Accounting 200 Comprehensive Homework Part 1,2,5- COHEN FENCING COMPANY,Rochman Water Company

| June 8, 2016

Question
Name:_____________________

Accounting 200

Comprehensive Homework

DO PART 1,2,5 ONLY

Part 1: At December 31, 2014, Cohen Fencing Company had the following trial balance.

Cohen Fencing Company
Unadjusted Trial Balance

12/31/14

Dr

Cr

Cash

203,203

Accounts Receivable

60,000

Allowance for Doubtful Accounts

600

Short Term Note Receivable

24,000

Interest Receivable

Prepaid Insurance

11,000

Supplies

6,000

Inventory

65,000

Equipment

175,000

Accumulated Depreciation

75,000

Copyright

48,000

Accounts Payable

35,000

Wages Payable

Interest Payable

Bonds Payable

200,000

Premium on Bonds Payable

11,103

Common Stock

90,000

Retained Earnings

5,000

Dividends

5,200

Sales

923900

Sales Returns & Allowances

4,000

Sales Discounts

9,000

Cost of Goods Sold

375,000

Bad Debts Expense

Depreciation Expense

Wages Expense

260,000

Rent Expense

65,000

Insurance Expense

16,000

Supplies Expense

7,000

Interest Revenue

800

Interest Expense

9,000

Gain on Sale of Equipment

5,000

Income Tax Expense

4,000

Total

1,346,403

1,346,403

Instructions: You must turn in the work performed on the sheets printed with this page. Your assignment will NOT BE ACCEPTED ON PLAIN PAPER.

1. Write the journal entries required for each of the 5 events described below on the General page provided. Use ONLY the accounts listed on the trial balance for your journal entries.

2. Post the journal entry transactions to individual T-accounts and prepare an adjusted trial balance for The Cohen Fencing Company as of December 31, 2014.

Information for the necessary adjustments or calculations as of December 31, 2014:

1. The company last received interest on the note receivable on October 30, 2014. Interest will next be paid on April 30, 2015, when the note matures. Record the accrued interest revenue for the last 2 months of 2014. The annual interest rate is 6%. Round to nearest whole dollar.

2. The Equipment was purchased prior to 2014. The company uses the straight-line method, assumed a $5,000 salvage value and an estimated useful life of 10 years. Record depreciation expense for the full year of 2014.

3. The company uses the allowance method to record its uncollectible accounts. The new Chief Financial Officer (CFO) estimated that 3% of Accounts Receivables at December 31, 2014, will be uncollectible. Record the adjusting entry for bad debt expense for 2014.

4. The company issued 8%, 10-year bonds when the market rate for similar investments is 5%. The company pays interest each year on January 1st. Using the effective interest method of amortizing the premium on bonds payable, accrue the interest expense as of December 31, 2014. Round to nearest whole dollar for your interest expense calculation.

5. Employees were last paid on December 24, 2014. Several employees worked through December 31st and wages due but not yet paid are $5,500. These wages will be paid in early January. An adjusting entry needs to be recorded to reflect this liability at Dec 31, 2014.

GENERAL JOURNAL

DATE

ACCOUNT NAME

DEBIT

CREDIT

Use the space below for T-accounts (REQUIRED FOR GRADING). For each account in the journal entries, you will need to adjust the balance from the unadjusted trial balance with the debit or credit from the journal entry. (You only need to provide T-accounts for those that change)

Example:

Interest Receivables

Unadj. Bal.

0

240

End Bal.

240

Cohen Fencing Company

ADJUSTED TRIAL BALANCE

12/31/14

DEBIT

CREDIT

Cash

Accounts Receivable

Allowance for Doubtful Accounts

Short-term Note Receivable

Interest Receivable

Prepaid Insurance

Supplies

Inventory

Equipment

Accumulated Depreciation

Copyright

Accounts Payable

Wages Payable

Interest Payable

Bonds Payable

Premium on Bonds Payable

Common Stock

Retained Earnings

Dividends

Sales

Sales Returns & Allowances

Sales Discounts

Cost of Goods Sold

Bad Debts Expense

Depreciation Expense

Wages Expense

Rent Expense

Insurance Expense

Supplies Expense

Interest Revenue

Interest Expense

Gain on sale of equipment

Income Tax Expense

Totals

1,380,898

1,380,898

Part 2: Using the trial balance below for Rochman Water Company (this is a different company and new problem), prepare (1) a Multi-step Income Statement and prepare (2) the Statement of Retained Earnings and (3) Classified Balance Sheet on the pages which follow. To get full credit you must include all critical subtotals.

Rochman Water Company

Adjusted Trial Balance

December 31, 2014

DEBIT

CREDIT

Cash

2,517

Accounts Receivable

1,560

Allowance for Uncollectible Accounts

17

Short term Note Receivable

76

Interest Receivable

2

Supplies

35

Inventory

1,019

Prepaid Expenses

15

Equipment

8,725

Accumulated Depreciation

975

Copyrights

98

Accounts Payable

370

Interest Payable

2

Unearned Revenue

40

Long Term Note Payable

3,400

Common Stock

6,600

Add’l Paid-in-Capital

800

Retained Earnings (1/1/12)

2,000

Dividends

100

Sales

34,900

Sales Returns & Allowances

34

Sales Discounts

65

Cost of Goods Sold

30,200

Bad debt expense

34

Depreciation Expense

276

Amortization Expense

11

Wages Expense

2,000

Rent Expense

500

Office Expense

79

Supplies Expense

100

Selling Expense

816

Interest Expense

100

Interest Revenue

8

Income Tax Expense

750

Totals

49,112

49,112

(Tips: see the illustration 5-11 on Page 245 in your textbook)

Rochman Water Company

Multi-step Income Statement

For the year ended December 31, 2014

Rochman Water Company

Statement of Retained Earnings

For the year ended December 31, 2014

(Tips: look at the presentation of illustration 2-2 on Page 49 in your textbook)

Rochman Water Company

Classified Balance Sheet

December 31, 2014

Part 5: Statement of Cash Flows

1) Fill in the table:

Indicate if it is an increasing or decreasing transaction with a plus or minus sign.

Indicate if it is operating (O), financing (F) or investing activity (I). +/- O, F, I

Cash collection of accounts receivable

340,000

Cash collection of interest revenue

12,500

Cash collection of dividend revenue

10,500

Cash proceeds from sale of equipment

12,000

Cash proceeds from sale of common stock

52,000

Cash payment of dividends

2,500

Cash payment for inventory

120,630

Cash payment for expenses

61,650

Cash payment for wages

45,250

Cash payment for interest expense

925

Cash payment for purchase of equipment

25,250

Cash payment for repayment of debt

15,000

2) Use the information in the table above, prepare a Statement of Cash Flows using the direct method (list the transaction and the amount under each section. Be sure to indicate if it is increasing or decreasing (+ or -).).

Cash from operating Activity

Amount

Net cash ____________ by operating activity

(provided or used)

Cash from investing activity

Net cash ____________ by investing activity

(provided or used)

Cash from Financing Activity

Net cash ___________ by financing activity

(provided or used)

Net __________ in cash

(increase or decrease)

Cash at beginning of period

100,000

Cash at end of period

3) Calculate the Current Cash Debt Coverage Ratio and the Cash Debt Coverage Ratio for this company using the Statement of Cash Flows prepared above.

Additional information: the beginning balance of current liabilities is $70,000 and the ending balance of current liabilities is $67,000; the beginning balance of total liabilities is $520,000 and the ending balance of total liabilities is $620,000.

1. Current cash debt coverage =

2. Cash debt coverage =

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