Made cash payments of $400,000 to employees for salaries. This amount includes the wages due…


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Made cash payments of $400,000 to employees for salaries. This amount includes the wages due… 1 answer below » Comprehensive problem The following balance sheet is presented for J.D.F. Company as of December 31, 2011. View complete question » J.D.F. Company Balance Sheet December 31, 2011 ASSETS Cash $       170,000 Accounts receivable 188,000 Merchandise inventory 200,000 Prepaid insurance 74000 Supplies inventory 40,000 Long-term investments 160, Comprehensive problem The following balance sheet is presented for J.D.F. Company as of December 31, 2011. J.D.F. Company Balance Sheet December 31, 2011 ASSETS Cash $       170,000 Accounts receivable 188,000 Merchandise inventory 200,000 Prepaid insurance 74000 Supplies inventory 40,000 Long-term investments 160,000 Equipment $480,000 Less: Accumulated depreciation 98,000 382,000 Machinery $950,000 Less: Accumulated depreciation 230,000 720,000 Patent 75,000 Total assets $2,009,000 LIABILITIES AND SHAREHOLDERS” EQUITY Accounts payable $220,000 Wages payable 73000 Mortgage payable 300000 Bonds payable 500,000 Contributed capital 500,000 Retained earnings 416,000 Total liabilities and shareholder? equity $2009,000 During 2012, J.D.F. entered into the following transactions. Made credit sales of $1,350,000 and cash sales of $350,000. The cost of the inventory sold was $700,000. Purchased $820,000 of merchandise inventory on account. Made cash payments of $400,000 to employees for salaries. This amount includes the wages due employees as of December 31, 2011. Purchased $110,000 of supplies inventory by issuing a six-month note that matures on March 12, 2013. Collected $850,000 from customers in payment of open accounts receivable. Paid suppliers $870,000 for payment of open accounts payable. Sold a long-term investment for $37,000. The investment had been purchased for $30,000. Paid $148,000 in cash for miscellaneous operating expenses. Issued additional common stock for $120,000 cash. On September 30, 2012, a customer gave the company a note due on May 1, 2013, in payment of a $72,000 account receivable. The company declared and paid a cash dividend of $50,000. The company purchased stock in Microsoft as a long-term investment for $50,000. J.D.F. used the following information to prepare adjusting journal entries on December 31, 2012. (a) Forty percent of the prepaid insurance on January 1 was still in effect as of December 31, 2012. (b) A physical count of the supplies inventory indicated that the company had $40,000 on hand as of December 31, 2012. (c) A review of the company”s advertising campaign indicates that of the expenditures made during 2012 for miscellaneous operating expenses, $25,000 applies to promotions to be undertaken during 2013. (d) The company is charged at a rate of $3,500 per month for certain operating expenses. It paid $36,000 for these expenses during the year. (e) The company owes employees $43,000 for wages as of December 31, 2012. (f) The $72,000 note receivable accepted in payment of an account receivable (see [10] above) specifies an annual interest rate of 9 percent. (g) Equipment has an estimated useful life of ten years, and machinery has an estimated useful life of twenty years. The patent originally cost $125,000 and had an estimated useful life of ten years. The company uses the straight-line method to depreciate and amortize all property, plant, equipment, and intangibles. (h) The note issued by the company (see [4] above) has a stated rate of 10 percent and was issued on September 12, 2012. REQUIRED: a. Prepare an income statement, a statement of shareholders” equity, a balance sheet, and a statement of cash flows using the direct form of presentation. b. Prepare the operating section of the statement of cash flows under the indirect method. View less » Jun 11 2014 04:05 PM

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