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Solved: Hampton Corporation s statement of financial position at December 31 2017


Hampton Corporation s statement of financial position at December 31 2017

Hampton Corporation’s statement of financial position at December 31, 2017, is presented below.

During 2018, the following transactions occurred.

1. Hampton issued 500 shares of $2.80 cumulative preferred shares for $50,000. Hampton is authorized to issue 50,000 preferred shares.

2. Hampton also issued 500 common shares for $30,000.

3. Hampton sold inventory for $320,000 on account and $100,000 for cash. Hampton uses a perpetual inventory system and its cost of goods sold for this total transaction was $250,000.

4. Hampton collected $296,000 from customers on account.

5. Hampton bought $35,100 of supplies on account.

6. Purchased $330,000 of merchandise inventory on account, terms 2/10, n/30.

7. Hampton paid $322,000 on accounts payable related to purchases of merchandise in transaction 6, within the 10-day discount period.

8. Paid salaries of $88,200.

9. An account receivable of $1,700, which originated in 2017, was written off as uncollectible.

10. Paid $2,000 on the mortgage principal during the year, and $4,000 of interest.

11. Near the end of the current fiscal year, Hampton declared the annual preferred share cash dividend of $1,400 and a $4,200 common share cash dividend, to shareholders of record on January 13, 2019, payable on January 31, 2019.

Adjustment data:

1. A count of supplies indicates that $5,900 of supplies remain unused at year end.

2. Estimated uncollectible accounts were $3,500 at year end.

3. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a residual value of $10,000.

4. Interest of $350 is owed on the mortgage at year end. The current portion of the mortgage due is $2,500.

5. The bank statement included a service charge of $3,000.

6. Income tax of $6,000 is estimated to be due.


(a) Record the 2018 summary transactions numbered (1) through (11).

(b) Set up T accounts, enter any opening balances, and post the general journal entries prepared in part (a).

(c) Record and post the adjusting journal entries (1) through (6) shown above at December 31, assuming adjusting entries are prepared annually.

(d) Prepare an adjusted trial balance as at December 31.

(e) Prepare (1) an income statement, (2) a statement of changes in equity, and (3) a statement of financial position.

(f) Prepare and post any required closing journal entries.

Hampton Corporation s statement of financial position at December 31 2017


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