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Norma Smith is the controller of Baylor Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year.
a. On December 20, 2020, a former employee filed a legal action against Baylor for $100,000 for wrong- ful dismissal, Management believes the action to be frivolous and without merit. The likelihood of payment to the employee is remote.
b. Bonuses to key employees based on net income for 2020 are estimated to be$150,000.
c. On December 1, 2020, the company borrowed $600,000 at 8% per year. Interest is paid quarterly.
d. Accounts receivable at December 31, 2020, is$10,000,000. An aging analysis indicates that Baylor's expense provision for doubtful accounts is estimated to be 3% of the receivables balance.
e. On December 15, 2020, the company declared a $2.00 per share dividend on the 40,000 shares of common stock outstanding, to be paid on January 5, 2021.
f. During the year, customer advances of$160,000 were received; $50,000 of this amount was earned by December 31, 2020.
For each item above, indicate the dollar amount to be reported as a current liability. If a liability is not reported, explain why.
Download an Excel template for this problem online in MyAccountingLab or at http://www.pearsonhighered.com/Horngren. Echo Lake Corporation started operations on November 1, 2018. Nine transactions occur during November. Financial statements are prepared at the end of the month.
- Use Excel to prepare a transaction analysis of the nine transactions. Use the blue shaded areas for inputs.
- a. For each transaction, record the amount (either an increase or decrease) under the correct account. Enter only non-zero amounts. If an account is not affected by the transaction, leave the amount blank. Be sure to use a minus sign (-) if the amount is a decrease.
- b. The row totals will be calculated automatically.
- c. The accounting equation (Assets = Liabilities + Equity) should remain in balance after each transaction. The accounting equation is calculated automatically to the right of the transaction table.
- Prepare the income statement, statement of retained earnings, balance sheet, and statement of cash flows for the company. Each financial statement appears on a separate worksheet tab. Fill in the blue shaded areas using a formula that references the account balances at the end of the month in the Transaction Analysis tab.