Rockford Corporation is a wholesale plumbing supply distributor.
The corporation was organized in 1981, under the laws of the State
of Illinois, with an authorized capitalization of 10,000 shares of
no-par common stock with a stated value of $18 per share. The
common stock is sold over the the counter in the local area. You
have been hired as of Thursday, December 25, 2014, to replace the
controller, who has resigned. As controller, you are responsible
for the corporation’s accounting recrods, preparation of the
financial statements, safeguarding the corporate assets, and
providing management with financial information to set prices and
to monitor and control operations.
Rockford Corporation closes its books annually on December 31 but
prepares financial statements quarterly. Adjusting entries are
posted to the general ledger only at year-end; at the end of the
first, second, and third quarter the adjustments are entered only
on a work sheet, not in the general ledger. Therefore, the
adjusting entries to be recorded on December 31 are annual
adjustments that you must journalize and the post to the general
ledger accounts before preparing the financial statements.
Rockford Corporation maintains a perpetual inventory system and
takes a physical count each year to adjust the inventory carrying
amount. Purchases are recorded at the gross amount (discounts taken
are recognized at the date of payment) of the supplier’s invoice,
and the terms vary with each supplier. Sales on account are subject
to terms of 1/10, n/30. Discounts are taken and granted only when
the terms are met. The cost of all inventory sold in December was
65% of the sales price. The corporation uses the following journals
and ledgers:
Journals 1. A sales journal (S) – to record sales of merchandise on
account. 2. A purchase journal (P)- to record purchases of
merchandise on account. 3. A cash receipts journal (CR) – to record
all cash receipts. 4. A cash disbursements journal (CD) – to record
all cash payments. 5. A general journal (J) – to record all
transacitons that cannot be recorded in the other journals.
Ledgers 1. A general ledger 2. An accounts receivable subsidiary
ledger. 3. An accounts payable subsidiary ledger.
In recording sales transactions, each sale should be posted on the
day of the sale directly to the customer’s account in the
subsidiary ledger, using the invoice number as the posting
reference number in the subsidiary account. Also, cash receipts
from customers should be posted to the subsidiary ledger on the day
they are received. The purchase order number should be used as the
posting reference number in the subsidiary ledger for purchases on
account from suppliers. Purchases from suppliers and payments to
them should be posted daily. All other individual posting may be
made weekly or at the month-end. Account numbers should be used as
posting reference numbers in the journals. Officers and office
personnel are salaried employees and are paid monthly on the last
day of each month. The delivery truck drivers and warehouse
employees are hourly wage employees and are paid biweekly. Each
biweekly pay period ends Friday. On the following Monday you
assistants provide you with a payroll summary from which you
prepare general journal entries to record the biweekly payroll and
the employer’s taxes on the payroll. The biweekly employees’
paychecks are distributed on the following day (Tuesday).
The January 1, 2014, balances appear in the general ledger accounts
as well as the Noverber 30, 2014, balances, for those accounts
whose balances have changed. All transacitons affecting the
non

Never use plagiarized sources. Get Your Original Essay on
Question: Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in…
Hire Professionals Just from $11/Page
Order Now Click here

