Schultz Company prepares interim financial statements at

the end of #2446

Schultz Company prepares interim financial statements at the end of each quarter. The income
statement presented at the end of the first quarter of 2016 is as follows:Shown next is the
Schultz Company trial balance as of June 30, 2016:Additional information:1. The company uses
a perpetual inventory system.2. The company uses control accounts for selling and
administrative expenses.3. The company records and posts its adjusting entries to its accounts
only at year-end.4. Uncollectible accounts average 0.5% of net sales.5. The $4,000 note
receivable was received on March 1, 2016. The 6-month note carries an annual interest rate of
12%, the interest to be collected at the maturity date.6. The balance in the Prepaid Insurance
account represents payment made on January 1, 2016, for a 1-year comprehensive insurance
policy.7. The Property and Equipment account consists of land, $5,000; buildings, $55,000; and
equipment, $20,000. The buildings are being depreciated over a 25-year life; the equipment
over an 8-year life. Straight- line depreciation is used; residual value is disregarded. No
acquisitions have been made in 2016. The depreciation on the buildings is treated as an
administrative expense; depreciation on the equipment as a selling expense.8. On February 1,
2016, the company rented some floor space to another company, receiving 1 year’s rent of
$1,800 in advance.9. The bonds pay interest semiannually on January 1 and July 1. Straight-
line amortization of the discount is recorded at the end of each year.10. The company estimates
that its pretax income for the second half of 2016 will total $11,550. All items in income are
subject to the same income tax rate schedule. The income tax rate schedule is 15% on the first
$20,000 of taxable income and 30% on the excess. There is no difference between the
company’s pretax financial income and taxable income, and no tax credits are available. The
company rounds its estimated effective income tax rate to the nearest tenth of a percent.
Income taxes will be paid during the first quarter of 2017.11. On June 29, 2016, the company
had declared and recorded (directly in Retained Earnings) a semiannual dividend of $0.40 per
share, payable on August 3, 2016.12. The 8,000 shares of common stock have been
outstanding the entire 6 months of 2016.Required:1. Prepare a 10-column worksheet to develop
the Schultz financial statements for the first 6 months of 2016. (Refer to Chapter 3 for a
worksheet illustration, if necessary.)2. Prepare the income statement for(a) The first 6 months of
2016 and(b) The second quarter of 2016.3. Prepare a retained earnings statement for the first 6
months of 2016.4. Prepare the June 30, 2016, balance sheet.View Solution:
Schultz Company prepares interim financial statements at the end of

ANSWER
http://paperinstant.com/downloads/schultz-company-prepares-interim-financial-statements-at-
the-end-of/

1/1
Powered by TCPDF (www.tcpdf.org)