Reference no: EM131772942
Problem - Nordham Corporation's trial balance at December 31, 2008, is presented below. All 2008 transactions have been recorded except for the items described below and on the next page.
Debit Credit
Cash $ 23,000
Accounts Receivable 51,000
Merchandise Inventory 22,700
Land 65,000
Building 95,000
Equipment 40,000
Allowance for Doubtful Accounts $ 450
Accumulated Depreciation-Building 30,000
Accumulated Depreciation-Equipment 14,400
Accounts Payable 19,300
Bond Interest Payable -0-
Dividends Payable -0-
Unearned Rent Revenue 8,000
Bonds Payable (10%) 50,000
Common Stock ($10 par) 30,000
Paid-in Capital in Excess of Par-Common Stock 6,000
Preferred Stock ($20 par) -0-
Paid-in Capital in Excess of Par-Preferred Stock -0-
Retained Earnings 75,050
Treasury Stock -0-
Dividends -0-
Sales 570,000
Rent Revenue -0-
Bad Debts Expense -0-
Bond Interest Expense 2,500
Cost of Goods Sold 400,000
Depreciation Expense-Buildings -0-
Depreciation Expense-Equipment -0-
Other Operating Expenses 39,000
Salaries Expense 65,000
Total $803,200 $803,200
Unrecorded transactions
1. On January 1, 2008, Nordham issued 1,000 shares of $20 par, 6% preferred stock for $22,000.
2. On January 1, 2008, Nordham also issued 1,000 shares of common stock for $23,000.
3. Nordham reacquired 300 shares of its common stock on July 1, 2008, for $49 per share.
4. On December 31, 2008, Nordham declared the annual preferred stock dividend and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2009.
5. Nordham estimates that uncollectible accounts receivable at year-end is $5,100.
6. The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000.
7. The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000.
8. The unearned rent was collected on October 1, 2008. It was receipt of 4 months' rent in advance (October 1, 2008 through January 31, 2009).
9. The 10% bonds payable pay interest every January 1 and July 1. The interest for the 6 months ended December 31, 2008, has not been paid or recorded.
Instructions -
a. Prepare journal entries for the transactions listed above.
b. Prepare an updated December 31, 2008, trial balance, reflecting the unrecorded transactions.
c. Prepare a multiple-step income statement for the year ending December 31, 2008.
d. Prepare a statement of retained earnings for the year ending December 31, 2008.
e. Prepare a classified balance sheet as of December 31, 2008.