Extra Credit 3 - Due in TA mailbox Saturday May 14 at 10pm.

Citikonk Corporation balance sheet at 12/31/15 is presented below.

Citikonk Corporation
Balance Sheet
12/31/2015
Cash
$ 16,500
Accounts payable
Merchandise Inventory
21,300
Common stock ($1 par)
Prepaid Insurance
1,400
Paid in capital in excess of par
Equipment
110,000
Retained earnings
Accumualed depreciation
(35,800)
$ 113,400

$ 22,530
8,000
64,000
18,870
$ 113,400

During 2016, the following transactions occurred:

1. Purchased $123,600 inventory on account. Perpetual is used.
2. Sales made on account to customers for $180,000 plus 5.5% sales tax. Cost of sales were $111,300.
3. Received $10,000 cash down payment for orders to be shipped next year.
4. Issued 10 year, $40,000 face, 8% bonds on 7/2/16 at 103. The bonds pay interest every 1/1 and 7/1.
5. Collected $160,000 on account.
6. Paid other operating expenses of $27,500.
7. Paid $121,030 on account.
8. Paid $8,000 to the state for some of the sales tax collected from customers.
9. On 1/1/16 sold equipment which cost $20,000 with accumulated depreciation of $8,500 for $4,000 cash.
10. Issued 1,100 shares of $100 par 8% preferred stock for $160,000 cash.
11. Purchased equipment on 7/1/16 for $80,000 for cash.
12. Purchased 400 shares of Citikonk common stock from a disgruntled shareholder for $40 per share.
13. Recorded wages and payroll taxes. Gross wages were $20,000, FICA tax was withheld at a 7.55% rate,
federal income taxes (FIT) of $2,000 were withheld, state income taxes (SIT) of $500 were withheld.
The Federal unemployment tax (FUTA) rate is 0.9% and the state unemployment (SUTA) rate is 3.5%.
The net wage checks were given immediately to employees. The payroll taxes will be paid to the IRS and
state in early January.
Requirement A:
i - Journalize 1 - 13 above
ii - Post to the ledger
iii - Prepare an unadjusted trial balance which will be used as the first 2 columns of a worksheet.
(See Requirement B.)
***Four Optional solution templates have been prepared to assist you. They can be accessed by clicking on
the Solution tabs below. Use of Microsoft Excel is optional. Hand prepared solutions are also acceptable.
Requirement B: Using your unadjusted trial balance above and the following data for adjusting
entries, prepare a 10 column worksheet similar to the one in the chapter 4 appendix of your text.
(a) Depreciation on equipment purchased in previous years uses straight-line, 5 year life, no salvage value
For the 2016 purchase (11 above) use a useful life of 10 years, $15,000 salvage, double declining balance.
(b) Accrue bond interest payable (Premium amortization too.).
(c) The prepaid insurance relates to a policy purchased in 2015 that expires at a rate of $80 per month.
(d) The company estimates that all accounts receivable are collectible. So don't worry about bad debts.
Requirement C: Prepare a Statement of Cash Flows.
Hints: In operating activities subtract gains and premium amortization.

Extra Credit 3
G

Name:
A

a.1. Purchases

123,600
189,900

Sales

180,000

Sales tax liability

Cost of Good Sales

9,900
111,300

Inventory
a.3. Cash

111,300
10,000

Un-Earned Revenue
a.4. cash

10,000
41,200

premium on issue of bonds

1,200

bonds payable
a.5. Cash

40,000
160,000

Receivables
a.6. other operating expenses

160,000
27,500

cash
a.7. Payables

27,500
121,030

Cash
a.8. Sales Tax

121,030
8,000

Cash
a.9. Cash

8,000
4,000

Equipment
Loss on Equipment Disposal

4,000
7,500

Equipment
a.10. Cash

7,500
160,000

Preffered Stock

110,000

Premium
a.11. Equipment

50,000
80,000

Cash
a.12 investments

80,000
16,000

cash
a.13 Salary Expense

Dis:

