1 listed below are account balances taken from the adjusted

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Reference no: EM13347969

1) Listed below are account balances taken from the adjusted trial balance of Alpha Inc. as of December 31, 2012.

 

Debit

Credit

Accounts receivable

1,090,500

 

Building

610,000

 

Cash

105,000

 

Accrued payroll expense

 

125,000

Bad debt

10,000

 

Financing receivables

250,000

 

Interest receivable

25,000

 

Amortization

55,000

 

Franchise

150,000

 

Bonds payable

 

375,000

Inventory

106,000

 

Gain on discontinued operations, net of tax

 

400,000

Salaries and benefits

400,000

 

Accumulated other comprehensive loss

30,000

 

Land

280,000

 

Impairment

65,000

 

Patent

25,000

 

Notes receivable

   360,000

 

Accrued income taxes

 

295,000

Cost of goods sold

2,750,000

 

Property loss

100,000

 

Oil Wells

548,000

 

Machinery

100,000

 

Deferred taxes

 

100,000

Treasury bills

45,000

 

Pension payable

 

455,000

Prepaid rent

60,000

 

Inventory loss

20,000

 

Investments

440,000

 

Building loss

30,000

 

Revolving credit line

 

60,000

Furniture and fixtures

200,000

 

Interest payable

 

30,000

Bond sinking fund

150,000

 

Research and development

15,000

 

Supplies

  24,000

 

Gain on sale of investments

 

42,000

Trademark

30,000

 

Accounts payable

 

620,000

Restructuring

135,000

 

Preferred stock

 

300,000

General and administrative

210,000

 

Copyrights

50,000

 

Accumulated depreciation

 

 120,000

Allowance for uncollectible accounts

 

50,000

Marketing and selling

150,000

 

Leasehold improvement

50,000

 

Allowance for obsolete inventory

 

26,000

Income tax

600,000

 

Available for sale equity securities

35,000

 

Dividends payable

 

68,000

Goodwill

50,000

 

Common stock

 

400,000

Interest income

 

15,000

Depreciation

10,000

 

Capital lease

 

140,000

Loss on abandoned assets

50,000

 

Notes payable

 

500,000

Retained earnings

152,000

 

Unearned revenue

 

 120,000

Treasury stock

 50,000

 

Sales

 

5,460,000

Dividend income

 

14,500

Commercial paper

100,000

 

 

9,715,500

9,715,500

The following is additional information with regards to amounts appearing in the trial balance above:

Accounts receivable relate to sales in the normal course of business and are due within 90 days of the related sale.  There is a $125,000 note receivable included in the accounts receivable balance that has a due date of November 30, 2013.

Financing receivable relate to sales in the normal course of business on a revolving credit arrangement.  Installment receivables are non-interest bearing and are expected to be collected at a rate of $8,000 per month.

Interest receivable is related to Company cash and other investments as is expected to be collected in February 2013.

Cash includes $55,000 of highly liquid equity securities designated by the Company board of directors for future building replacement and $20,000 of treasury notes maturing on January 15, 2013.

Investments include $100,000 of trading securities, $200,000 of debt securities with a maturity date of January 15, 2014, and $140,000 of money market funds.

Prepaid rent relates to an advance payment for the period from January 1, 2013 - August 31, 2014.

Notes receivable relate to a loan made to a Company affiliate.  The note requires the affiliate to make payments on the last day of each month beginning on July 31, 2013 equal to principle of $10,000 plus interest at 4%.

Land includes a $140,000 property on which the Company has a factory, $50,000 of land which the Company has a sales office that they believe they will have a gain on but they plan to relocate and sell in 2015, $50,000 of land that is being held for future expansion, and $40,000 of land adjacent to the land held for future expansion that the Company believes it can profit from as its value increases.

Capital lease includes an equipment lease, which requires principal payments of $1,000 per month, beginning on July 1, 2013.

Note payable includes a $200,000 note due December 31, 2013 and a $300,000 note, which requires payments of $20,000 plus 3% interest on the last day of each month beginning on April 1, 2013.

