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Zeidman Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet (work sheet) for Zeidman Security Services Co.

Zeidman Security Services Co.End-of-Period Spreadsheet (Work sheet)For the Year Ended July 31,2012\begin{array}{c} \textbf{Zeidman Security Services Co.}\\ \textbf{End-of-Period Spreadsheet (Work sheet)}\\ \textbf{For the Year Ended July 31,2012}\\ \end{array}

AdjustedIncomeBalanceTrial BalanceAdjustmentTrial balanceAccount TitleDr.Cr.Dr.Cr.Dr.Cr.Cash12Accounts Receivable89Supplies3Prepaid Insurance4Land100Equipment40Accum. Depr.- Equipment8Accounts Payable36Wages Payable1Alex Zeidman, Capital170Alex Zeidman, Drawing8Fees Earned99Wages Expense21Rent Expense12Insurance Expense8Utilities Expense6Supplies Expense5Depreciation Expense4Miscellaneous Expense2314314Net income (loss)\begin{array}{lccc} \hline&\textbf{Adjusted}&\textbf{Income}&\textbf{Balance}\\ &\underline{\textbf{Trial Balance}}&\underline{\textbf{Adjustment}}&\underline{\textbf{Trial balance}}\\ \textbf{Account Title}&\textbf{Dr.}\quad\quad\quad\textbf{Cr.}&\textbf{Dr.}\quad\quad\quad\textbf{Cr.}&\textbf{Dr.}\quad\quad\quad\textbf{Cr.} \\ \hline\text{Cash}&12\quad\quad\quad\quad\quad\\ \text{Accounts Receivable}&89\quad\quad\quad\quad\quad\\ \text{Supplies}&3\quad\quad\quad\quad\quad\\ \text{Prepaid Insurance}&4\quad\quad\quad\quad\quad\\ \text{Land}&100\quad\quad\quad\quad\quad\\ \text{Equipment}&40\quad\quad\quad\quad\quad\\ \text{Accum. Depr.- Equipment}&8\\ \text{Accounts Payable}&36\\ \text{Wages Payable}&1\\ \text{Alex Zeidman, Capital}&170\\ \text{Alex Zeidman, Drawing}&8\quad\quad\quad\quad\quad\\ \text{Fees Earned}&99\\ \text{Wages Expense}&21\quad\quad\quad\quad\quad\\ \text{Rent Expense}&12\quad\quad\quad\quad\quad\\ \text{Insurance Expense}&8\quad\quad\quad\quad\quad\\ \text{Utilities Expense}&6\quad\quad\quad\quad\quad\\ \text{Supplies Expense}&5\quad\quad\quad\quad\quad\\ \text{Depreciation Expense}&4\quad\quad\quad\quad\quad\\ \text{Miscellaneous Expense}&2\quad\quad\quad\quad\quad\\ \hline &314\quad\quad\quad314\\ \hline\hline \text{Net income (loss)} \end{array}

prepare an income statement, statement of owner’s equity, and balance sheet for Zeidman Security Services Co.

Armstrong Chemical began operations in January. The company manufactures an acrylic car wax called Tough-Coat. The following standard cost estimates were developed several months before the company began operations, based on an estimated production of 1,000,0001,000,000 units (pints):

Material X1\mathrm{X}-1 ( 1 ounce) $1.00\$1.00
Material X2\mathrm{X}-2 ( 1 pound) 0.5
Direct labor 0.8
Manufacturing overhead ($1,400,000÷1,000,000(\$ 1,400,000 \div 1,000,000 units) 1.4
Total estimated standard cost per pint $3.70\$3.70

During the year, 1,000,000 pints of Tough-Coat were actually produced, of which 900,000 were sold. Actual costs incurred during the year were:

Material X1X-1 purchased, 1,200,0001,200,000 ounces @$0.70@ \$ 0.70 $840,000\$840,000
Material X2X-2 purchased, 1,150,0001,150,000 pounds @$0.50@ \$ 0.50 575,000
Direct labor 880,000
Manufacturing overhead 1,400,000
Total production cost incurred during the year $3,695,000\$3,695,000

The company's inventories at the end of the year consisted of the following, with the Finished Goods inventory stated at standard cost:

Direct materials:
Material X-1: 200,000 ounces @ $0.70 $140,000\$140,000
Material X-2: 100,000 pounds @$0.50@ \$ 0.50 50,000 $190,000\$190,000
Finished Goods:
Tough-Coat: 100,000 pints @$3.70@ \$ 3.70 standard cost 370,000
Total inventory at December 31 560,000

The independent certified public accountant who has been engaged to audit the company's financial statements wants to adjust the valuation of Finished Goods inventory to "a revised standard cost" that would take into account the favorable price variance on material X1($0.30\mathrm{X}-1(\$ 0.30 per ounce) and the 10 percent wage increase early in the year. (An unfavorable quantity variance on material X-2 was caused by spoilage in production; the CPA feels no adjustment to the standard should be made for this type of item.)