123,600

Payables
a.2. Cash

16,000
20,000

FICA Tax

1,520

FIT Tax

2,000

SiT

500

FUCTA

180

SUTA

700

Cash

15,110

Extra Credit 3
G

0
R

CASH

DR

Page 1
CR

BALANCE

Beginning

16,500

16,500

item 3

10,000

26,500

item 4

41,200

67,700

item 5

160,000

227,700

item 6

27,500

200,200

item 7

121,030

79,170

item 8

8,000

71,170

item 9
item 10

4,000

75,170

160,000

235,170

item 11

80,000

155,170

item 12

16,000

139,170

item 13

15,110

124,060

ACCOUNTS RECEIVABLE

DR

CR

Beginning
item 2

0
189,900

item 5
MERCHANDISE INVENTORY
Beginning
item 1

DR

Beginning

123,600

144,900
111,300

DR

CR

1,400

Beginning

110,000

item 9

CR

BALANCE
90,000
170,000

CR
35,800

8,500

BALANCE

110,000

80,000
DR

33,600

1,400

20,000

Beginning
item 9

BALANCE
21,300

DR

ACCUMULATED DEPRECIATION

CR

29,900

21,300

EQUIPMENT

item 11

0
189,900

160,000

item 2
PREPAID INSURANCE

BALANCE

BALANCE
-35,800
-27,300

ACCOUNTS PAYABLE

DR

Beginning
item 1
item 7

121,030

SALES TAX PAYABLE

DR

item 2
item 8
UNEARNED REVENUE

Page 2
CR

BALANCE

22,530

-22,530

123,600

-146,130
-25,100

CR

BALANCE

9,900
8,000
DR

item 3
FICA PAYABLE

-1,900
CR

BALANCE

10,000
DR

item 13

CR
1,510

DR

CR

DR

CR

DR

CR

CR

item 13
BONDS PAYABLE
item 4
PREMIUM ON BONDS PAYABLE
item 4

CR
40,000

DR

-180
BALANCE

700
DR

-500
BALANCE

180
DR

-2,000
BALANCE

500

item 13
SUTA PAYABLE

BALANCE

2,000

item 13
FUTA PAYABLE

-1,510
-1,510

item 13
SIT PAYABLE

-10,000
BALANCE

item 13
FIT PAYABLE

-9,900

CR
1,200

-700
BALANCE
-40,000
BALANCE
-1,200

COMMON STOCK

DR

CR

Beginning

BALANCE

8,000

Preferred Stock

DR

-8,000

Page 3
CR

BALANCE

Beginning

item 10

PAID IN CAPITAL IN EXCESS OF PAR

110,000
DR

CR

-110,000
BALANCE

Beginning

64,000

-64,000

item 10

50,000

-114,000

TREASURY STOCK
item 12
RETAINED EARNINGS

DR
16,000
DR

Beginning
SALES

DR

DR

item 2

111,300

OPERATING EXPENSES

DR

WAGE EXPENSE
item 13
PAYROLL TAX EXPENSE
item 13
LOSS ON EQUIPMENT DISPOSALS
item 9

CR

CR
180,000

COST OF GOODS SOLD

CR

CR

CR

7,500

BALANCE
-180,000
BALANCE

BALANCE

BALANCE
15,110

CR

4,890
DR

-18,870

27,500

15,110
DR

BALANCE

111,300

27,500
DR

BALANCE
16,000

18,870

item 2

item 6

CR

BALANCE
4,890

CR

BALANCE
7,500

Requirement B

0
Account Title
Cash
Accounts Receivable
Merchandise Inventory
Prepaid Insurance
Equipment
Accumulated depreciation
Accounts Payable
Sales Tax Payable
Unearned Revenue
FICA Payable
FIT Payable
SIT Payable
FUTA Payable
SUTA Payable
Bonds Payable
Premium on Bonds Payable

Common Stock
Preferred Stock
Paid in Capital in Excess of Par

Treasury Stock
Retained Earnings
Sales
Cost of Goods Sold
Operating Expenses
Wage Expense
Payroll Tax Expense
Loss on disposal
Additional accounts:
Depreciation Expense
Interest Expense
Interest payable
Insurance Expense
Totals
Net Loss
Totals

Citikonk Corporation
Work Sheet
For the Year Ended December 31, 2016
Unadjusted
Adjusted
Trial Balance
Adjustments
Trial Balance
DR
CR
DR
CR
DR
CR
124,060
124,060
29,900
29,900
33,600
33,600
1,400
c
960
440
170,000
170,000
27,300
a
34000
61,300
25,100
25,100
1,900
1,900
10,000
10,000
1,510
1,510
2,000
2,000
500
500
180
180
700
700
40,000
40,000
1,200
60 b
1,140
8,000
8,000
110,000
110,000
114,000
114,000
16,000
16,000
18,870
18,870
180,000
180,000
111,300
111,300
27,500
27,500
15,110
15,110
4,890
4,890
7,500
7,500
541,260 541,260
34,000 a
1,540 b
b
960 c
36,560

34,000
1,540
1,600
36,560

Income
Statement
DR
CR

Balance
Sheet
DR
CR
124,060
29,900
33,600
440
170,000
61,300
25,100
1,900
10,000
1,510
2,000
500
180
700
40,000
1,140
8,000
110,000
114,000
16,000
-3,930

180,000
111,300
27,500
15,110
4,890
7,500

34,000
1,540
1,600

960
576,800

576,800

1,600
960
202,800
202,800

180,000
22,800

374,000

374,000

202,800

374,000

374,000

Citikonk Corporation

Statement of Cash Flows

For the Year ended 12/31/15
CASH FROM OPERATING ACTIVITIES:
Net Loss
Depreciation
Trade Receivables
Trade Payables
Inventory
Prepaid Insurance

-22,800
34,000
-29,900
2,570
-12,300
960

Loss on Equipment Disposal

7,500

FICA

1,510

FIT

2,000

SIT

500

FUTA

180

SUTA

700

S.TAX

1,900

interest expense

1,540

Unearned revenue

10,000

Net Cash From Operations

-1,640

CASH FROM INVESTNG ACTIVITIES:

Equipment Disposal
Purchase of Equipment

4,000
-80,000

Net Cash From Investing

-76,000

CASH FROM FINANCING ACTIVITIES:

Issuence of Preffered Stock

160,000

Purchase of Common Stock

-16,000

bonds issue
Net Cash From Financing
NET INCREASE IN CASH
Cash at beginning of year
Cash at end of year

41,200
185,200
107,560
16,500
124,060