Bonds payable include on $75,000 bond maturing on March 30, 2014 and a $200,000 bond, which requires quarterly payments of $5,000 plus interest on March 31, June 30, September 30 and December 31 of each year and a $100,000 bond due on June 30, 2013.

The Company can borrow in aggregate up to $100,000 on its revolving line of credit.  The Company is required to sign individual notes with a 90 day maturity period each time it borrows.  The notes related to the amounts currently borrowed mature on March 15, 2013.  Payments of interest only on the outstanding balance are due each December 31.  The revolving credit line agreement expires on December 31, 2014.

Common Stock includes the proceeds 100,000 shares of $1 par value stock issued to investors at $4 per share.  The Company charter authorizes the issue of 500,000 shares of common stock.  Preferred stock includes 3000 shares of 5% stock issued at $100 per share.

Unearned revenue includes rent collected in advance at $10,000 per month for a portion of the company plant rented to another business.

Interest payable is due on January 3, 2013

One half of the bond sinking fund balance is related to the $75,000 bond, one quarter of the balance is related to the $100,000 bond and the remaining balance is related to the $200,000 bond.

Property loss arose from hurricane damage at a facility in Miami

Inventory loss relates to a write down of the inventory carrying value because cost exceeded market value at December 31, 2012

Building loss relates to the destruction of a facility by invaders from outerspace.  The amount included in the trial balance is net of any related income tax impact

REQUIRED:  Using all the information provided above prepare:

(1)   A balance sheet for Alpha, Inc. as of December 31, 2012.  The balance sheet should be prepared in proper form and format including all relevant headings, sections, captions, titles, totals, subtotals and disclosures one would expect to see on the balance sheet.

(2)    A multiple step income statement for Alpha for the year ending December 31, 2012.  The income statement must be prepared in proper form and format including all relevant headings, sections, captions, titles, totals, subtotals, and disclosures one would normally expect on the face of the income statement. 

(3)   Solutions must be prepare using either excel or word (excel is best).

2. Listed below are some balances of Omega, Inc for the year ending December 31, 2013 and as of December 31, 2012 and 2013

Year ending

            12/31/13

 

Revenue

3,000,000

 

Cost of goods sold

1,600,000

 

Rent expense

115,000

 

Insurance expense

80,000

 

Interest expense

5,000

 

Income tax expense

100,000

 

Payroll and benefit expense

225,000

 

Depreciation cost

70,000

 

Dividend income

30,000

 

Gain on sale of investments

45,000

 

Loss on building fire

35,000

 

Interest income

25,000

 

General and administrative cost

155,000

 

Impairment

20,000

 

As of

12/31/12

12/31/13

Cash

100,000

1,595,000

Accounts receivable

325,000

350,000

Interest receivable

12,000

10,000

Inventory

400,000

375,000

Accrued payroll and benefits

75,000

88,000

Accrued rent

50,000

50,000

Prepaid insurance

80,000

60,000

Accrued general and administrative

55,000

50,000

Accrued income tax

20,000

65,000

The following is additional information with regards Omega during the year ending December 31, 2013:

Purchased $200,000 of machinery with a note payable

Paid a dividend on preferred stock of $100,000

Made capital lease payments of $80,000

Issued a $200,000 bond

Purchased Delta Stock for $225,000

Borrowed $700,000 under its line of credit

Purchased land for $50,000

Sold a building for $100,000 for $20,000 cash and $80,000 mortgage

Loaned $125,000 to the CEO

Sold a franchise for $130,000

Proceeds from sale of UAL stock $100,000

Made mortgage payments of $30,000

Repurchased Omega stock for $15,000

Received insurance proceeds of $125,000 related to building fire

Issued $150,000 of Omega common stock

Requirements:  Using the information above for Omega Inc

(1)    Prepare a complete cash flow statement for the year ending December 31, 2013 using the indirect method.  The statement must include all titles, headings, captions, sections, totals, subtotals and disclosures one would normally expect on the face of the cash flow statement.

(2)    Prepare the operating section of the cash flow statement for the year ending December 31, 2013 using the direct method.

(5)   The cash flow statements should be prepared in proper form and format including all relevant headings, sections, captions, titles, totals and subtotals. 

(6)   Solutions must be prepare using excel

Reference no: EM13347969

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