Assigned Problem # 2: Balance Sheet (35 Points).
Due on Canvas Week # 7: 9/30/ 2020 on or before 4:30 pm
ATTENTION!! You are to work on your assignments by yourself this is NOT a group project. ALL written work MUST be TYPED. Your work will be graded on content, accuracy, spelling, grammar and neatness and MUST have your name typed at the top. Any academic dishonesty will result in zero assigned to ALL parties involved (see page 20 of the syllabus, and FGCU Academic Integrity Guidelines on Canvas Module Week # 1). See pages 5 and 6 of syllabus for further clarifications on assignments.
The trial balance of balance sheet account of Lancer’s, a popular casual dining spot, as of December 31, 2019, is as follows:
| | Debits | | Credits |
Cash | $ | 10,000 | | |
Marketable Securities | | 16,000 | | |
Accounts Receivable | | 130,000 | | |
Allowance for Doubtful Accounts | | | $ | 6,000 |
Food Inventory | | 20,000 | | |
Prepaid Rent |
| 14,000 | | |
Prepaid Insurance | | 12,000 | | |
Investments | | 50,000 | | |
Land | | 80,000 | | |
Building | | 520,500 | | |
Equipment | | 100,000 | | |
Accumulated Depreciation | | | | 100,000 |
Accounts Payable | | | | 15,000 |
Income Taxes Payable | | | | -0- |
Accrued Expenses | | | | 25,000 |
| | | | |
Dividends Payable | | | | -0- |
Long-Term Debt | | | | 300,000 |
Capital Stock | | | | 130,000 |
Paid-In Capital in Excess of Par | | | | 120,000 |
Retained Earning (1 / 1 / 2019) | | | | 61,500 |
Additional Information:
- Dividends declared during 2019 totaled $45,000. Only $20,000 of the dividends declared in 2019 have been paid as of December 31, 2019. The unpaid dividends have not been recorded.
- Operations generated $860,000 of revenue for 2019. Expenses recorded totaled $600,000. Additional adjustments required are as follows:
- The allowance for doubtful accounts should be adjusted to 10 percent of accounts receivable.
- Prepaid insurance of $12,000 is the premium paid for insurance coverage for July 1, 2019, through June 30, 2020.
- Unrecorded depreciation expense for 2019 totals $47,000.
- Income taxes have not been recorded. Lance’s average rate is 20 percent.
- Prepaid rent of $14,000 is the amount paid for two months’ rent; Dec.31, 2019, through January 31, 2020. December portion of rent was not expensed.
- The Long-Term Debt account includes $60,000, which must be paid on June 30, 2020.
- Required: Prepare a balance sheet according to the USALI.
- Use the four (4) steps provided below to prepare the Balance Sheet.
Step # 1 (Work Sheet # 1) Prepare the adjustment to Old Trial Balance Assigned Problem # 2
The trail balance of balance sheet account of Lancer’s, a popular casual dining spot, as of December 31, 2019 is as follows:
| | | Debits | | Credits |
| Cash | $ | 10,000 | | |
| Marketable Securities | | 16,000 | | |
__2a__ | Accounts Receivable (Less 10%) | | 130,000 | | |
__2a__ | Allowance for Doubtful Accounts(_____________) | | | $ | 6,000 |
| Food Inventory | | 20,000 | | |
| | | | | |
__2e__ | Prepaid Rent (_____________________________) | | 14,000 | | |
__2b__ | Prepaid Insurance (_________________________) | | 12,000 | | |
| Investments | | 50,000 | | |
| Land | | 80,000 | | |
| Building | | 520,500 | | |
| | | | | |
| Equipment | | 152,000 | | |
__2c__ | Accumulated Depreciation + $________________ | | | | 100,000 |
| Accounts Payable | | | | 15,000 |
__*2d__ | Income Taxes Payable 20% (see (iii) calculation ) | | | | -0- |
| Accrued Expenses | | | | 25,000 |
__3__ | Current Liabilities | | | |
|
__1__ | Dividends Payable + ($ - ) $ | | | | -0- |
__3__ | Long-Term Debt ($ - ) $ | | | | 300,000 |
| Capital Stock | | | | 130,000 |
| Paid-In Capital in Excess of Par | | | | 120,000 |
| Retained Earnings(1/1/2019) Old R/E | | | | 61,500 |
Used NEW Retained earnings calculated in (V) on the on the B/S
Additional Information:
- Dividends declared during 2019 totaled $45,000. Only $20,000 of the dividends declared in 2019 have been paid as of December 31, 2019. The unpaid dividends have not been recorded.
