The accounting clerk for Geneva Company has prepared the following pre-adjustment trial balance as of December 31, 2020. Geneva Company is a small business that specializes in selling model toy cars in Nevada. G
Use the excel template provided for the homework, which includes the worksheet, journals, space to complete the financial statements and space to answer the questions. Each requirement is included on a separate tab in the work sheet.
Req 1. Worksheet
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 1: Worksheet
Geneva Company
Worksheet
For the Year Ended December 31, 2020
Retained Earnings
Trial Balance Adjustments Income Statement Statement Balance Sheet
Accounts Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 95,000
Accounts Receivable 8,000
Allowance for Doubtful Accounts 1,000
Inventory 325,000
Building 500,000
Accumulated Depreciation – Building 88,000
Truck 20,000
Accumulated Depreciation – Truck – 0
Furniture & Fixtures 125,000
Accumulated Depreciation – Furn & Fix 20,000
Accounts Payable 95,000
Accrued Expenses 7,000
Unearned Revenue 8,000
Notes Payable (due 6/30/2030) 125,000
Common Stock, $5 par 150,000
Additional paid-in capital in excess of par 175,000
Retained Earnings (1/1/20) 113,000
Dividends 10,000
Sales Revenue 1,250,000
Cost of Goods Sold 775,000
Salary Expense 100,000
Insurance expense 12,000
Advertising expense 50,000
Utility expense 5,000
Miscellaneous expense 7,000
Totals 2,032,000 2,032,000
Interest expense
Interest payable
Depreciation expense – Furn & Fix
Depreciation expense – Building
Depreciation expense – Truck
Totals
Income tax expense
Income tax payable
Net Income
Retained Earnings, 12/31/20
Req 2. Adj. Entries
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 2: Adjusting journal entries
Date Account Title Debit Credit
Req 3. IS
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 3: Income Statement
Req 4. SSE
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 4: Statement of Shareholders’ Equity
Req 5. BS
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 5: Balance Sheet
Req 6 Closing. Entries
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 6: Closing Entries
Req 7 Questions
ACC224
Case 1: Comprehensive Accounting Case
Solution
Requirement 7: Questions 1
ACC224
Case 1: Comprehensive Accounting Case
Due: September 23, 2020
The accounting clerk for Geneva Company has prepared the following pre-adjustment trial
balance as of December 31, 2020. Geneva Company is a small business that specializes in
selling model toy cars in Nevada.
Geneva Company
Trial Balance
December 31, 2020
Debit Credit
Cash $95,000
Accounts receivable 8,000
Allowance for doubtful accounts $1,000
Inventory 325,000
Building 500,000
Accumulated depreciation Building 88,000
Truck 20,000
Accumulated depreciation Truck 0
Furniture & Fixtures 125,000
Accumulated depreciation Furniture & Fixtures 20,000
Accounts payable 95,000
Accrued expenses 7,000
Unearned revenue 8,000
Notes payable, (due 6/30/2030) 125,000
Common stock, $5 par 150,000
Additional paid-in capital in excess of par 175,000
Retained earnings 113,000
Dividends 10,000
Sales revenue 1,250,000
Cost of Goods Sold 775,000
Salary expense 100,000
Insurance expense 12,000
Advertising expense 50,000
Utility expense 5,000
Miscellaneous expense 7,000
Totals $2,032,000 $2,032,000
As the accountant, hired as a consultant to prepare the financial statements, you have gathered
the following additional information:
a. The company issued a ten-year, 4% interest bearing note payable for $125,000 on 7/1/20.
The interest and principle is due at the end of 10 years.
2
b. The furniture & fixtures have a $5,000 salvage value and are being depreciated over 6
years using the straight-line method. Depreciation is only recorded at year-end.
c. The building on the balance sheet has 20-year life and has a $60,000 residual value.
Geneva Company is using the straight-line method of depreciation for the building.
Depreciation is only recorded at year-end.
d. The truck was purchased on January 1, 2020. It has a salvage value of 2,000 and will be
depreciated using the straight-line method, over 4 years.
e. Unrecorded and unpaid salaries are $13,000. You can use accrued expenses in this
journal entry.
f. A 12-month insurance policy was acquired for $12,000 on January 1, 2020 and was
charged to insurance expense.
g. The $3,000 of the balance in unearned revenue was earned in December 2020.
h. The income tax rate for Geneva Company is 21%.
Required:
1. Complete the worksheet for Geneva Company, assuming the accounting clerk has made
no adjusting journal entries during 2020.
2. Prepare the adjusting journal entries in general journal form.
3. Prepare an income statement for the year ended December 31, 2020. Be sure to include
earnings per share.
4. Prepare a statement of shareholders equity for the year ended December 31, 2020. No
common stock was issued during 2020.
5. Prepare a classified balance sheet as of December 31, 2020. Unearned revenue is a
current liability.
6. Prepare the December 31, 2020 closing entries in general journal form.
7. Answer the following questions:
a. In what year was the building purchased?
b. How many shares of common stock are issued?
c. What is Geneva Companys current ratio at 12/31/20?
d. What is Geneva Companys quick ratio at 12/31/20?
e. Based on your calculations of c and d above, would you be comfortable loaning
Geneva Company money? Be sure to include your rationale for your answer.
You may need to consider other ratios when evaluating this company.
NOTE: Use the excel template provided for the homework, which includes the worksheet,
journals, space to complete the financial statements and space to answer the questions. Each
requirement is included on a separate tab in the work sheet.
