I-04.

05

On January 1, 20X7, Jacqueline Fernandez formed a corporation to purchase wheat harvesting equipment and provide contract support services to farmers throughout the Midwest. Information about the first Jan. 1 Investors provided $3,000,000 of cash in exchange for stock of Fernandez Corporation. Jan. 1 Purchased combines and trucks in exchange for $1,000,000 cash and a $3,000,000 note payable. Feb. 7 Purchased $40,000 of supplies on account that will be needed during the upcoming harvest. Mar. 3 Paid wages of $55,400. Apr. 1 Billed customers for services in the amount of $240,000. Apr. 11 May 1 June 6 June 9 June 15 June 20 June 30 Aug. 1 Sept. 3 Sept. 16 Sept. 25 Oct. 20 Nov. 3 Dec. 15 Dec. 31 Paid $30,000 toward the purchase of February 7. Purchased a $24,000 insurance policy. This transaction was recorded as prepaid insurance. Collected $200,000 on accounts receivable. Paid wages of $130,600. Paid $30,000 for fuel costs. Paid $12,500 for lodging costs incurred by crew. Paid $110,000 of interest and $80,000 to reduce the balance of the note payable. Billed customers for services provided in the amount of $812,000. Collected $715,000 on accounts receivable. Purchased $25,000 of supplies on account. Paid $61,200 for fuel costs. Paid $8,100 for lodging costs incurred by crew. Paid wages of $125,900. Collected $100,000 as deposits from customers who contracted for 20X8 harvesting services. Paid a $25,000 dividend to shareholders.

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Fernandez Corporation uses the following accounts: Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Interest Payable Unearned Revenue Notes Payable Capital Stock Retained Earnings Dividends Revenues Wage Expense Fuel Expense Lodging Expense Insurance Expense Supplies Expense Interest Expense Depreciation Expense Income Summary (a) (b) (c) (d) Journalize the listed transactions. Post the transactions to the appropriate general ledger accounts. Prepare a trial balance as of December 31. Journalize and post adjusting entries based on the following additional information.20-year life, with no salvage value. The equipment had Supplies on hand at year end amount to $20,000. At year end, $115,000 of additional interest is due on the note
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The insurance policy covered a 24-month period commencing on May 1. At year end, Fernandez had provided $30,000 of unbilled services to customers. These services will be billed in early 20X8. (e) Prepare an adjusted trial balance as of December 31. (f) Prepare an income statement and statement of retained earnings for 20X7, and a classified balance sheet as of the end of the year. (g) Journalize and post closing entries. (h) Prepare a post-closing trial balance as of December 31.

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Tr tin li v gc

K/H tm ng Tr c tc

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H thng TK Tin P.thu k/h VPP Bo him tr trc Trang thit b Hao mn ly k P.tr n/bn Li phi tr Doanh thu cha thc hin Vay NH NVKD Li nhun gi li (Tng t tk 421) C tc Doanh thu CP lng CP xng du CP Cng tc CP Bo him CP vpp CP Li vay CP khu hao Tng t tk 911 Ghi vo s nht k chung Ghi s ci Bng cn i tk th Ghi s nht k chung v ghi s ci cc bt ton iu chnh K/H 20 NM-pp ng thng Cui nm cn li 20,000 Li phi tr vo cui nm l 115,000
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Bo him 24 thng

hon thnh dch v tr gi 30,000, nhng cha gi ha n cho k/h Bng cn i tk sau iu chnh Lp 3 loi BCTC Ghi s nht k chung v ghi s ci cc bt ton ng s Bng cn i tk sau cc bt ton ng s

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n cho k/h

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Name: Date: Section:

I-04.05(a)

GENERAL JOURNAL
Date Accounts Debit

Page 1
Credit

Jan. 1

Cash Capital Stock Collected $715,000 on accounts receivable.

3,000,000 3,000,000

Jan. 1

Equipment Cash Notes Payable Purchased combines and trucks in exchange for $1,000,000 cash and a $3,000,000 note payable. Supplies Accounts Payable Purchased $40,000 of supplies on account that will be needed during the upcoming harvest. Wage Expense Cash Paid wages of $55,400.