current accounts from January 1, 2014, through Noverber 30, 2014,
with explanations, appear in these accounts to facilitate the
preparation of the statement of cash flows.
Subsidiary ledger account balances as of Noverber 30, 2014, are as
follows:
Accounts Receivable Acct No Amount Boecker Builders 117 62,920 The
Potts Company 122 46,300 Swanson Brothers Contruction 133 22,590 A
& B Hardware 143 Trudy’s Plumbing 155 15,500 Coconino
Contractors Inc 160 28,700 Rankin Plumbing Corp 166 74,350
Beverly’s Building Products 175 13,600 Bilder Construction Co 180
48,900 Iwanaga Plumbing and Heating 190 5,800 Total 318,660
Accounts Payable Acct No Amount Phoenix Plastics 14 19,280 Business
Basics Inc 16 Edward’s Plumbing Suppliers 18 20,050 DeKalb
Transport 20 Oxenford Copperworks 35 28,700 Smith Pipe Co 39 37,700
Ron & Rod’s Plumbing Products 44 14,850 Khatan Steel Corp 57
12,000 Total 132,580
The transactions through December 23 have already been recorded by
the former controller. You are to begin your work by entering the
transaction of December 25 for the payment of cash to repurchase
stock.
Dec-14 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
19 20 21 22 23 24 25 26 27 28 29 30 31
December Transactions December 1 Received a check in the amount of
$22,364 from Swanson Brothers Contruction in full payment of
invoice No. 1120 dated Novermber 26 in the amount of $22,590. 1
Sold sewer and drainage pipe to Beverly’s Building Products on
account, invoice No. 1201 for $28850. 2 Purchased copper tubing and
fittings from Edward’s Plumbing Supplies Inc. on account, purchase
order No. 315 for $32660, terms n/60. 2 Issued check No. 1580 for
$28,700 to Oxenford Copperworks in settlement of the balance owned
on purchase order No. 280.

3 A court notice indicates that Iwanaga Plumbing and Heating is
bankrupt and payment of its account improbable; the president
orders the account to be written off as a bad debt (invoice No.
780). 3 Sold bathroom fixtures to Bilder Construction Co on
account, invoice No. 1202 for $47,700.00 4 Received a check in the
amount of $45,374 from the Potts Co in full payment of invoice No.
1128 dated November 27 for $46,300. 4 Sold plumbing supplies and
plastic pipe to Coconino Contractors Inc. on account, invoice No.
1203 for $12,300. 4 Issued check No. 1581 for $720 to Standard Oil
Co, in payment of gas, oil, and truck repair from Tierney’s
Standard Service. 5 Issued check No. 1582 for $11,880 to Khatan
Steel Corp. in full settlement of purchase order No. 312 for
$12,000. 5 Issued check No. 1583 for $12,054 to Phoenix Plastics in
full payment of Phoenix’s invoice dated November 28 in the amount
of $12,300, for purchase order No. 313, terms 2/10, n/30. 5
Received a check in the amount of $72,863 from Rankin Plumbing
Corp. in full payment of invoice No. 1129 dated November 28 for
$74,350. 8 Sold cast pipe to Trudy’s Plumbing on account, invoice
No. 1204 for $26,300. 8 Received a check in the amount of $28,700
from Coconion Contractors, Inc. in full payment of invoice No. 1091
dated October 20. 8 Purchased bathroom fixtures from Phoenix
Plastics, on account, purchcase order No. 316 for $56,800 terms
1/10, n/30. 8 Received a check in the amount of $29,600 from
Boecker Builders in partial payment of balance outstanding covering
invoice Nos. 1050 and 1071. 9 The payroll summary for the biweekly
pay period ended Friday, December 5 contained the follwing
information: Delivery and warehouse wages 4,860 FICA taxes withheld
410 Federal income taxes withheld 900 State income taxes withheld
190 Net pay 3,360 Employer’s payroll taxes: FICA tax 410 Federal
unemployment tax State unemployment tax Issued check No. 1584 for
the amount of the net pay and deposited it in the payroll bank
account. Individual payroll checks were then preppared for
distributions to the biweekly emplyees on Tuesday, December 9,
2014. 9 Issued check No. 1585 for $650 to Scooter Gordon for
lettering and sign painting on some delivery trucks. 9 Issued check
No. 1586 for $6,980 to Phoenix Plastics, in payment of Phoenix’s
invoice dated November 12 in the amount of $6,980, our purchase
order No. 299. 10 Issued check No. 1587 for $37,323 to Smith Pipe
Co in full payment of their invoice dated November 28, terms 1/15,
n/30, our purchase order No. 314. 10 Received a check in the amount
of $15,500 from Trudy’s Plumbing in full settlement of invoice No.
1106 dated November 7. 10 Sold pipe, fixtures, and accessories to
Trudy’s Plumbing on account, invoice No. 1205 for $26,850.00 11
Sold pumbing supplies and copper tubing to The Potts Company on
account, invoice No. 1206 for $31,450. 11 Received a check in the
amount of $33,320 from Boecker Builders in full payment of invoice
No. 1071.

