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ACC205 WEEK 4 WITH WORKING IN WORD
a. Prepayments by customers
Greenland Enterprises began a new magazine in the fourth quarter of 19X2. Annual subscriptions, which cost $18 each, were sold as follows:
Month Number of Subscriptions Sold October 400 November 700 December 1,000
If subscriptions begin (and magazines are sent) in the month of sale:
Present the necessary journal entry to record the magazine subscriptions sold during the fourth quarter.
Determine how much subscription revenue Greenland earned by the end of 19X2.
Compute Greenland's liability to subscribers at the end of 19X2.
b. Notes payable
Sentry Security Systems purchased $72,000 of office equipment on April 1, 19X3, by signing a three-year, 12% note payable to Sharp, Inc. One-third of the principal, along with interest on the outstanding balance, is payable each April 1 until maturity. (The first payment is due in 19X4.)
Fill in the following table to reflect Sentry's liabilities, assuming a March 31 year-end.
Assuming that interest is properly recorded at the end of each year, present the proper journal entry to record the last payment on April 1, 19X6.
c. Notes payable
Red Bank Enterprises was involved in the following transactions during the fiscal year ended October 31:
Prepare journal entries to record the transactions.
Prepare adjusting entries on October 31 to record accrued interest.
Prepare the current liability section of Red Bank's balance sheet as of October 31. Assume the Accounts Payable account totals $203,600 on this date.
d. Partner investments; journal entries
The LP partnership was formed on January 1, 19X7, by investments from Bill Levy and Marv Parcells. Levy contributed $30,000 cash and $80,000 of land. Parcells contributed various assets from a business that he had operated over the past five years. A balance sheet from that business disclosed the following:
Accounts receivable $ 27,000
Allowance for uncollectibles (3,200)
Accumulated depreciation (24,000)
The partners confirmed that the allowance for uncollectible accounts should be decreased by $600. In addition, an independent appraisal determined that fair market values of the land and equipment on January 1 were $125,000 and $35,000, respectively.
Prepare the journal entries needed to record the investments of Levy and Parcells.
e. Income distribution: Different arrangements
Frank, Gatti, and Hogan recently invested 530,000 each and formed the Apex partnership. During the first year of operation, the business generated a net income of $39,000. Determine the proper division of income among the partners for the following independent cases: Income is divided on the basis of a ratio of the beginning capital investments. Partners are allowed 12% interest on their investments; the remaining profits and losses are allocated on a 6 :1 :3 basis. Frank and Hogan each receive salary allowances of $24,000 per year; the remaining profits and losses are shared equally.
f. Investment by partners; financial statements
Abram, Haas, and Tidwell formed a partnership to practice law by combining their respective sole proprietorships. The assets and liabilities contributed to the firm on January 2, 19X4, the date of formation, follow.
Prepare journal entries to record the investments of Abram, Haas Tidwell in the new partnership. Prepare a classified balance sheet for the partnership immediately after the investments are recorded.
The partners share profits and losses equally, and the first year's n income was $66,000. Cash withdrawals of $5,000 were made by Abram,$22,000 by Haas, and $17,000 by Tidwell. Prepare the December 31 19X4, statement of partners' equity for the firm