1.Intrepid Enterprises begins business on January 1, 2021 and engages in the following transactions for the three months ending March 31, 2021. 1. Issued common stock for $60,000 cash. 2. Borrowed...

1.Intrepid Enterprises begins business on January 1, 2021 and engages in the following transactions for the three months ending March 31, 2021.

1. Issued common stock for $60,000 cash.
2. Borrowed $10,000 from the bank. The loan is due in 6 months.
3. Purchased machinery & equipment for $124,000 by putting $6,000 down and signing a $118,000 loan payable, which is due in three years.
4. Purchased $288,000 of inventory; $48,000 was paid for in cash and the remainder was on credit.
5. Sold inventory for cash and on account. Intrepid prices their goods to achieve a 50% gross margin on sales.
a. Sales on Credit $280,000
b. Cash Sales $120,000
6. Paid $25,000 per month for salaries and wages.
7. Collected $225,000 from customers who purchased good on account (from 5).
8. Paid $200,000 to vendors who sold inventory to Intrepid on credit (from 4)
9. Incurred operating costs of $12,000 for the quarter. Of the total amount, 80% was paid in cash and the remainder was accrued as a liability.
10. Received $14,000 deposit from a customer toward a future purchase of inventory to be delivered in April.
11. Recorded $3,000 in depreciation on the machinery and equipment for the quarter
12. Accrued interest of $1,900 in total for the two Notes Payable. No payments were made for interest or principal.
13. Accrued $22,000 in income taxes for the quarter.

Using the chart of accounts in Problem 1, prepare an income statement for the three months ending March 31, 2021 and a balance sheet as of March 31, 2021. Use the the attached template to prepare your answers. Upload your file when you done.

2.Pumpkin Services had net sales in 2020 of $1,400,000. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $250,000 and Allowance for Doubtful Accounts $2,400. Pumpkin estimates that 8% of its receivables will prove to be uncollectible.

Instructions

What amount of Bad Debt Expense will Pumpkin report in its income statement for the year 2020?

3.The following selected transactions relate to contingencies of Ocean Gliders, Inc.. Ocean Gliders' fiscal year ends on December 31. Financial statements are issued on February 28.

Instructions

Calculate the amount of the liability that should be reported, if any, in each of the following situations.

1. Ocean Gliders manufactures paddle boards. The company offers a one-year warranty on all paddle boards. During the year, the company recorded net sales of $1,520 million. Historically, about 4% of all sales are returned under warranty and the cost of repairing and or replacing goods under warranty is about 30% of retail value. Assume that at the start of the year Ocean Gliders balance sheet included an accrued warranty liability of $13.0 million and that during the year they paid $14.4 to honor warranty claims. What amount should be reported as accrued warranty liability in the year-end financial statements?


2. Ocean Gliders issued a 120-day note in the amount of $288,000 on December 17 of this year with an annual rate of 5%. What amount of interest payable should be reported in the December 31 balance sheet?


3. In December 2020, the state of California filed suit against Ocean Gliders, seeking penalties for violations of clean water laws. On January 23, 2019, Ocean Gliders reached a settlement with state authorities to pay $3.2 million in penalties. What liability should be reported, if any, in the December 31 balance sheet?


4. 
   

   Community Outreach, a non-profit organization, receives a cash contribution of $50,000 and a donation of stock with a fair value of $96,000 at the time of the donation. The donor of the cash states that $10,000 of the cash contribution must be used for a community food bank and the remainder can be used for general operating purposes. The donor of the stock originally paid $64,000 for her investment. She directs Community Outreach not to sell the stock until next year, at which time they are free to sell it and to use the proceeds for general operating purposes.

   
   

   
   Instructions
   

   
   

   How much revenue should Community Outreach report, if any, in the Statement Activities for each of the following categories?

   
   

   1. Contribution Revenue – Support without Donor Restrictions
   2. Contribution Revenue – Support with Purpose Restrictions
   3. Contribution Revenue – Support with Time Restrictions
   4. Contributions Revenue – Support with Permanent Restrictions