Gordon Corporation is a company that specializes in the design and…

Question Gordon Corporation is a company that specializes in the design and… Gordon Corporation is a company that specializes in the design and sale of custom telecommunication solutions for companies in the food services industry.  The company also sells a variety of telecommunications products from a small retail store and its website. Gordon Corporation’s staff are able to record daily transactions, collect receivables, pay vendors and complete the weekly payroll.  Gordon uses the services of an outside accountant to prepare end of year adjusting entries, corrections, and any other necessary entries necessary to prepare accurate financial statements.  You will be providing this service for 2021.  Gordon will issue financial statements to shareholders on February 15, 2022 and that deadline is part of your service agreement. Gordon has a fixed-asset software system to track plant assets and depreciation. Depreciation for all assets that have been capitalized and entered in the fixed-asset system has already been recorded for 2021.  Gordon uses straight-line depreciation/amortization for plant & intangible assets and records ½ year’s depreciation/amortization for any asset in the year of acquisition regardless of the actual purchase date. The company uses the LIFO inventory method with lower of cost or net realizable value applied to individual items. Adjustments are only recorded at the end of the fiscal year unless otherwise noted Gordon has 70,000 shares of $6.50 par value common stock authorized.  The corporation uses the cost method of accounting for treasury stock. Gordon prepares all financial statements in accordance with GAAP.  Gordon’s incremental borrowing rate is 6%.  The company’s common stock was selling for $32 per share throughout the entire last quarter of 2021.  That is also the average market price for Gordon’s stock during the year of 2021. You will find the 12/31/21 preliminary trial balance for Gordon Corporation on the last page of this assignment.  You can assume the amounts on the trial balance are correct so far unless you are given information to the contrary.  The list of transactions that need your attention as the company’s outside accountant will follow the project requirements.  Unless you are told otherwise, assume the information in these transactions have not been recorded.  You will also find the post-closing trial balance for 2021 on the last page. Gordon’s effective tax rate in 2021 was 28%. For simplicity, most operating expenses for the current year are shown in one account entitled “Operating Expenses.”  But, when you complete your entries, use specific account titles for any operating expenses you need to record (such as Salaries Expense or Insurance Expense). However, if the accounts you add are Operating Expenses, you may combine them into the amount reported as Operating Expenses on the income statement. You will need to submit your answer in one Excel file and upload it in eLearn to the appropriate assignment dropbox. That file should contain the followingJournal entries needed as a result of the information provided on a sheet named Journal.  These may be adjusting, correcting or other entries.  There may be some items that do not require an entry.  If no entry is needed, please indicate that.  Organize your journal entries by item, not chronologically.  Have all the entries for #1 together, then #2, etc.  Do not organize by date.  Show all supporting calculations with the appropriate entry.  The easier I can follow your work, the more points you will get!  Assume all items are material.  Round all entries to the nearest whole dollar.Prepare the following statements for year end 2021 in good form each on a separate Excel sheet.  Round all amounts (except earnings per share) to the nearest whole dollar.Updated trial balance resulting from your entries. Name the sheet Trial Bal.Multiple-step Income Statement with the appropriate earnings per share data. Be sure all expenses are properly classified. Round earnings per share data to the nearest cent. Name the sheet Inc Stmt.Statement of Retained Earnings. Name the sheet RE Stmt.Classified Balance Sheet.  Name the sheet Bal Sheet.Statement of Cash Flows using the Indirect Method.  (Hint: look carefully at the transactions you recorded that affected Net Income without involving cash.  Net Income may need to be adjusted for these items in the Operating Activities section.) Name the sheet Cash Flows.Your file may have additional sheets that you use for calculations. But have everything you want considered in your grade on the sheets identified above.  Transactions/Events that may require accounting entries. Unless specifically stated, these events have not been recorded in the accounting records. 1. Based on past experience, Gordon estimates that 2.5% of the accounts receivables at year end will not be collected. 