2. Operations generated (ii) $860,000 of revenue for 2019. Expenses recorded totaled
(ii) $600,000. Additional adjustments required are as follows:
- The allowance for doubtful accounts should be adjusted to 10 percent of accounts receivable.
- Prepaid insurance of $12,000 (½ of $12,000 on BS &1/2 to (i) ) is the premium paid for insurance coverage for July 1, 2019, through June 30, 2020.
- Unrecorded depreciation expense for 2019 totals $47,000 (use on B/S & (i))
- Income taxes have not been recorded. Lance’s average rate is 20 percent.
- Prepaid rent of $14,000 (1/2 of $14,000 on BS & 1/2 to (i) ) is the amount paid for two months rent; Dec.31, 2019, through January 31, 2020. December portion of rent was not expensed (addition to problem).
3. The Long-Term Debt account includes $60,000, which must be paid on June 30, 2020.
Required: Prepare a balance sheet according to the USALI.
Step # 2: (Work Sheet # 2) Prepare the adjusted Trial Balance for December 31, 2019
Lancer’s Adjusted Trial Balance December 31, 2019
| Debits | | Credits |
Cash | $ | | |
Marketable Securities | | | |
Accounts Receivable | | | |
Allowance for Doubtful Accounts | | | $ |
Food Inventory | | | |
Prepaid Rent | | | |
Prepaid Insurance | | | |
Investments | | | |
Land | | | |
Building | | | |
Equipment | | | |
Accumulated Depreciation | | | |
Accounts Payable | | | |
Income Taxes Payable | | | |
Accrued Expenses | | | |
Current Liabilities | | | |
Dividends Payable | | | |
Long-Term Debt | | | |
Capital Stock | | | |
Paid-In Capital in Excess of Par | | | |
Retained Earnings (12/31/x3 From Step # 3) | | | |
| | | |
Totals | $ | | $ |
Step # 3 (Work Sheet # 3) Calculations to Determine Ending Retain Earnings Balance as at
12/31/2019
| i) | Adjustments to net income: | | | |
| | Prepaid Rent ( in December) Expensed | (1/2 year of $ Expensed (2e)) | $ | |
| | Current Portion of Prepaid Insurance | (1/2 year of $ Expensed (2b) ) | | |
| | Unrecorded Depreciation Expense | (From 2c) | | |
| | Pretax Adjustment to Net Income | (Additional Expenses) | $ |
|
| ii) | Net Income Before Tax | = | Revenue – Expenses – Pretax Adj. to Net Income |
| | | = | $ - $ - $ |
| | | = | $ |
| | | | |
| iii) | Income Tax Payable | = | (Tax Rate) (Net Income) |
| | | = | .20 ($ ) |
| | | = | $ |
| | | | |
| iv) | Net Income After Tax | = | $ - $ |
| | | = | $ |
| | | | |
| v) | Retain Earnings (RE) Ending | = | RE (1/1/x3) + NI After tax (iv) - dividends declared (1) |
| | | = | $ + $ - $ |
| | | = | $ |
Step # 4 (Work Sheet # 4) Prepare Work Sheet for the Balance Sheet as at December 31, 2019
Lancer’s
Balance Sheet
December 31, 2019
| Assets | | | | |
| | | | | |
| Current Assets | | | | |
| | Cash | $ | | |
| | Marketable Securities | | | |
| 2a | Accounts Receivable (Net) $ les 10% | | |
|
| | Food Inventory | | | |
| 2b&2e | Prepaid Expenses (Rent $ + Ins. $ ) | | |
|
| | Total Current Assets | | |
|
| Investments | | | | |
| | | | | |
| Property and Equipment | | | | |
| | Land | | | |
| | Building | | | |
| | Equipment | | | |
| 2c | Less Accumulated Depreciation $100,000 + | | ( | ) |
| | Net Property and Equipment | | |
|
| | | | | |
| Total Assets | | $ | | |
| | | | | |
| Liabilities and Owner’s Equity | | | | |
| | | | | |
| Current Liabilities | | | | |
| | Accounts Payable | $ | | |
| iii | Income Taxes Payable ( x .20) | | | |
| 3 | Current Maturities of Long-Term Debt | | | |
| 1 | Dividends Payable ($ - $ ) | | |
|
| | Accrued Expenses | | | |
