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3 years ago

The general ledger of Red Storm Cleaners at January 1, 2015, includes the following account balances:

Business

1 answer:

Anna71 [15]3 years ago

8 0

Solution :

Prepare Journal entries :

Transaction General Journal Debit Credit

a Cash 27,300

Accounts receivable 19,700

Service revenue 47,000

b Cash 16,700

Accounts receivable 16,700

c Cash 6000

Common stock 6000

d Salaries expense 16,6000

salaries payable 8,100

e Repairs and maintenance 11,700

Cash 11,700

f Equipment 6,700

Cash 6,700

g Dividends 1,100

Cash 1,100

Prepare an unadjusted trial balance :

Red Storm Cleaners

Unadjusted Trial balance, December 31, 2015

Accounts Debit Credit

Cash(13500+27300+16700+6000-24700-11700-1100) 19,300

Accounts receivable (6700+19700-16700) 9,700

Supplies 2,700

Equipment (16500+6700) 23,200

Accumulated depreciation 5,600

Salaries payable 0

Common stock (18500+6000) 24,500

Retained earnings 7,200

Dividends 1,100

Service revenue 47,000

Salaries expense 16,600

Repairs and maintenance expense <u> 11,700 </u>

Totals 84,300 84,300

Prepare adjusted entries :

Transaction General Journal Debit Credit

1 Salaries expenses 1,100

Salaries payable 1,100

2. Depreciation expense 3,700

Accumulated depreciation 3,700

3. Supplies expense 1,000

Supplies 1,000

Prepare an adjusted trial balance :

Red Storm Cleaners

Adjusted Trial balance, December 31, 2015

Accounts Debit Credit

Cash(13500+27300+16700+6000-24700-11700-1100) 19,300

Accounts receivable (6700+19700-16700) 9,700

Supplies (2700-1000) 1,700

Equipment (16500+6700) 23,200

Accumulated depreciation (5600+3700) 9,300

Salaries payable 1,100

Common stock (18500+6000) 24,500

Retained earnings 7,200

Dividends 1,100

Service revenue 47,000

Salaries expense(16600+1100) 17,700

Repairs and maintenance expense 11,700

Depreciation 3,700

Supplies expense <u> 1,000 </u>

Totals 89,100 89,100

Prepare Income statement

RS Cleaners

Income statement, Dec 31, 2015

Incomes:

Service revenue 47,000

Total Income 47,000

Expenses :

Dividends 1,100

Repairs and maintenance 11,700

Salaries 17,700

Supplies expense 1,000

Depreciation <u> 3,700 </u>

Total Expenses <u> 35,200 </u>

Net Income 11,800

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Answer:

11.40

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Explanation:

Inventory turnover and days of sales of inventory are examples of activity ratios.

They are used to measure the efficiency of performing daily tasks

inventory turnover = Cost of goods sold/ average inventory

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3 years ago

On January 1, 2019, Pepin Company adopts a compensatory share option plan for its 50 executives. The plan allows each executive

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Answer:

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Explanation:

Note: See part b of the the attached excel file for the journal entries

Also note that before the journal entries are recorded, the current compensation expense for year 2019, 2020 and 2021 are first calculated. See part a of the attached excel file for the calculation of the the current compensation expense for year 2019, 2020 and 2021.

In part a of the attached excel file, the estimated compensation cost for 2019, 2020 and 2021 are calculated as follows:

Estimated compensation cost for 2019 = Option value on the grant date * Number of executives * (1 - Expected option forfeited rate) * Number of shares in the option = $14 * 50 * (1 - 15%) * 200 = $119,000

Estimated compensation cost for 2020 = Option value on the grant date * Number of executives * (1 - Expected option forfeited rate) * Number of shares in the option = $14 * 50 * (1 - 15%) * 200 = $119,000

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On 06 January 2022, the calculation of the entries used in the part b of the attached excel file are as follows:

w.1. Cash = Number of executives who exercise their options * Number of shares in the option * Purchase price per share after completing a 3-year service period = (8 * 200 * $30) = $48,000

w.2. Paid-in capital from share options = Number of executives who exercise their options * Number of shares in the option * Option value on the grant date = (8 * 200 * 14) = $22,400

w.3. Common Stock = Number of executives who exercise their options * Number of shares in the option * Sahre par value = (8 * 200 * $2) = $3,200

w.4. Paid in capital in excess of par- common stock (balancing figure) = Cash + Paid-in capital from share options - Common Stock = $48,000 + $22,400 - $3,200 = $67,200

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