ACCT551 Week 7 Course ACCT551Submission 2021
ACCT551 Course Project Instructions and Data
This Course Project applies financial reporting principles relating to intangibles, current liabilities, and long-term liabilities for a ficititious (though realistic) company scenario.
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GeneralProducts, Inc. was incorporated in Nevada on January 1, 2016, to take over a local retail chain and supply goods to customers at the most competitive prices, both in stores and online.
To complete this project, you’ll need to use the financial information below provided for the year 2019 along with the prior year’s Balance Sheet (dated December 31, 2018).
GeneralProducts, Inc.
Balance Sheet
As of December 31, 2018
ASSETS
Current Assets
Cash 11,980
Accounts Receivable 20,520
Inventory 3,17,060
Inventory of Premiums (@$1.10 per premium item) 660
Total Current Assets 3,50,220
Long-Term Assets
Investments 66,775
Property, Plant, and Equipment (PP&E) 7,50,000
Less: Accumulated Depreciation -90,000 6,60,000
Total Long-Term Assets 7,26,775
Intangible Assets
Trademarks 1,90,000
Total Assets 12,66,995
LIABILITIES
Current Liabilities
Accounts Payable 50,722
Liability for Premiums 550
Interest Payable (on 6% Bonds) 3,000
Total Current Liabilities 54,272
Long-Term Liabilities
6% Bonds Payable (due 2023) 1,00,000
Unamortized Discount on Bonds Payable (6,732)
Total Long-Term Liabilities 93,268
Total Liabilities 1,47,540
STOCKHOLDERS’ EQUITY
Common Stock
(150,000 shares authorized, par value $1,
130,000 shares issued and outstanding) 1,30,000
Paid-in Capital in Excess of Par – Common Stock 9,54,000
Retained Earnings 35,455
Total Stockholders’ Equity 11,19,455
Total Liabilities and Stockholders’ Equity 12,66,995
GeneralProducts, Inc., provided the following financial and business-related data for 2019 below.
Item #
1 Trademarks were previously acquired for $200,000 on January 1, 2018. Estimated useful life at the time of acquisition was 20 years.
In 2019, there was litigation challenging these trademarks brought by a competitor, and GeneralProducts successfully
defended these trademarks at a legal cost of $45,000. The new (updated) useful life of the trademarks was estimated to be 25 years from the date of acquisition.
2 All sales were on credit and totaled $940,560. COGS totaled $780,650.
3 Included in the total sales of $940,560 were the sales of 6,000 soap powder boxes.
As a premium offer to increase soap powder sales, GeneralProducts includes one special coupon with every soap powder box. Customers can redeem four coupons
to obtain one free premium item—a kitchen utensil. Based on past experience, 60% of the coupons are expected to be redeemed by customers.
During 2019, 3,400 coupons were actually redeemed. Also in 2019, GeneralProducts purchased
an additional 1,000 premiums (kitchen utensil items) @ $1.10 each on credit to add to its Inventory of Premiums.
4 Five-year 6% bonds were issued on January 1, 2018, sold to yield 8% interest. Interest is paid semiannually on January 1 and June 30 for these bonds.
Maturity value of the bond issue is $100,000 and the issue was sold at a discount of $8,111 for an initial carrying value of $91,889.
The bond indenture indicated that GeneralProducts may later call and redeem these bonds @101 any time after June 30, 2019.
These bonds were subsequently called and redeemed on September 1, 2019, following the sale of a new 5% bond issue &nb