4,000,000 1,000,000 3,000,000

Feb. 7

40,000 40,000

Mar. 3

55,400 55,400

Apr. 1

Accounts Receivable Revenues Billed customers for services in the amount of $240,000.

240,000 240,000

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Name: Date: Section:

I-04.05(a)

GENERAL JOURNAL
Date Accounts Debit

Page 2
Credit

Apr. 11

Accounts Payable Cash Paid $30,000 toward the purchase of February 7.

30,000 30,000

May 1

Prepaid Insurance Cash Purchased a $24,000 insurance policy. This transaction was recorded as prepaid insurance. Cash Accounts Receivable Collected $200,000 on accounts receivable.

24,000 24,000

June 6

200,000 200,000

June 9

Wage Expense Cash Paid wages of $130,600.

130,600 130,600

June 15

Fuel Expense Cash Paid $30,000 for fuel costs.

30,000 30,000

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Name: Date: Section:

I-04.05(a)

GENERAL JOURNAL
Date Accounts Debit

Page 3
Credit

June 20

Lodging Expense Cash Paid $12,500 for lodging costs incurred by crew.

12,500 12,500

June 30

Interest Expense Notes Payable Cash Paid $110,000 of interest and $80,000 to reduce the balance of the note payable. Accounts Receivable Revenues Billed customers for services provided in the amount of $812,000. Cash Accounts Receivable Collected $715,000 on accounts receivable.

110,000 80,000 190,000

Aug. 1

812,000 812,000

Sept. 3

715,000 715,000

Sept. 16

Supplies Accounts Payable Purchased $25,000 of supplies on account.

25,000 25,000

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Name: Date: Section:

I-04.05(a)

GENERAL JOURNAL
Date Accounts Debit

Page 4
Credit

Sept. 25

Fuel Expense Cash Paid $61,200 for fuel costs.

61,200 61,200

Oct. 20

Lodging Expense Cash Paid $8,100 for lodging costs incurred by crew.

8,100 8,100

Nov. 3

Wage Expense Cash Paid wages of $125,900.

125,900 125,900

Dec. 15

Cash Unearned Revenue Collected $100,000 as deposits from customers who contracted for 20X8 harvesting services. Dividends Cash Paid a $25,000 dividend to shareholders. Tng

100,000 100,000

Dec. 31

25,000 25,000

9,824,700

9824700

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Solution

I-04.05(b,d,g)

CASH
Date Jan. 1 Jan. 1 Jan. 1 Mar. 3 Apr. 11 May 1 June 6 June 9 June 15 June 20 June 30 Sept. 3 Sept. 25 Oct. 20 Nov. 3 Dec. 15 Dec. 31 Description Balance forward GJ page 1 GJ page 1 GJ page 1 GJ page 2 GJ page 2 GJ page 2 GJ page 2 GJ page 2 GJ page 3 GJ page 3 GJ page 3 GJ page 4 GJ page 4 GJ page 4 GJ page 4 GJ page 4 100,000 25,000 2,322,300 715,000 61,200 8,100 125,900 200,000 130,600 30,000 12,500 190,000 Debit 3,000,000 1,000,000 55,400 30,000 24,000 Credit Balance -

ACCOUNTS RECEIVABLE
Date Jan. 1 Apr. 1 June 6 Aug. 1 Sept. 3 Description Balance forward GJ page 1 GJ page 2 GJ page 3 GJ page 3 812,000 715,000 137,000 Debit 240,000 200,000 Credit Balance -

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Solution

I-04.05(b,d,g)

SUPPLIES
Date Jan. 1 Feb. 7 Sept. 16 Dec. 31 Description Balance forward GJ page 1 GJ page 3 GJ page 5 Debit 40,000 25,000 45,000 20,000 65,000 Credit Balance -

PREPAID INSURANCE
Date Jan. 1 May 1 Dec. 31 Description Balance forward GJ page 2 GJ page 2 Debit 24,000 8,000 16,000 Credit Balance 24,000

