Question

Accounting Cycle Review 15 a-e
Oriole Corporation’s trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described below.

Debit
Credit
Cash
$25,900
Accounts Receivable
56,000
Inventory
23,300
Land
62,200
Buildings
89,600
Equipment
30,000
Allowance for Doubtful Accounts
$410
Accumulated Depreciation—Buildings
28,000
Accumulated Depreciation—Equipment
15,200
Accounts Payable
19,100
Interest Payable
–0–
Dividends Payable
–0–
Unearned Rent Revenue
7,600
Bonds Payable (10%)
52,000
Common Stock ($10 par)
30,000
Paid-in Capital in Excess of Par—Common Stock
6,000
Preferred Stock ($20 par)
–0–
Paid-in Capital in Excess of Par—Preferred Stock
–0–
Retained Earnings
54,690
Treasury Stock
–0–
Cash Dividends
–0–
Sales Revenue
581,000
Rent Revenue
–0–
Bad Debt Expense
–0–
Interest Expense
–0–
Cost of Goods Sold
405,000
Depreciation Expense
–0–
Other Operating Expenses
36,200
Salaries and Wages Expense
65,800

Total
$794,000
$794,000

Unrecorded transactions and adjustments:

1.       On January 1, 2020, Oriole issued 1,100 shares of $20 par, 6% preferred stock for $25,300.
2.       On January 1, 2020, Oriole also issued 1,000 shares of common stock for $23,000.
3.       Oriole reacquired 290 shares of its common stock on July 1, 2020, for $49 per share.
4.       On December 31, 2020, Oriole declared the annual cash dividend on the preferred stock and a $1.30 per share dividend on the outstanding common stock, all payable on January 15, 2021.
5.       Oriole estimates that uncollectible accounts receivable at year-end is $5,600.
6.       The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,600.
7.       The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $3,000.
8.       The unearned rent was collected on October 1, 2020. It was receipt of 4 months’ rent in advance (October 1, 2020 through January 31, 2021).
9.       The 10% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2020, has not been paid or recorded.

(Ignore income taxes.)

  
Prepare journal entries for the transactions and adjustment listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.
Account Titles and Explanation
Debit
Credit
1.

2.

3.

4.

5.

6.

7.

8.

9.

LINK TO TEXT
LINK TO TEXT

  
Prepare an updated December 31, 2020, trial balance, reflecting the journal entries in part(a).

ORIOLE CORPORATION
Trial Balance

Debit
Credit

$
$

$
$

LINK TO TEXT
LINK TO TEXT

  
Prepare a multiple-step income statement for the year ending December 31, 2020. (List other revenues before other expenses.)

ORIOLE CORPORATION
Income Statement

$

$

$

LINK TO TEXT
LINK TO TEXT

  
Prepare a retained earnings statement for the year ending December 31, 2020. (List items that increase retained earning first.)

ORIOLE CORPORATION
Retained Earnings Statement

$
:

:

$

LINK TO TEXT
LINK TO TEXT

  
Prepare a classified balance sheet as of December 31, 2020. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment. Enter account name only and do not provide descriptive information.)

ORIOLE CORPORATION
Balance Sheet

Assets

$

$
:

:

:

$
Liabilities and Stockholders' Equity

$

$

:

$

Answer 1

ANSWER

1. Journal entries to adjust -

No	Account Titles and Explanation	Debit $	Credit $
1	Cash	25,300
	Preferred Stock ($20 par)		22,000
	Paid-in Capital in Excess of Par—Preferred Stock		3,300
2	Cash	23,000
	Common Stock ($10 par)		10,000
	Paid-in Capital in Excess of Par—Common Stock		13,000
3	Treasury Stock	14,210
	Cash		14,210
4	Cash Dividends	6,143
	Dividends Payable		6,143
	(no. of shares (3000+1000-290) = 3710, dividend= 3710*1.30=4823)+ (Preferred stock dividend= 1100*20*6%= 1320)
5	Bad Debts Expenses	5,190
	Allowance for doubtful account		5,190
6	Depreciation Expense	2,800
	Accumulated Depreciation—Buildings		2,800
7	Depreciation Expense	2,700
	Accumulated Depreciation—Equipment		2,700
8	Unearned Rent Revenue	5,700
	Rent Revenue		5,700
9	Interest Expenses	5,200
	Interest payable		5,200

2. Adjusted Trial Balance

	Debit $	Credit $
Cash	59,990
Accounts Receivable	56,000
Inventory	23,300
Land	62,200
Buildings	89,600
Equipment	30,000
Allowance for Doubtful Accounts		5,600
Accumulated Depreciation—Buildings		30,800
Accumulated Depreciation—Equipment		17,900
Accounts Payable		19,100
Interest Payable		5,200
Dividends Payable		6,143
Unearned Rent Revenue		1,900
Bonds Payable (10%)		52,000
Common Stock ($10 par)		40,000
Paid-in Capital in Excess of Par—Common Stock		19,000
Preferred Stock ($20 par)		22,000
Paid-in Capital in Excess of Par—Preferred Stock		3,300
Retained Earnings		54,690
Treasury Stock	14,210
Cash Dividends	6,143
Sales Revenue		581,000
Rent Revenue		5,700
Bad Debt Expense	5,190
Interest Expense	5,200
Cost of Goods Sold	405,000
Depreciation Expense	5,500
Other Operating Expenses	36,200
Salaries and Wages Expense	65,800
Total	$    864,333	$    864,333

3.

ORIOLE CORPORATION Income Statement
	$	$
Sales		581,000
Cost of Goods Sold		(405,000)
Gross Profit		$        176,000
Operating Expenses
Salaries Expense	65,800
Other Operating Expenses	36,200
Depreciation Expense	5,500
Bad Debts Expense	5,190
Total Operating Expense		(112,690)
Income From Operations		$          63,310
Other Revenues and Gains
Rent Revenue	5,700
		5,700
Other Expenses and Losses
Interest Expense	5,200
		(5,200)
Net Income		$          63,810

4.

Retained Earnings Statement
Retained Earnings, 12/01/2020	$       54,690
Add: Net Income	63,810
	118,500
Less: Dividends	(6,143)
Retained Earnings, 12/31/2020	$     112,357

5.

ORIOLE CORPORATION
Balance Sheet
ASSETS	$	$	$
Current Assets
Cash		59,990
Accounts Receivable	56,000
Allowance for Doubtful Accounts	(5,600)	50,400
Inventory		23,300
Total Current Assets			133,690
Property, Plant, and Equipment
Land		62,200
Building	89,600
Less Accum. Depr.	(30,800)	58,800
Equipment	30,000
Less Accum. Depr.	(17,900)	12,100
Total Property, Plant, and Equip.			133,100
Total Assets			$      266,790
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts Payable		19,100
Interest Payable		5,200
Dividend payable		6,143
Unearned Rent		1,900
Total Current Liabilities			32,343
Long-term Liabilities
Bonds Payable		52,000	52,000
Total Liabilities			84,343
Stockholders’ Equity
Paid in Capital
Common Stock	40,000
Preferred Stock	22,000
Paid-in Capital in Excess of Par-Common stock	19,000
Paid-in Capital in Excess of Par-Preferred stock	3,300	84,300
Retained Earnings		112,357
Subtotal		196,657
Less: Treasury Stock		(14,210)
Total Stockholders’ Equity			182,447
Total Liabilities and Stockholders’ Equity			$      266,790