11 Cash sales to date totaled $10,232. 12 Received a check in the
amount of $25,774 from Trudy’s Plumbing in payment of inoivce No.
1204. 12 Sold plumbing fixtures and supplies to Boecker Builders,
on account, invoice No. 1207 for $24,730. 15 The Potts Co returned
defective copper tubing that is purchased on December 11. A credit
memo in the amount of $5680 is issued relative to invoice No. 1206.
The copper tubing had a cost of $3692. 15 The defective copper
tubing is returned to Edward’s Plumbing supplies, Inc. along with a
debit memo in the amount of $3692 in reduction of purchase order
No. 315. 15 Issud check No. 1588 for $599 in payment of November
telephone bill to Northern Illinois Communications. 16 Issued check
No. 1589 in the amount of $12,360 in payment of federal withholding
taxes, $10,573, and FICA taxes, $1787, payable on November salaries
and wages; The check is remitted to the Winnebago County Bank as
the depository. 16 Issued check No. 1590 for $56,232 to Phoenix
Plastics, Inc, in payment of purchase order No. 316. 17 The
president informs you that Bilder Construction Co agrees to convert
the $48900 overdue account receivable (invoice No. 1120) to a 8%
note due six months from today. 17 Purchased plumbing materials
from Smith Pipe Company on account, purcase order No. 317 for
$,51,120 terms 1/15, n/60. 17 Sold drain tile, plastic pipe, and
copper tubing to A & B Hardware on account, invoice No. 1208
for $7,340. 18 Sold fixtures and materials to Coconino Contractors,
Inc. on account, invoice No. 1209 for $44,530. 18 An invoice in the
amount of $1,021 was received from S. White Trucking Company for
freight on purchase order No. 317 and paid by issuing check No.
1591. 18 Received a check in the amount of $26,582 from Trudy’s
Plumbing in payment of invoice No. 1205. 19 Purchased office
supplies from the Pen & Pad, issuing check No. 1592 in the
amount of $1,460. (Note: Debit asset account). 19 Purchased a new
Faith computer for $5600 from Business Basics, Inc, purchase order
No, 318, paying $600 down through check No. 1593 with the balance
due in thirty days (n/30). The computer has an estmated life of 4
years with a salvage value of $2200. 22 Purchased bathroom and
kitchen fixtures from Phoenix Plastics, on account, purchase order
No. 319 for $48,330, terms 1/10, n/30. 22 Received a bill from
DeKalb Transport for $2580 for freight costs incurred during the
last 30 days, terms n/30. 23 The payroll summary for the biweekly
pay period ended Friday, December 19 contained the follwing
information: Delivery and warehouse wages 5,770 FICA taxes withheld
415 Federal income taxes withheld 1,067 State income taxes withheld
225 Net pay 4,063 Employer’s payroll taxes: FICA tax 415 Federal
unemployment tax State unemployment tax Issued check No. 1594 for
the amount of the net pay and deposited it in the payroll bank
account. Individual payroll checks were then prepared for
distributions to the biweekly emplyees on Tuesday, December
23.