EQUIPMENT
Date Jan. 1 Jan. 1 Description Balance forward GJ page 1 Debit 4,000,000 4,000,000 Credit Balance -

ACCUMULATED DEPRECIATION
Date Description Debit Credit Balance

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Solution

I-04.05(b,d,g)

Jan. 1 Dec. 31

Balance forward GJ page 5

200,000

ACCOUNTS PAYABLE
Date Jan. 1 Feb. 7 Apr. 11 Sept. 16 Description Balance forward GJ page 1 GJ page 2 GJ page 3 30,000 25,000 35,000 Debit Credit 40,000 Balance -

INTEREST PAYABLE
Date Jan. 1 Dec. 31 Description Balance forward GJ page 5 Debit Credit 150,000 150,000 Balance -

UNEARNED REVENUE
Date Jan. 1 Dec. 15 Dec. 31 Description Balance forward GJ page 4 GJ page 5 30,000 70,000 Debit Credit 100,000 Balance 100,000

NOTES PAYABLE
Date Description Debit Credit Balance

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Solution

I-04.05(b,d,g)

Jan. 1 Jan. 1 June 30

Balance forward GJ page 1 GJ page 3

80,000

3,000,000

2,920,000

CAPITAL STOCK
Date Jan. 1 Jan. 1 Description Balance forward GJ page 1 Debit Credit 3,000,000 3,000,000 Balance -

RETAINED EARNINGS
Date Jan. 1 Dec. 31 Description Balance forward GJ page 6 Debit Credit 145,300 Balance 145,300

DIVIDENDS
Date Dec. 31 Description GJ page 4 Debit 25,000 25,000 Credit Balance

REVENUES
Date Description Debit Credit Balance

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Solution

I-04.05(b,d,g)

Apr. 1 Aug. 1 Dec. 31 Dec. 31

GJ page 1 GJ page 3 GJ page 5 GJ page 6 1,082,000

240,000 812,000 30,000 1,052,000 1,082,000 -

WAGE EXPENSE
Date Mar. 3 June 9 Nov. 3 Dec. 31 Description GJ page 1 GJ page 2 GJ page 4 GJ page 6 Debit 55,400 130,600 125,900 311,900 311,900 Credit Balance

FUEL EXPENSE
Date June 15 Sept. 25 Dec. 31 Description GJ page 2 GJ page 4 GJ page 6 Debit 30,000 61,200 91,200 91,200 Credit Balance

LODGING EXPENSE
Date June 20 Oct. 20 Dec. 31 Description GJ page 3 GJ page 4 GJ page 6 Debit 12,500 8,100 20,600 20,600 Credit Balance

INSURANCE EXPENSE

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Solution

I-04.05(b,d,g)

Date Dec. 31 Dec. 31

Description GJ page 5 GJ page 6

Debit 8,000

Credit 8,000

Balance 8,000 -

SUPPLIES EXPENSE
Date Dec. 31 Dec. 31 Description GJ page 4 GJ page 6 Debit 45,000 45,000 Credit Balance 45,000

INTEREST EXPENSE
Date June 30 Dec. 31 Dec. 31 Description GJ page 3 GJ page 5 GJ page 6 Debit 110,000 150,000 260,000 Credit Balance 110,000 260,000

DEPRECIATION EXPENSE
Date Dec. 31 Dec. 31 Description GJ page 5 GJ page 6 Debit 200,000 200,000 Credit Balance 200,000

INCOME SUMMARY

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Solution

I-04.05(b,d,g)

Date Dec. 31 Dec. 31 Dec. 31

Description GJ page 6 GJ page 6 GJ page 6

Debit 936,700 145,300

Credit 1,082,000

Balance 145,300

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Name: Date: Section:

I-04.05(c)

FERNANDEZ CORPORATION Trial Balance December 31, 20X7 Debits Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accounts Payable Unearned Revenue Notes Payable Capital Stock Dividends Revenues Wage Expense Fuel Expense Lodging Expense Interest Expense $ 2,322,300 137,000 65,000 24,000 4,000,000 35,000 100,000 2,920,000 3,000,000 25,000 1,052,000 311,900 91,200 20,600 110,000 $ 7,107,000 Credits

$ 7,107,000

Name: Date: Section:

I-04.05(d)

GENERAL JOURNAL
Date Accounts Debit

Page 5
Credit

Dec. 31

Depreciation Expense Accumulated Depreciation The equipment had 20-year life, with no salvage value.

