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Ch10 Problem

The trial balance provided is for Hassellhouf Company as of December 31, 2020. It lists various asset, liability, capital, revenue and expense accounts. There are also several unrecorded transactions that need to be journalized, including the purchase and sale of equipment, the sale of inventory on account, an estimate of uncollectible accounts, interest on a note receivable, prepaid insurance, and depreciation calculations. Journal entries need to be prepared for these transactions and an updated trial balance, income statement, owner's equity statement, and classified balance sheet prepared.

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736 views2 pages

Ch10 Problem

The trial balance provided is for Hassellhouf Company as of December 31, 2020. It lists various asset, liability, capital, revenue and expense accounts. There are also several unrecorded transactions that need to be journalized, including the purchase and sale of equipment, the sale of inventory on account, an estimate of uncollectible accounts, interest on a note receivable, prepaid insurance, and depreciation calculations. Journal entries need to be prepared for these transactions and an updated trial balance, income statement, owner's equity statement, and classified balance sheet prepared.

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palashndc
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ACR10 Hassellhouf Company’s trial balance at December 31, 2020, is as follows.

All 2020 transactions


have been recorded except for the items described following the trial balance.
Debit Credit
Cash $ 28,000
Accounts Receivable 36,800
Notes Receivable 10,000
Interest Receivable –0–
Inventory 36,200
Prepaid Insurance 3,600
Land 20,000
Buildings 150,000
Equipment 60,000
Patents 9,000
Allowance for Doubtful Accounts $ 500
Accumulated Depreciation—Buildings 50,000
Accumulated Depreciation—Equipment 24,000
Accounts Payable 27,300
Salaries and Wages Payable –0–
Unearned Rent Revenue 6,000
Notes Payable (due in 2021) 11,000
Interest Payable –0–
Notes Payable (due after 2021) 30,000
Owner’s Capital 113,600
Owner’s Drawings 12,000
Sales Revenue 905,000
Interest Revenue –0–
Rent Revenue –0–
Gain on Disposal of Plant Assets –0–
Bad Debt Expense –0–
Cost of Goods Sold 630,000
Depreciation Expense –0–
Insurance Expense –0–
Interest Expense –0–
Other Operating Expenses 61,800
Amortization Expense –0–
Salaries and Wages Expense 110,000
Total $1,167,400 $1,167,400

Unrecorded transactions:
1. On May 1, 2020, Hassellhouf purchased equipment for $21,200 plus sales taxes of $1,600 (all paid
in cash).
2. On July 1, 2020, Hassellhouf sold for $3,500 equipment which originally cost $5,000. Accumulated
depreciation on this equipment at January 1, 2020, was $1,800; 2020 depreciation prior to the sale
of the equipment was $450.
3. On December 31, 2020, Hassellhouf sold on account $9,000 of inventory that cost $6,300.
4. Hassellhouf estimates that uncollectible accounts receivable at year-end is $3,500.
5. The note receivable is a one-year, 8% note dated April 1, 2020. No interest has been recorded.
6. The balance in prepaid insurance represents payment of a $3,600 6-month premium on September 1,
2020.
7. The building is being depreciated using the straight-line method over 30 years. The salvage value is
$30,000.
8. The equipment owned prior to this year is being depreciated using the straight-line method over
5 years. The salvage value is 10% of cost.
9. The equipment purchased on May 1, 2020, is being depreciated using the straight-line method over
5 years, with a salvage value of $1,800.
10. The patent was acquired on January 1, 2020, and has a useful life of 10 years from that date.
11. Unpaid salaries and wages at December 31, 2020, total $5,200.
12. The unearned rent revenue of $6,000 was received on December 1, 2020, for 3 months’ rent.
13. Both the short-term and long-term notes payable are dated January 1, 2020, and carry a 9% interest
rate. All interest is payable in the next 12 months.
10-44 CH A PT ER 10 Plant Assets, Natural Resources, and Intangible Assets

Instructions
a. Prepare journal entries for the transactions listed above.
b. Totals
b. Prepare an updated December 31, 2020, trial balance.
$1,205,040
d. Total assets c. Prepare a 2020 income statement and an owner’s equity statement.
$259,200 d. Prepare a December 31, 2020, classified balance sheet.

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