Posted: May 8th, 2023

Jones Widget Company (JWC) incorporated at the beginning of 2014. Below is the post closing trial balance as of

Name ___________________________________ BUA 201 Spring 2016 Project 3 (70 pts) #___________BUA 201 – Spring 2016Final Project (70 pts)Dr. Henri AkonoNotice: You are required to submit your solution in hardcopy, handwritten form in class on thedue date: Thursday May 5th, 2015.Score: ________________________________________________1Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70 pts) #___________"On my honor, as a student of The University of Maine, I will uphold the highest standardsof academic integrity and personal accountability for the advancement of the dignity andthe reputation of our university and myself.”Student Signature _____________________________________________1Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70 pts) #___________General InformationIntroductionJones Widget Company (JWC) incorporated at the beginning of 2014. Below is the post closing trial balance as of12/31/14.Account TitleBalanceCash10,700Accounts Receivable12,300Allowance for Doubtful Account(685)Inventory12,300Prepaid Rent1,500Equipment25,000Accumulated Depreciation-Equipment(2,400)Total assets58,715Sales Tax payable800FICA Taxes Payable600FIT (i.e., Federal Income) Taxes Payable500Wages Payable1,600Unearned Revenue6,500Interest Payable440Notes Payable22,000Common Stock23,100Retained Earning3,175Total liabilities + stockholders’ equity 58,7151Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________Additional Information:JWC establishes a policy that it will sell inventory at $130 per unit. Sales taxes are 5%.JWC will use the FIFO method and record COGS on a perpetual basis.Employee wages are $4,000 per month, the federal income taxes (FIT) withheld are $500 and the FICAtaxes are $300 per month payable on the first (1st) and sixteenth (16th) of the month.The Beginning inventory of $12,300 consists of 200 units.The Prepaid Rent balance is for the month of January.The equipment was purchased on July 1, 2014. It has a residual value of $1,000 and an expected life offive years. It is being depreciated using the straight line method.Unearned Revenue is for 50 units ordered by two customers in late December. One order will be filledin January, the remainder in early February.The Notes payable represents a $22,000 bank loan received on November 1 at 12% annual interest.State unemployment taxes amount to $200 and Federal unemployment taxes amount to $250 permonth.Common stock includes 4,260 shares at $5 par value.Round all transactions to the nearest dollar.1Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________Below are transactions for January 2015Jan 1: A $100,000 6% six year bond is issued at 105.074. The market rate at issue of the bond is 5%.Jan 1: A truck (record as Truck) is purchased for $10,000 cash. It is estimated the truck will be used for50,000 miles and will have no salvage value. The truck will be depreciated using the units-ofproduction method.Jan 2: Machinery (record as Furniture) is purchased for $120,000 cash. The machinery will be used for 8years, has a salvage value of $8,000, and will be depreciated using the double-declining balancemethod.Jan 3: Paid December 31 payroll (“wages payable”) on Jan 1.Jan 4: Payroll taxes withheld (FIT payable & FICA payable) during December are remitted to the IRS.Jan 5: A $500 customer account is written off as uncollectible.Jan 6: Sales on account of 180 units of inventory occurred during January.Jan 8: Sales taxes collected in December 2014 are remitted to the local tax collector.Jan 10: An additional 70 units of inventory were purchased on account for $4,410.Jan 11: Sold 50 units of merchandise inventory for cash totaling $6,825, which includes 5% sales taxes.Jan 12: The equipment purchased in 2013 for $25,000 is sold for $24,500. No additional depreciation isrecorded for January.Jan 14: Having sold the equipment, JWC paid off the equipment loan received on November 1 in full.The amount paid was $22,550, which included interest through Jan 14.Jan 15: A portion of the advance order from December (30 units) is delivered. There is no sales tax onthis order.Jan 16: (a) Paid employee payroll (in cash).Jan 16: (b) Record the employer’s payroll tax expense.Jan 17: Collections