Your required tasks are as follows On the designated workshe

Your required tasks are as follows:

On the designated worksheet, prepare in journal entry form the adjusting journal entries for the following items. (Round all numbers to the nearest dollar)

Computers R Us took out a 9 month, 7%, $   25,000 note on October 1, 2014 with interest and principal to be paid on maturity.

On November 1, 2014, Computers R Us rented some storage space at a rate of $800 per month. On that date Computers R Us recorded Rent Expense for five months rent paid in advance.

Computers R Us purchased $6,550 of office supplies during the year and the asset office supplies account was increased. A count of the supplies on hand December 31, 2014, indicates a balance of $1,650.

$17,500 of store supplies were purchased during the year and were immediately expensed. A count of the store supplies on hand December 31, 2014, indicates a balance of $2,800.

On April 1, 2014 a 24-month insurance policy was purchased for $15,000.

On July 1, 2014, Computers R Us collected 40,000 for consulting services to be performed from July 1, 2014 to February 28, 2014. The company credited the revenue account when paid.

On September 1, 2014, Computers R Us issued a 5-month note receivable to Morerams Inc. at an annual interest rate of 8%. Principle and interest will be paid at the end of the 5-months. The note was recorded in Notes Receivable and is the only note outstanding.

The company rented idle office space to Bytes and Bits on February 1, 2014, at a rate of $1000 per month. On this date Computers R Us credited Unearned Rent Revenue for one year of rent received in advance.

Computers R Us is open seven days a week and has a daily payroll of $2500. Employees are paid every Friday, December 31 is a Wednesday. 40% of the payroll is for office employees, 60% of payroll is for sales employees

Depreciation for store equipment is based on the following:

Straight Line Depreciation

Store equipment – Assets were held for the entire year; Residual Value = $10,000; Service life is estimated to be 10 years.                           

Depreciation for office equipment is based on the following:

Double-Declining Method

Office equipment – Assets were purchased May 1; Residual Value = $5,000; Service life is estimated to be 5 years.

Based on past experience, Computers R Us calculates bad debt expense at 2% of net sales for the year.

Utilities expenses of $2,500 remained unpaid. 40% of the utilities expense is for office and 60% of utilities expense is for the       store

After the above adjusting entries are entered on the adjustment worksheet (TAB 2), the amounts should be linked to the adjustments column of the worksheet (TAB 1). Your adjustment amounts should be a formula so if you change the debit/credit amount on the adjustments worksheet (TAB 2), the column amount will automatically change. TAB 2 is the only worksheet that has hard coded numbers. Formulas must be implemented in the rest of the workbook when a numerical amount is needed.

Complete the adjusted columns by the use of the formula. Think about the best way to do this. Your last two columns should never contain constant numbers but will include formulas only. Maximum points are given for using a correct “if” statement. Once an “if” statement has been created, you must be able to drag it from the top of the column, down.

Prepare a multiple-step income statement on the proper worksheet. Your Income Statement should be in good form (proper titles, etc., use examples from your book) and well formatted. Do your best designating between selling and administrative expenses. You should use formulas in all cells, not constant numbers. (That means your income statement should be linked to the adjusted numbers on your worksheet.)

Prepare a Statement of Retained Earnings on the proper worksheet. Your Statement should be formatted. You should use formulas in all cells, not constant numbers.

                                                  

6.   Prepare a Classified Balance Sheet on the proper worksheet as of 12/31/14. Your Statement should be formatted. You should use formulas in all cells, not constant     numbers.

7.   On the designated worksheet, prepare in journal entry form the closing entries for Computers R Us at the end of 12/31/14.  

Solution

Date Accounts Debit Credit 1-Oct cash    25,000 notes payable    25,000 1-Nov rent in advance      4,000             -   cash      4,000             -   1-Nov office supplies      6,550             -   cash      6,550 bal: 1650             -   Supplies expense    17,500             -   cash    17,500 bal: 2800             -               -   1-Apr prepaid insurance    15,000             -   cash    15,000             -   1-Jul cash    40,000             -   consulting fee- revenue    40,000             -   1-Sep notes receivable             -   cash             -               -   1-Feb cash    12,000             -   unearned rent    12,000             -   office salaries expense      1,000             -   sales salaries expense      1,500 cash      2,500             -   depreciation             -   accumulated depreciation- store eqipment             -   accumulated depreciation- office equip             -               -   baddebts          800             -   provision for doubtful debts          800             -   utilies expense      2,500             -   utilies expense payable      2,500