2. Gordon allows customers to return merchandise for up to 60 days after it is purchased. Gordon estimates returns in January and February of 2022 will be $4,000. Gordon marks-up products it sells 40% above cost. 3. Gordon’s inventory includes some Routers that are old technology. The 500 routers in stock were purchased for $30 each. Those routers could be purchased now for $17 each. Gordon does not want to recommend the use of old routers to clients. The company has an opportunity to sell the routers to an overstock company for $10 each. Costs to package and ship the routers to the overstock company will be $75. 4. At year end, the following inventory items were in-transit to Gordon from the company’s vendors. None of these inventory items were recorded or included in the physical inventory count.Total Cost of InventoryShipping TermsDate Shipped from Vendor’s locationDate arrived at Gordon’s warehouse$4,000FOB Shipping Point12/28/20211/3/2022$700FOB Shipping Point12/31/20211/5/2022$2,000FOB Destination12/10/20211/2/2022 5. Research efforts during the year resulted in a patent for a new type of switch used in telecommunication systems. The total costs to develop the new switch were $37,000. The cost to file for the patent were $3,000. The switch will probably produce revenue for 6 years because it will probably be replaced with new technology at that time. All $40,000 of the costs associated with the new switch were recorded as Operating Expenses. 6. On 1/5/2021, Gordon purchased 30% of the outstanding shares of Ramsey Corporation for $70,000. Gordon’s accounting staff correctly recorded that purchase. At year end, the market value of shares of Ramsey stock owned by Gordon was $87,000. Ramsey’s net income for 2021 was $160,000. Ramsey did not pay any dividends in 2021. Make any necessary year-end entries. 7. The chart below provides information of additional stock investments owned by Gordon. Gordon does not intent to sell any of these investments in 2022.Company#shares owned% of total shares ownedCost per share when purchasedCurrent per share market price (12/31/21)Company’s net income for 2021Grant Company508%$10$13.50$260,000Gokey Corporation753%$22$23$1,532,000Mac Industries16012%$16.90$15$790,000Daigle, Inc.401%$14$28$2,445,700 8. The balance in the Land account represents 2 parcels of land. Land purchased for $33,000 is where Gordon Corporation’s office building and retail store were constructed. Gordon also owns land purchased for $17,000 that is currently vacant and not used in operations. The corporation purchased the land in 2021 as a future building site for a warehouse and the purchase was correctly recorded. 9. In September 2021, a storm with straight-line winds caused a large tree on the vacant land Gordon owns to be uprooted and fall. This resulted in significant damage to a building on an adjacent property. That property owner is suing Gordon for $100,000 above the amount he has already received for the property damage. In January 2022, the property owner’s attorney said his client would settle for $20,000. Gordon accepted that settlement and will be paying the property owner on or before March 1, 2022. 10. Gordon declared a $1.00 per share dividend on its common stock on Dec. 30, 2021.  The dividend is payable on 1/31/2022. Record the necessary entries for 2021. 11. On 1/1/2019, Gordon signed a bank loan for $88,000. The 4-year loan has a 6% interest rate, which was a fair interest rate at the time. The loan requires monthly payments of $2,067 on the first of each month and the first payment was due 2/1/2019. The 12 cash monthly payments have been recorded correctly for 2021. Make any year-end entries, if necessary. 12. On January 1, 2021, Gordon leased equipment with a fair value of $95,000 for 5 years. Lease payments are 20,000 per year, payable on January 1 each year, with the first payment made at the lease signing on 1/1/2021. While doing your work for year-end 2020, you helped Gordon do all the necessary lease calculations and set up the lease correctly in the accounting records. The first lease payment made on 1/1/2021 was recorded in Gordon’s accounting records. Now you need to prepare any entries related to the lease for year-end 2021. 13. On January 1, 2020, Gordon granted 2,000 stock options to company executives. Each option permits the holder to purchase 1 share of Gordon Corporation stock for $20 per share after December 31, 2023. The options expire on December 31, 2027. The average market price for Gordon Corporation’s stock was $32 per share in 2021.  The value of each option, using an appropriate options pricing model, is $11 per share. Assume the options were correctly accounted for in 2020. Make the necessary entries for 2021. 14. On July 1, 2021 Gordon issued an additional 1,000 shares of common stock, receiving a total of $29,876 after paying issuing costs. Gordon’s accountants did record the stock issuance. Business Accounting ACC 2102 Share QuestionEmailCopy link Comments (0)