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Question No 1: Journal Entries

The document contains journal entries recording the issuance of bonds payable at a premium, income statements and balance sheets for Stark Company, calculations of inventory turnover, and financial statements including an income statement, balance sheet, and statement of changes in equity for an unnamed company. Stark Company reports $39,380 in net income for the year and $89,380 in retained earnings. The statement of changes in equity shows the company opening with $2,000 in share capital and generating $6,000 in net income for the year.

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76 views3 pages

Question No 1: Journal Entries

The document contains journal entries recording the issuance of bonds payable at a premium, income statements and balance sheets for Stark Company, calculations of inventory turnover, and financial statements including an income statement, balance sheet, and statement of changes in equity for an unnamed company. Stark Company reports $39,380 in net income for the year and $89,380 in retained earnings. The statement of changes in equity shows the company opening with $2,000 in share capital and generating $6,000 in net income for the year.

Uploaded by

MUKHTALIF
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Question no 1:

JOURNAL ENTRIES

Diary Entry to record offer of bonds

Date Account Titles and Explanation Debit C

June 1 2017 Cash $2,62,650

Bond payable $2,55,000

Premium on Bond Payable $7,650

(Recording of issue of 6% bond payable at103)

Money got a bargain of securities = $2,55,000*

Question no 2:

STARK COMPANY

STARK COMPANY
INCOME STATEMENT
FOR YEAR ENDED DECEMBER 31
Revenue:
Service Revenue
Expenses:
Utilities Expense 2100
Interest Expense 600
Wages Expense 8300
Insurance Expense 2600
Supplies Expense 360
Depreciation Expense-building 6000
Total Expense
Net Expense

STARK COMPANY
Statement of retained earnings
For Year Ended December 31
Retained earnings, Dec 31 prior year end 56,000
Add income 39,380
96,380
Less Dividends -7,000
Retained earnings, Dec 31 current year end 89,380
STARK COMPANY
Balance Sheet
December 31
Assets
Cash 26,000
Prepaid insurance 3,300
Account receivable 5,600
Supplies 1,200
Buildings 120,000
Less; Accumulated depreciation- Building -23,000 97,000
Total Assets 133,100
Liabilities
Notes payable 19,000
Accounts payable 5,500
Wages payable 1,200
Interest payable 420
Unearned revenue 1,200
Total liabilities 27,320
Equity
Common stocks 16,400
Retained earnings 89,380
Total liabilities 105,780
Total liabilities and equity 133,100

Question no 3:

INVENTORY TURNOVER

Stock turnover= Cost of goods sold/average inventory =$32,352,920/$5,329,830=6.070

Here, since the beginning stock isn’t given, we are thinking inventory referenced yet to be
determined sheet as average inventory

Question no 4:

STATEMENT OF CHANGES IN EQUITY

Income statement
Service Revenue $20,000

Expenses
Insurance Expense $1,500
Misc. Expense $2,500
Office Supplies esp. $1,000
Wages Expense $9,000

Net Income $6,000

Balance Sheet
Assets Amount Liabilities & Amount
Shareholder’s equity
Accounts $4,000 Account payable $5,000
Receivable
Cash $1000 Share capital $2,000 13000-
5000-
6000
Equipment $8000 Current year profit $6,000

$13000 $13,000

Statement of changes
in Equity
Share Capital Retained earning Total
Opening Balance $- $2,000
Net Income $- $6,000 $6,000
$2,000 $6,000 $8,000

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