Question 1 (40 points)
XYZ Company's December 31, 2015 trial balance is as follows:
December 31, 2015
Allowance for Doubtful Accounts
Accumulated Depreciation, Building
Accumulated Depreciation, Equipment
Long-Term Notes Payable
Common Stock, $10 par, 2,000 shares authorized and outstanding
Cost of Goods Sold
XYZ is a small company and records adjusting entries and closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded.
Notes Receivable is a 3-month, 6% note accepted on November 1, 2015.
Long-Term Notes Payable is a 5-year, 5% note that was signed on July 1, 2015. Interest is payable annually.
Building is depreciated at 3% per year. There is no salvage value.
Equipment is depreciated at 15% per year. There is no salvage value.
XYZ discovered, on December 30, that the inexperienced bookkeeper recorded in the general journal and general ledger that day's $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue.
The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any difference in value will not be considered theft or loss.
Salaries for the last half of December, payable in January, amount to $5,500.
XYZ estimates that of the Accounts Receivable, 5% will not be collectable.
Prepare in journal form, any required correcting entries.
Prepare in journal form, all end-of-the-period adjusting entries.
Prepare a December adjusted trial balance.
Prepare a classified balance sheet for the year ended December 31, 2015.
Prepare in journal form the closing entries for the year ended December 31, 2015.