from sales on account totaled $5,000.Jan 18: JWC issued 2,500 shares of $3.60 par value common stock for cash at $8 per share.Jan 19: JWC issued 300 shares of $12 par-value preferred stock for cash at $102 per share.Jan 21: JWC Purchased 4,000 shares of its common stock for the treasury at a cost of $16,000.Jan 25: JWC issued a second bond with a face value of $250,000, a stated rate of 10% (used to calculateinterest payments), with a maturity of 4 years. At the time of issuance, the market rate (used tocalculate the present values) for bonds of similar characteristics was 12%.Jan 28: Declared and paid a $0.50 per share cash dividend on 2,400 shares of $5 par value.Jan 30: Purchased a small company and recorded goodwill for $150,000. (Indefinite life – no record ofamortization expense)1Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________Below are transactions requiring adjusting entries for January 2015AJE 1: Record depreciation expense for the truck (Truck) purchased on Jan 1 using the units-of-activitymethod. During January, the truck is driven 800 miles.AJE 2: Record the depreciation expense for the machinery (Furniture) purchased on Jan 1.AJE 3: Record January rent expired.AJE 4: Accrue January 28 payroll, which will be paid on February 1 and the related payroll tax expense.AJE 5: Record the accrual of interest expense on the bonds issued on Jan 1.AJE 6: Record the accrual of interest expense on the bonds issued on Jan 25.AJE 7: Record the accrual of bad debt expense assuming that $941 is the estimate of uncollectiblereceivables from the aging schedule.AJE 8: Record the accrual of income tax expense assuming that the tax rate is 25% of income before taxes.1Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________Special Note:The chart of accounts for JWC, Inc. includes the followingCASHACCOUNTS RECEIVABLEALLOWANCE FOR DOUBTFUL ACCOUTNSINVENTORYPREPAID RENTEQUIPMENTACCUMMULATED DEPRECIATION_EQUIPMENTTRUCKACCUMMULATED DEPRECIATION_TRUCKFURNITUREACCUMMULATED DEPRECIATION_ FURNITUREGOODWILLACCOUNTS PAYABLESALES TAX PAYABLEWAGES PAYABLEFICA TAX PAYABLEFIT TAX PAYABLEUNEARNED REVENUEINTEREST PAYABLEINCOME TAX PAYABLESTATE UNEMPLOYMENT TAX PAYABLEFEDERAL UNEMPLOYMENT TAX PAYABLENOTES PAYABLEBONDS PAYABLEPREMIUM ON BONDS PAYABLEDISCOUNT ON BONDS PAYABLEDIVIDENDSCOMMON STOCKAPIC-CSPREFERRED STOCKAPIC-PSTREASURY STOCKRETAINED EARNINGSSALES REVENUECOGSWAGES EXPENSERENT EXPENSEPAYROLL TAX EXPENSEDEPRECIATION EXPENSEBAD DEBT EXPENSEGAIN ON DISPOSALINTEREST EXPENSEMaine Business School_Principles of Financial Accounting | Project #3_Spring 20161Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________INCOME TAX EXPENSE1Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________REQUIRED 1: Prepare the debit section of the adjusted trial balance. (17 PTS)JWC, Inc.Trial balanceFor the period January 1 – January 31, 2014ACCOUNT NAMEDEBIT AMOUNTTotal debit = $487,191ACCOUNT NAMECREDIT AMOUNTTotal credit = $487,1911Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________REQUIRED 2: Prepare the income statement using the multiple-step format. (15PTS)JWC, Inc.(Multiple-step) Income StatementFor the period January 1 – January 31, 2014SALES REVENUELess:GROSS PROFITLESS: OPERATING EXPENSESTotal Operating ExpensesOPERATING INCOMEADD: Other Revenues & GainsLESS: Other Expenses & LossesINCOME BEFORE TAXESNET INCOMEREQUIRED 3: Prepare the Statement of Retained Earnings. (4PTS)JWC, Inc.Statement of Retained EarningsFor the period January 1 – January 31, 2015RETAINED EARNINGS, BEGINNING OF PERIODADD:1LESS:RETAINED EARNINGS, END OF PERIODREQUIRED 4: Prepare a classified balance sheet. (34 PTS)Maine Business School_Principles of Financial Accounting | Project #3_Spring 2016Name ___________________________________ BUA 201 Spring 2016 Project 3 (70pts) # ___________JWC, Inc.Classified Balance Sheetas of January 31, 2015ASSETS (13 pts)CURRENT ASSETS (CL)LIABILITIES (13 pts)CURRENT LIABILITIES (CL)Total CATotal CLPLANT ASSETS (PPE)LONG-TERM LIABILITIES (LT)Total LTTotal PPETOTAL LIABILITIESINTANGIBLE ASSETS (IA)STOCKHOLDERS’ EQUITY (SE)Total IATotal SETOTAL ASSETS (the correctvalue is = $416,256)TOTAL LIABILITIES& STOCKHOLDERS’ EQUITYMaine Business School_Principles of Financial Accounting | Project #3_Spring 20161

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