Hampton Corporation’s balance sheet at December 31, 2011, is presented below.
HAMPTON CORPORATION
BALANCE SHEET
DECEMBER 31, 2011
Cash $24,600
Accounts Receivable 45,500
Allowance for doubtful accounts (1,500)
Supplies 4,400
Land 40,000
Buildings 142,000
Accumulated depreciation-buildings (22,000)
Total $233,000
Accounts payable $25,600
Common stock ($10par) 80,000
Retained earnings 127,400
Total $233,000
During 2012, the following transactions occurred.
- 1. On January 1, 2012, Hampton issued 1,200 share of $40 par, 7% preferred stock for $49,200.
- 2. On January 1, 2012, Hampton also issued 900 shares of the $10 par value common stock for $21,000.
- 3. Hampton performed services for $320,000 on account.
- 4. On April 1, 2012, Hampton collected frees of $36,000 in advance for services to be performed from April 1, 2012, to March 31, 2013.
- 5. Hampton collected $276,000 from customers on account.
- 6. Hampton bought $35,100 of supplies on account.
- 7. Hampton paid $32,200 on accounts payable.
- 8. Hampton reacquired 400 shares of its common stock on June 1, 2012, for $28 per share.
- 9. Paid other operating expenses of $188,200.
- 10. On December 31, 2012, Hampton declared the annual preferred stock dividend and a $1.20 per share dividend on the outstanding common stock, all payable on January 15, 2013.
- 11. An account receivable of $1,700 which originated in 2011 is written of as uncollectible.
ADJUSTMENT DATA:
- 1. A count of supplies indicates that $5,900 of supplies remain unused at year-end.
- 2. Recorded revenue earned from item 4 above.
- 3. The allowance for doubtful accounts should have a balance of $3,500 at year end.
- 4. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and salvage value of $10,000.
- 5. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
INSTRUCTIONS
- 1. Prepare journal entries for the transactions listed above, and adjusting entries.
- 2. Prepare an adjusted trial balance at December 31, 2012.
- 3. Prepare an income statement and a retained earnings statement for the year ending December 31, 2012, and a classified balance sheet as of December 31, 2012.