200,000 200,000

Dec. 31

Supplies Expense Supplies Supplies on hand at year end amount to $20,000.

45,000 45,000

Dec. 31

Interest Expense Interest Payable At year end, $115,000 of additional interest is due on the note payable.

150,000 150,000

Dec. 31

Insurance Expense Prepaid Insurance The insurance policy covered a 24month period commencing on May 1. Unearned Revenue Revenues At year end, Fernandez had provided $30,000 of unbilled services to customers. These services will be billed in early 20X8.

8,000 8,000

30,000 30,000

Name: Date: Section:

I-04.05(e)

FERNANDEZ CORPORATION Adjusted Trial Balance December 31, 20X7 Debits Cash $ 2,322,300 Accounts Receivable 137,000 Supplies 20,000 Prepaid Insurance 16,000 Equipment 4,000,000 Accumulated Depreciation Accounts Payable Interest Payable Unearned Revenue Notes Payable Capital Stock Dividends 25,000 Revenues Wage Expense 311,900 Fuel Expense 91,200 Lodging Expense 20,600 Insurance Expense 8,000 Supplies Expense 45,000 Interest Expense 260,000 200,000 Depreciation Expense $ 7,457,000 Credits

200,000 35,000 150,000 70,000 2,920,000 3,000,000 1,082,000

$ 7,457,000

Name: Date: Section:

I-04.05(f)

FERNANDEZ CORPORATION Income Statement For the Year Ending December 31, 20X7 Revenues $ Expenses Wage Fuel Lodging Insurance Supplies Interest Depreciation Net income $ 311,900 91,200 20,600 8,000 45,000 260,000 200,000 $ 1,082,000

936,700 145,300

FERNANDEZ CORPORATION Statement of Retained Earnings For the Year Ending December 31, 20X7 Beginning retained earnings Plus: Net income Less: Dividends Ending retained earnings $ $ $ 145,300 145,300 25,000 120,300

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I-04.05(f)

FERNANDEZ CORPORATION Balance Sheet December 31, 20X7 Assets Current assets Cash Accounts Receivable Supplies Prepaid Insurance Property, plant & equipment Equipment Accumulated Depreciation Total assets Liabilities Current liabilities Accounts Payable Interest Payable Unearned Revenue Long-term liabilities Notes Payable Total liabilities Stockholders' equity Capital Stock Retained earnings Total stockholders' equity Total Liabilities and equity $ 3,000,000 120,300 $ 3,120,300 6,295,300 $ $ 35,000 150,000 70,000 $ 4,000,000 200,000 $ 4,200,000 6,695,300 $ 2,322,300 137,000 20,000 16,000 $

2,495,300

255,000 2,920,000 3,175,000

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Name: Date: Section:

I-04.05(g)

GENERAL JOURNAL
Date Accounts Debit

Page 6
Credit

Dec. 31

Revenues Income Summary Wage Expense Fuel Expense Lodging Expense Insurance Expense Supplies Expense Interest Expense Depreciation Expense Income Summary

1,082,000 1,082,000 311,900 91,200 20,600 8,000 45,000 260,000 200,000 936,700

Dec. 31

Dec. 31

Income Summary Retained Earnings

145,300 145,300

Name: Date: Section:

I-04.05(g)

Name: Date: Section:

I-04.05(h)

FERNANDEZ CORPORATION Post-Closing Trial Balance December 31, 20X7 Debits Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Interest Payable Notes Payable Capital Stock Retained Earnings $ $ Credits