Question: 1. Prepare a classified balance sheet in
1. Prepare a classified balance sheet in good form at December 31, 2012 from the information in M4-8.
Romney’s Marketing Company has the following adjusted trial balance at December 31, 2012. No dividends were declared. However, 500 shares issued at the end of the year for $3,000 are included below:
Prepare a multi-step income statement in good form for 2012. Include earnings per share.
2. Explain how the adjustments in M4-4 and M4-6 affected the operating, investing, and financing activities on the statement of cash flows.
In each of the following transactions ( a ) through ( c ) for Romney’s Marketing Company, use the threestep process illustrated in the chapter to record the adjusting entry at year-end December 31, 2012. The process includes (1) determining if revenue was earned or an expense incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment.
a. Collected $1,000 rent for the period December 1, 2012, to April 1, 2013, which was credited to Unearned Rent Revenue on December 1, 2012.
b. Purchased a machine for $32,000 cash on January 1, 2008. The company estimates annual depreciation at $3,000.
c. Paid $4,200 for a two-year insurance premium on July 1, 2012; debited Prepaid Insurance for that amount.
In each of the following transactions ( a ) through ( c ) for Romney’s Marketing Company, use the threestep process illustrated in the chapter to record the adjusting entry at year-end December 31, 2012. The process includes (1) determining if revenue was earned or an expense incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment.
a. Estimated electricity usage at $380 for December; to be paid in January 2013.
b. On September 1, 2012, loaned $5,000 to an officer who will repay the loan principal and interest in one year at an annual interest rate of 14 percent.
c. Owed wages to 10 employees who worked four days at $150 each per day at the end of December. The company will pay employees at the end of the first week of January 2013.
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Debit Credit Cash $ 1,500 Accounts receivable 2,200 Interest receivable Prepaid insurance Notes receivable (long-term) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent revenue Contributed capital (800 shares) Retained earnings Sales revenue 100 1,600 2,800 15,000 $ 3,000 2,400 3,920 2,700 500 3,700 2,000 37,650 Interest revenue 100 Rent revenue 750 Wages expense depreciation expense Utilities expense Insurance expense 19,000 1,800 320 700 Rent expense Income tax expense 9,000 2,700 Total $56,720 $56,720
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