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    ACCT 438 Homework 1

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    umar
    The document contains three accounting problems involving transactions, an incorrect income statement, and a trial balance. 1) The first problem lists transactions for Wainwright Corporation during March 2016 involving the issuance of stock, purchase of equipment and inventory, sales, expenses, and payments. 2) The second problem identifies an incorrect income statement prepared by Axel Corporation and requires preparing a multiple-step income statement applying GAAP principles and calculating EPS. 3) The third problem provides a trial balance for Jackson Corporation at December 31, 2016 and requires preparing a classified balance sheet with amounts to be deducted indicated by a minus sign.

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    ACCT 438 Homework 1

    Uploaded by

    umar
    217 views2 pages
    The document contains three accounting problems involving transactions, an incorrect income statement, and a trial balance. 1) The first problem lists transactions for Wainwright Corporation during March 2016 involving the issuance of stock, purchase of equipment and inventory, sales, expenses, and payments. 2) The second problem identifies an incorrect income statement prepared by Axel Corporation and requires preparing a multiple-step income statement applying GAAP principles and calculating EPS. 3) The third problem provides a trial balance for Jackson Corporation at December 31, 2016 and requires preparing a classified balance sheet with amounts to be deducted indicated by a minus sign.

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    The document contains three accounting problems involving transactions, an incorrect income statement, and a trial balance. 1) The first problem lists transactions for Wainwright Corporation during March 2016 involving the issuance of stock, purchase of equipment and inventory, sales, expenses, and payments. 2) The second problem identifies an incorrect income statement prepared by Axel Corporation and requires preparing a multiple-step income statement applying GAAP principles and calculating EPS. 3) The third problem provides a trial balance for Jackson Corporation at December 31, 2016 and requires preparing a classified balance sheet with amounts to be deducted indicated by a minus sign.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    217 views2 pages

    ACCT 438 Homework 1

    Uploaded by

    umar
    The document contains three accounting problems involving transactions, an incorrect income statement, and a trial balance. 1) The first problem lists transactions for Wainwright Corporation during March 2016 involving the issuance of stock, purchase of equipment and inventory, sales, expenses, and payments. 2) The second problem identifies an incorrect income statement prepared by Axel Corporation and requires preparing a multiple-step income statement applying GAAP principles and calculating EPS. 3) The third problem provides a trial balance for Jackson Corporation at December 31, 2016 and requires preparing a classified balance sheet with amounts to be deducted indicated by a minus sign.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    ACCT 438 Homework 1

    1. The following transactions occurred during March 2016 for the Wainwright Corporation. The
    company owns and operates a wholesale warehouse.

    1. Issued 28,000 shares of common stock in exchange for $280,000 in cash.


    2. Purchased equipment at a cost of $36,000. $9,000 cash was paid and a note payable was signed for
    the balance owed.
    3. Purchased inventory on account at a cost of $86,000. The company uses the perpetual inventory
    system.
    4. Credit sales for the month totaled $110,000. The cost of the goods sold was $66,000.
    5. Paid $4,000 in rent on the warehouse building for the month of March.
    6. Paid $5,800 to an insurance company for fire and liability insurance for a one-year period beginning
    April 1, 2016.
    7. Paid $66,000 on account for the merchandise purchased in 3.
    8. Collected $49,500 from customers on account.
    9. Recorded depreciation expense of $900 for the month on the equipment.

    Required:
    Analyze each transaction and show the effect of each on the accounting equation for a corporation, and
    make related journal entries.

    2. The following incorrect income statement was prepared by the accountant of the Axel
    Corporation:

    AXEL CORPORATION
    Income Statement
    For the Year Ended December 31, 2016
    Revenues and gains:
    Sales $ 720,000
    Interest and dividends 45,000
    Gain on sale of investments 92,000

    Total revenues and gains 857,000


    Expenses and losses:
    Cost of goods sold $ 390,000
    Selling expenses 72,000
    Administrative expenses 92,000
    Interest 39,000
    Restructuring costs 68,000
    Income taxes 78,400

    Total expenses and losses 739,400

    Net Income $ 117,600

    Earnings per share $ 1.18


    Required:
    Prepare a multiple-step income statement for 2016 applying generally accepted accounting principles.
    The income tax rate is 40%. (Amounts to be deducted should be indicated with a minus
    sign. Round EPS answers to 2 decimal places.)

    3. The following is a December 31, 2016, post-closing trial balance for the Jackson Corporation.

    Account Title Debits Credits


    Cash 59,000
    Accounts receivable 53,000
    Inventories 94,000
    Prepaid rent 35,000
    Marketable securities (short term) 29,000
    Machinery 240,000
    Accumulated depreciation—
    30,000
    machinery
    Patent (net of amortization) 98,000
    Accounts payable 17,500
    Wages payable 13,500
    Taxes payable 51,000
    Bonds payable (due in 10 years) 260,000
    Common stock 170,000
    Retained earnings 66,000

    Totals 608,000 608,000

    Required:
    Prepare a classified balance sheet for Jackson Corporation at December 31, 2016. (Amounts to be
    deducted should be indicated by a minus sign.)

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