NOTE: Transactions up to this point have been recorded. At this
point you became controller and are responsible for recordign all
further transactions.
25 The board of directors voted to purchase 2,500 shares of its own
stock from stockholder Dionne Schivone at $76 per share and issued
check No. 1595 in payment. Stock repurchases are recorded at cost.
Rockford is purchasing these shares because Ms. Schivone had been a
valuable employee. 26 The baord of directors declared a $1.25 per
share cash dividend payable on January 14 to shareholders of record
by the end of the day of December 26. 26 The president informs you
that Beverly’s Building Products agrees to convert the $13,600
overdue accounts receivable (invoice No. 1119) balance to a 10%
note due six months from today. 29 A half-acre parcel of land
adjacent to the building is acquired in exchange for 750 shares of
unissued common stock. The land has a fair value of $58,400 and
will be used immediately as an outside storage lot and parking lot.
29 An invoice in the amount of $1,860 is received from Wayne
McManus, lawyer, for legal services involved in the acquisition of
the adjacent parcel of land; check No. 1596 is issued. 29 Sold pipe
and plumbing materials to Boecker Builders on account, invoice No.
1210 for $44,280 30 Issued check No. 1597 in the amount of $3,500
to the Northern Star for adverstisement run in the home building
supplement of December 13. 30 Issued check No. 1598 in the amount
of $830 to Standard Oil Co. in payment of gas, oil, and truck
repairs from Standard Oil Co. (use Freight-out). 30 Purchased
copper and cast iron pipe from Oxenford Copperworks on account,
purchase order No. 320 for $55,240, terms 1/10, n/30. 30 Check No.
1599 for $9,400 is issued to the bond sinking fund trustee, Chicago
Trust Co., for deposit in the sinking fund. (Use Other Assets). 30
Sold plumbing supplies to Swanson Brothers Construction on account,
invoice No. 1211 for $24,150. 31 Received a check for $24,730 from
Boecker Builders in payment of invoice No. 1207. 31 Issued check
No. 1600 for $50,609 to Smith Pipe Company in payment of purchase
order No. 317. 31 The custodian of the petty cash fund submits the
following receipts for reimbursement and reports a cash-on-hand
count of $8. Postage stampls used (supplies) $38 United Parcel
(freight-out) 23 C.O.D postage (freight costs) 51 Christmas office
decorations (Misc exp) 30 Check No. 1601 is issued and cashed to
reimburse the fund. 31 Sold an electric truck-lift to Leila
Stierman Co. for $2600 cash. The original cost was $7900 with
salvage value of $900, a life of 10 years, and accumulated
depreciation recorded through 12/31/13 is $4,550. The straight-line
method is used. (Note: the company follows the practice of
recording a half year’s depreciation in the year of acquisition and
a half year in the year of disposal.) First, bring the depreciation
expense up to date in the general journal. Then journalize the
entire entry for the sale in the cash receipts journal. 31 Sold
bathroom fixtures and plumbing supplies to Trudy’s Plumbing on
account, invoice No. 1212 for $56370. 31 Because for some time the
petty cash fund has been smaller than required for monthly
expenditures, the fund is increased by $95 by cashing check No.
1602 and placing the money in the petty cash fund.

31 The payroll summary for the monthly paid employees in submitted
so that December checks can be distributed before the year-end; the
details are as follows: Office and administrative salaries $43,900
Federal income taxes withheld 7,696 State income taxes withheld
1,517 FICA taxes withheld 3,120 Net pay $31,567 Issued check No,
1603 for the amount of the net pay and deposited it in the payroll
bank account. Individual payroll checks were prepared for
distribution to all monthly employees by the end of the day.
Employer’s payroll taxes: FICA tax (all office and administrative)
$3,120 Federal unemployment tax 0 State unemployment tax 0 31 Cash
sale since December 12 total $42150.
Instructions 1 Make the entries in the appropriate journal for
December 25 through December 31. (adjusting entries are recorded in
general journal) 2 Post any amounts to be posted as individual
amounts from journals to the general ledger and update the
receivable and payable subsidiary ledger accounts. (only a few
entries are posted for Dec, e.g., account receivable. Please post
all other entries) 3 Foot and cross-foot the columnar journals and
complete the month-end postings of all books of orginal entry. 4
Prepare a trial balance by entering the accout balance from the
general ledger in the work sheet (list all accounts, including
those with zero balances). 5 From the following information prepare
adjusting entries in the general journal and enter them in the work
sheet. a The annual provison for doubtful accounts receivable is
recorded by providing a charge to Bad Debt Expense in an amount
equal to 2% of net credit sale. All cash sales were executed in
December. b An inventory count of the office supplies revealed $780
of supplies on hand at year end. c The prepaid insurance on January
1, 2014 was $3400 which covers the period January 1 through August
31, 2014. The insurance premium of $6800 recorded in August covers
the period of September 1, 2014 through August 31, 2015. Rockford
estimates that 50% of the premiums are attributable to general
activities (Use Insurance Expense) and 50% to selling activities.
(Use Miscellaneous Expense). d The payroll summary for the
employees who are paid biweekly shows the following information at
December 31, 2014: Delivery and Warehouse Wages $6,100 FICA Taxes
Payable 550 Federal Withholding Taxes 1,036 State Withholding Taxes
218 Net pay 4,296 (will pay in 2015) e The employer’s share of the
FICA tax ($550) must be accrued; no state or federal unemployment
tax is incurred during the fourth quarter because all wages and
salries earned during the last quarter exceed the maximum

