FUTA or SUTA)

20- Dec Received payment from Princess Leia Co. from the Dec. 11 sale.

21-Dec An uninhabited moon orbiting the planet of Star Wars, Inc.'s headquarters is acquired by issuing 20,000 shares of unissued common stock. The moon has a fair value of $1,200,000. The moon is immediately used for operations. The moon is considered land.

28- Dec Star Wars, Inc. sold a used Star Destroyer to Chewbacca and Sons Co. for $30,100 cash. The original cost of the Star Destroyer was $200,000 with a salvage value of $25,000, a useful life of 10 years, and accumulated depreciation of $100,000 through the end of last fiscal year. Note: you will need to record 1/2's years depreciation for this year before recording the sale (the company policy is to depreciate assets for 1/2 year in the year of acquisition and disposal). Star Wars, Inc. uses the straight-line method to depreciate Star Destroyers.

Note: record depreciation expense first, then the disposal.

28- Dec The Board of Directors of Star Wars Inc. declares a $2.50 per share cash dividend to be paid in January of the next year. You will need to determine the number of shares outstanding. See instructions for the beginning amount and don't forget to take into account previous transactions involving new shares issued. Take the amount directly out of retained earnings.

31- Dec The petty cash custodian performs the month-end reconciliation and totals the receipts as follows:

Postage stamps used $58

Courier costs $73

Company lunch costs $61

Office decorations $30

$68 of cash remained on hand. Record the entry to reimburse the petty cash fund. Book any overage or shortage to Petty Cash Overage/Shortage. Use Misc. expense for all costs noted above.

Adjusting entries

1.The annual provision for bad debt is recorded as 5% of ending A/R. Use the allowance method. Round to the nearest $1

2. Payroll summary for wages earned from Dec. 24 to Dec. 31 is detailed below. These amounts will be paid next year.

Gross Wages $6,300

FICA Taxes Payable 482

Federal Withholding Taxes 1,246

State Withholding Taxes 389

Net Pay 4,183

Employer's share of FICA 482

(No FUTA or SUTA is due)

Instructions Trial Balance at 11 30 2014 General Journal Ger Credit 450 A S Inventory Supplies Land 245.000 Star Wars, Inc Trial Balance November 30, 2014 Accounts: Debit Cash 211,524 Petty Cash 300 Accounts Receivable 317,420 Allowance for Doubtful Accounts Notes Receivable (current) 65,000 Interest Receivable 373,700 3.110 S Prepaid Insurance 15,440 E Prepaid Rent 32.150 T Other Assets (current) 165,000 750,000 Buildings 1.100,000 Accumulated Depreciation - Buildings Equipment 891,500 Accumulated Depreciation - Equipment Space Ships 762,865 Accumulated Depreciation - Space Ships Notes Payable (current) L Accounts Payable I Salaries & Wages Payable A FICA Taxes Payable B Income Taxes Payable Federal Withholding Taxes Payable 1 State Withholding Taxes Payable FUTA Taxes Payable 1 SUTA Taxes Payable T Interest Payable I Dividends Payable E Notes Payable (long-term) S Bands Payable Discount on Bonds Pavable 57.350 E Common Stock O Additional Paid-in Capital, Common U Retained Earnings 377.996 325.450 65,000 321.650 5.200 3,825 36,000 13,521 4,111 650 3.890 1.200.000 500,000 504,000 385.000 217,389 T Treasury Stock 56,325 5.079,585 12,567 82,567 3,130,002 25,678 R Sales Revenue E Sales Returns & Allowances Sales Discounts O Cost of Goods Sold P Advertising Expense F Bad Debt Expense R Supplies Expense A Repairs Expense T Miscellaneous Expense | Depreciation Expense Insurance Expense Salaries & Wages Expense Rent Expense Payroll Tax Expense 16,574 28,777 0 C N 953,172 99,657 N Utilities Expense 24,567 3.150 Interest Revenue Gain on Disposal of Fixed Assets Interest Expense 48,752 Loss on Disposal of Fixed Assets Petty Cash Overage/Shortage Income Tax Expense 72,000 Totals 9,295,997 9,295,997 Instructions Trial Balance at 11 30 2014 General Journal Ger Credit 450 A S Inventory Supplies Land 245.000 Star Wars, Inc Trial Balance November 30, 2014 Accounts: Debit Cash 211,524 Petty Cash 300 Accounts Receivable 317,420 Allowance for Doubtful Accounts Notes Receivable (current) 65,000 Interest Receivable 373,700 3.110 S Prepaid Insurance 15,440 E Prepaid Rent 32.150 T Other Assets (current) 165,000 750,000 Buildings 1.100,000 Accumulated Depreciation - Buildings Equipment 891,500 Accumulated Depreciation - Equipment Space Ships 762,865 Accumulated Depreciation - Space Ships Notes Payable (current) L Accounts Payable I Salaries & Wages Payable A FICA Taxes Payable B Income Taxes Payable Federal Withholding Taxes Payable 1 State Withholding Taxes Payable FUTA Taxes Payable 1 SUTA Taxes Payable T Interest Payable I Dividends Payable E Notes Payable (long-term) S Bands Payable Discount on Bonds Pavable 57.350 E Common Stock O Additional Paid-in Capital, Common U Retained Earnings 377.996 325.450 65,000 321.650 5.200 3,825 36,000 13,521 4,111 650 3.890 1.200.000 500,000 504,000 385.000 217,389 T Treasury Stock 56,325 5.079,585 12,567 82,567 3,130,002 25,678 R Sales Revenue E Sales Returns & Allowances Sales Discounts O Cost of Goods Sold P Advertising Expense F Bad Debt Expense R Supplies Expense A Repairs Expense T Miscellaneous Expense | Depreciation Expense Insurance Expense Salaries & Wages Expense Rent Expense Payroll Tax Expense 16,574 28,777 0 C N 953,172 99,657 N Utilities Expense 24,567 3.150 Interest Revenue Gain on Disposal of Fixed Assets Interest Expense 48,752 Loss on Disposal of Fixed Assets Petty Cash Overage/Shortage Income Tax Expense 72,000 Totals 9,295,997 9,295,997