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    Accounting Balance Sheet for Johnson Corporation

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    With the provided balance sheet of Johnson Corporation as of 12/31/2007 and the relevant data for 2008:

    1. Record the effects of the information given and provide in journal entry form.
    2. Prepare an income statement, statement of retained earnings, and a balance sheet for year ending December 31, 2008.

    Johnson Corporation
    Financial Data for 2008
    1. Sales on account for the year were $221,632.
    2. Cash collected from customers on account, $219,514.
    3. Purchases of merchandise were $132,500, of which $12,425 had not been paid by the end of the year.
    4. Operating expenses of the current year, paid in cash, were $57,394. In addition, $1,575 of such expense were incurred but not paid by the end of the year.
    5. Rent paid in cash during the year was $7,800, of which $6000 related to 2008, and the remainder to 2009. This payment is not included in #4 above.
    6. Accounts receivables of $1,950 were written off as uncollectible.
    7. Beginning accounts payable were paid.
    8. A cash dividend of $2,500 was paid to the shareholders during the year.
    9. Prepaid rent at 12/31/07 was for January and February of 2008.
    10. As a result of the physical inventory, it was determined that inventory on hand at 12/31/2008 was $27,500.
    11. Based on an aging of the accounts receivable, it was determined that the allowance for bad debts at 12/31/2008 should be $1,100.
    12. Depreciation expenses for the year is $2,700 (classified as an operating expense).
    13. The note payable bears simple interest at 8% annually. Interest for 2008 is due January 3, 2009.
    14. Income tax expense is 20% of the net income before taxes. These taxes are payable March 15, 2009.

    Johnson Corporation
    Balance sheet, December 31, 2007

    Assets:

    Cash 6,155
    Accounts Receivable 17,320
    Less : Allowance for bad debts 700 16,620
    Inventory 26,440
    Prepaid Rent 1,200
    Total Current Assets 50,415

    Plant and equipment 62,720
    Less: Accumulated Depreciation 33,242 29,478

    Total Assets 79,893

    Liabilites and Stockholder's Equity

    Liabilities:
    Current:
    Accounts payable 21,735
    Long-Term:
    Notes payble 30,000
    Total Liabilities 51,735

    Stockholder's Equity:
    Common Stock 5,000
    Retained earnings 23,158 28,158

    Total liabilities and stockholder's equity 79,893

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    Solution Summary

    The solution determines the effect of information on journal entries.

    $2.19

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