subject to unemployment tax. f Interest has accrued at 6% on the
long-term notes payable since July 1,2014. These interests are due
on January 1, 2015 (The first six-month interests have been
recorded and paid in July). Interest on bonds is accrued and paid
semi-annually, at a 4% annual coupon rate. The next interest
payment is due on January 1, 2015. The bonds are dated January 1,
2008, and mature January 1, 2018. Market interest rate was 6% at
issurance . Use effective interest amortization method. g The
interest accrued to 12/31/14 on notes receivable is composed of the
following: Platteville Plumbers, 10%, 6 months, due March 31, 2015
Bilder Construction, 8%, 6 months, due June 14, 2015 Beverly’s
Building, 10%, 6 months, due June 26, 2015
The interst accrued at 12/31/14 on the note payable (current) of
$16000 is $1250. Interest is payable on January 2, 2015. (The note
is due in 2015) h A warehouse lease payment of $8400 was made on
Septermber 1, 2014, for rental through February 28, 2015. (The
Prepaid Rent account is for advance lease payments on the
warehouse.) i $815 is owned to Northern Electric Co. and $425 is
owned to City of Rockford for utility services proved during
December 2014. j Plant and equipmentto be depreciated are composed
of the following:
Assets
Date Acquired cost
estimated usage or life
salvage value
depreciati on method Building 7/1/2010 $306,000 25 years $20,000
sum-of-years’ digits Truck #1 4/1/2010 28,000 60,000 miles 3,100
miles driven Truck #2 9/1/2011 33,000 60,000 miles 4,200 miles
driven Lift Truck #1* 8/17/2007 7,900 10 years 900 straight-line
Lift Truck #2 3/29/2011 4,500 10 years 500 straight-line Lift Truck
#3 9/16/2012 5,000 10 years 500 straight-line Office Equipment
7/1/2012 32,800 7 years 2,000 straight-line Computer 12/19/2014
5,600 4 years 2,200 Double-decling * sold 12/31/14 Truck No. 1has
been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been
driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was
driven 10000 miles and truck No. 2 was driven 15000 miles. Remember
that Rockford Company takes a half-year’s depreciation in the year
of acquisition and a halfyear in the year of sale. 6 Complete the
worksheet. Compute State of Illinois corporate income taxes at 4.5%
of pretax income. The state income tax is deductible on the federal
tax return, and the federal tax is not deductible on the Illinois
return. Assume federal corporate income tax on income subject to
federal tax is as follows: first $50000 15% next 25000 25%
remainder 34% Income between $100,000 and $335,000 is assessed a 5%
federal surtax, not to exceed $11,750.00 7 Prepare the journal
entry for income taxes. Post all adjusting entries. 8 Prepare
2014’s income statement (assume the weighted-average number of
shares outstanding for the year 2014 is 5,600 shares). Assume that
bad debt expense and depreciation expense
adapted from Rockford Practice Set
are administrative expenses.

9 Prepare 2014’s statement of retained earnings.

10 Prepare 2014’s balance sheet.

Open chat
Lets chat on via WhatsApp
Hello, Welcome to our WhatsApp support. Reply to this message to start a chat.