The president of the company objects on the following grounds: "Such a revision is not necessary because the cost of material X1\mathrm{X}-1 already shows signs of going up and the wage increase was not warranted because the productivity of workers did not increase one bit. Furthermore, if we revise our inventory figure of $560,000\$ 560,000, our operating income will be reduced from the current level of $50,000\$ 50,000." You are called in by the president to help resolve the controversy.


a. Do you agree with the president that revision of the $3.70\$ 3.70 standard cost figure is not necessary?


The trial balance of Customer Choice Wholesale Company contained the accounts shown at December 31, the end of the company’s fiscal year.

CUSTOMER CHOICE WHOLESALE COMPANYTrial BalanceDecember 31, 2014\begin{array}{c} \textbf{CUSTOMER CHOICE WHOLESALE COMPANY}\\ \textbf{Trial Balance}\\ \textbf{December 31, 2014}\\ \end{array}

DebitCreditCash$31,400Accounts Receivable37,600Inventory70,000Land92,000Buildings200,000Accumulated Depreciation—Buildings$60,000Equipment83,500Accumulated Depreciation—Equipment40,500Notes Payable54,700Accounts Payable17,500Common Stock160,000Retained Earnings67,200Dividends10,000Sales Revenue922,100Sales Discounts6,000Cost of Goods Sold709,900Salaries and Wages Expense51,300Utilities Expense11,400Maintenance and Repairs Expense8,900Advertising Expense5,200Insurance Expense4,800$1,322,000$1,322,000\begin{array}{lcc} &\underline{\textbf{Debit}}&\underline{\textbf{Credit}}\\[3pt] \text{Cash}&\text{\$\hspace{17pt}31,400}\\ \text{Accounts Receivable}&\text{\hspace{22pt}37,600}\\ \text{Inventory}&\text{\hspace{22pt}70,000}\\ \text{Land}&\text{\hspace{22pt}92,000}\\ \text{Buildings}&\text{\hspace{17pt}200,000}\\ \text{Accumulated Depreciation—Buildings}&&\text{\$\hspace{17pt}60,000}\\ \text{Equipment}&\text{\hspace{22pt}83,500}\\ \text{Accumulated Depreciation—Equipment}&&\text{\hspace{22pt}40,500}\\ \text{Notes Payable}&&\text{\hspace{22pt}54,700}\\ \text{Accounts Payable}&&\text{\hspace{22pt}17,500}\\ \text{Common Stock}&&\text{\hspace{17pt}160,000}\\ \text{Retained Earnings}&&\text{\hspace{22pt}67,200}\\ \text{Dividends}&\text{\hspace{22pt}10,000}\\ \text{Sales Revenue}&&\text{\hspace{17pt}922,100}\\ \text{Sales Discounts}&\text{\hspace{27pt}6,000}\\ \text{Cost of Goods Sold}&\text{\hspace{17pt}709,900}\\ \text{Salaries and Wages Expense}&\text{\hspace{22pt}51,300}\\ \text{Utilities Expense}&\text{\hspace{22pt}11,400}\\ \text{Maintenance and Repairs Expense}&\text{\hspace{27pt}8,900}\\ \text{Advertising Expense}&\text{\hspace{27pt}5,200}\\ \text{Insurance Expense}&\underline{\text{\hspace{27pt}4,800}}&\underline{\hspace{50pt}}\\ &\underline{\underline{\text{\$\hspace{1pt}}1,322,000}}&\underline{\underline{\text{\$\hspace{1pt}}1,322,000}}\\ \end{array}

Adjustment data:

 1. Depreciation is $8,000 on buildings and$7,000 on equipment. (Both are operating expenses.)
 2. Interest of $4,500 is due and unpaid on notes payable at December 31.
 3. Income tax due and unpaid at December 31 is$24,000.

Other data: $15,000 of the notes payable are payable next year.


(d) Prepare a multiple-step income statement and a retained earnings statement for the year, and a classified balance sheet at December 31, 2014.


Answered 9 months ago
Answered 9 months ago
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In this exercise, we will prepare the multiple-step income statement.

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