| | Total Current Liabilities | | |
|
| | | | | |
| Long-Term Debt 3 | ($ - $ ) |
| | |
| | | | | |
| Owner’s Equity | | | | |
| | Capital Stock | | | |
| | Paid-in Capital in Excess of Par | | | |
| v. | Retained Earnings |
| | |
| | | | | |
| Total Liabilities and | Owner’s Equity | $ | | |
Owner’s Equity = $ + + = $
Name: (Typed) Date: (Typed)
Lancer’s
Balance Sheet
December 31, 2019
| Assets | | | | |
| | | | | |
| Current Assets | | | | |
| | Cash | $ | | |
| | Marketable Securities | | | |
| | Accounts Receivable (Net) | | | |
| | Food Inventory | | | |
| | Prepaid Expenses | | |
|
| | Total Current Assets | | |
|
| Investments | | | | |
| | | | | |
| Property and Equipment | | | | |
| | Land | | | |
| | Building | | | |
| | Equipment | | | |
| | Less Accumulated Depreciation | | ( | ) |
| | Net Property and Equipment | | |
|
| | | | | |
| Total Assets | | $ | | |
| | | | | |
| Liabilities and Owner’s Equity | | | | |
| | | | | |
| Current Liabilities | | | | |
| | Accounts Payable | $ | | |
| | Income Taxes Payable | | | |
| | Current Maturities of Long-Term Debt | | | |
| | Dividends Payable | | | |
| | Accrued Expenses | | | |
| | Total Current Liabilities | | |
|
| | | | | |
| Long-Term Debt | |
| | |
| | | | | |
| Owner’s Equity | | | | |
| | Capital Stock | | | |
| | Paid-in Capital in Excess of Par | | | |
| | Retained Earnings |
| | |
| | | | | |
| Total Liabilities and | Owner’s Equity | $ | | |
Owner’s Equity = $ + + = $
NOTE (From Page 8 of the Syllabus):
ALL assignments MUST be typed up using font size 12 and submitted using WORD DOCUMENT FORMAT. DO NOT SUBMIT ASSIGNMENTS IN PDF FORMAT because I CANNOT make written commence on a PDF document when grading assignments. See reminder for submission below.
Reminder Before Submission in the Drop Box on Canvas
1. Remove the NOTE above on the Balance Sheet before submission in the drop box.
2. ALL hand written submission in the drop box will received ZERO (0) POINTS
3. Any violation(s) FGCU Academic Integrity Guidelines will result in zero (0) points given for the assignment and student(s) violations submitted to FGCU Code of Conduct Office.
4. The completed Balance Sheet MUST have your name typed and date the assignment is due at the top. Writing your name or numbers with a pen or pencil will result in five (5) point’s deductions. To ensure orderly submission in the Drop Box on Canvas you MUST do the following. The Balance Sheet will be the first page, and the second page will have both information from the adjusted Trial Balance for December 31, 2019 (STEP # 2), and the Adjustment Calculations for Ending Retain Earnings (STEP # 3).
NOTE: Both (STEP # 2) and (STEP # 3) are on the second page of your submission.
IF YOU SUBMIT MORE THAN 2 PAGES FOR ASSIGN PROBLEM # 2 I WILL ONLY GRADE THE FIRST 2 PAGES AND IGNORE ALL OTHER PAGES.
ALL calculations MUST be shown in STEP # 2 and (STEP # 3 to support your answers on the Balance Sheet prepared. Points will be deducted if calculations are NOT shown.
5. Points Distributions:
Adjusted Trial Balance = 10;
Adjustment Calculations for Ending Retaining Earnings = 10 points;
Balance Sheet = 10 points; and
Professional appearance = 5 points (meaning that your work is neatly organized, with clarity, free from error(s) and follow the guidelines for preparation and submission in the drop box). NO partial points will be given for Professional Appearance.
Total points for assignment # 2 = 35 points.