Requirements: a. Copy the trial balance above in the first two columns of a 10-c

Question

Requirements:

a.   Copy the trial balance above in the first two columns of a 10-column work sheet.

b.   Prepare adjusting journal entries in journal form from the following information (the fiscal year ends December 31).

1.   Estimated bad debts, .5% of sales less returns and allowances.

2.   Depreciation on building 4% per year; on furniture and fixtures, 10% per year.

3.   Insurance expired during the year, $3,900.

4.   Interest at 12% is payable on the mortgage on January 1 of each year

5.   Sales salaries accrued, December 31, $4,000.

6.   Advertising expense paid in advance, $740.

7.   Office supplies on hand December 31, $1,600 (charged to Miscellaneous Office Expenses when purchased).

8.   Interest accrued on notes payable, December 31, $1,500.

c.   Transfer the adjusting entries to the work sheet and complete it.

d.   Prepare an income statement, a balance sheet, and a statement of retained earnings.

e.   Prepare closing journal entries.

f.    Indicate the adjusting entries that would be reversed.

Debit Credit Cash 13,600 Accounts Receivable 64,800 Allowance for Doubtful Accounts 2,000 Inventory 76,000 Office Supplies Land 40,000 Building 90,000 Accumulated Depreciation of Building 14,400 Furniture and Fixtures 22,000 Accumulated Depreciation of Furniture and Fixtures 6,600 Prepaid Insurance 7,800 Prepaid Advertising Accounts Payable 34,200 Salaries Payable Interest Payable Notes Payable 30,000 Mortgage Payable 40,000 Common Stock 60,000 Retained Earnings 64,730 Sales 720,000 Sales Returns and Allowances 2,800 Sales Discounts 5,900 Cost of Goods Sold 533,700 Sales Salaries Expense 54,000 Advertising Expense 9,400 Salaries Expense, Office and General 31,000 Heat, Light, and Water Expense 15,100 Telephone Expense 1,700 Miscellaneous Office Expenses 2,000 Bad Debt Expense Depreciation Expense Insurance Expense Interest Expense 2,130              Subtotal Net Income Totals 971,930 971,930

Explanation / Answer

b. Journalise the adjusting entries on Dec. 31 JOURNAL Date Account Debit Credit Dec. 31 1. Bad debt expense 3586    Allowance for Doubtful debts 3586 2. Depreciation Expense 5800      Accumulated Depreciation of Building 3600      Accumulated Depreciation of Furniture and Fixtures 2200 3. Insurance Expense 3900      Prepaid Insurance 3900 d. Interest expense 4800      Interest payable 4800 e. Salary expense 4000      Salary payable 4000 f. Prepaid Advertising 740    Advertising expense 740 g. Office Supplies 1600      Miscellaneous office expense 1600 h. Interest expense 1500      Interest payable 1500 c. Transfer Journal entries to worksheet. Work Sheet Account Unadjusted Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit Credit Debit Credit Cash 13600 13600 Accounts Receivable 64800 64800 Allowance for Doubtful accounts 2000 3586 5586 Inventory 76000 76000 Office Supplies 1600 1600 Land 40000 40000 Building 90000 90000      Accumulated Depreciation of Building 14400 3600 18000 Furniture & Fixtures 22000 22000      Accumulated Depreciation of Furniture and Fixtures 6600 2200 8800 Prepaid Insurance 7800 3900 3900 Prepaid Advertising 740 740 Accounts Payable 34200 34200 Salary Payable 4000 4000 Interest payable 6300 6300 Notes payable 30000 30000 Mortgage Payable 40000 40000 Common Stock 60000 60000 Retained earnings 64730 64730 Sales 720000 720000 Sales Return and Allowances 2800 2800 Sales discount 5900 5900 Cost of goods sold 533700 533700 Sales salaries expense 54000 4000 58000 Advertising expense 9400 740 8660 Salaries expense, Office and general 31000 31000 Heat light and water expense 15100 15100 Telephone expense 1700 1700 Miscelleneous Office expense 2000 1600 400 Bad debt expense 3586 3586 Depreciation expense 5800 5800 Insurance expense 3900 3900 Interest expense 2130 6300 8430 subtotal net income Totals 971930 971930 25926 25926 991616 991616 d. Prepare an Income statement, a balance sheet and a statement of retained earnings Income Statement For the year ended December 31 Sales 720000 Sales Return and Allowances -2800 Sales discount -5900     Net Sales 711300 Cost of goods sold 533700 Gross Profit 177600 Less: Expenses Advertising expense 8660 Sales salaries expense 58000 Salaries expense, Office and general 31000 Heat light and water expense 15100 Telephone expense 1700 Miscelleneous Office expense 400 Bad debt expense 3586 Depreciation expense 5800 Insurance expense 3900 Interest expense 8430    Total expenses 136576 Net Income 41024 Statement of retained earnings For the year ended December 31 Balance - Beginning 64730 Add: Net Income for the year 41024 Balance - Ending 105754 Balance Sheet As on December 31 Assets Current Assets Cash 13600 Accounts Receivable 64800 Allowance for Doubtful accounts -5586 Inventory 76000 Office Supplies 1600 Prepaid Insurance 3900 Prepaid Advertising 740 Total Current Assets 155054 Property, Plant & Equipment Land 40000 Building 90000      Accumulated Depreciation of Building -18000 Furniture & Fixtures 22000      Accumulated Depreciation of Furniture and Fixtures -8800 Total Property, Plant & Equipment 125200 Total Assets 280254 Liabilties and Stockholder's Equity Current Liabilties Accounts Payable 34200 Salary Payable 4000 Interest payable 6300 Total Current Liabilties 44500 Long term liabilites Notes payable 30000 Mortgage Payable 40000    Total Long term liabilites 70000 Total Liabilities 114500 Stockholder's equity Common Stock 60000 Retained earnings 105754 Total Stockholder's equity 165754 Total Liabilties and Stockholder's Equity 280254 e. Prepare closing Journal entries JOURNAL Date Account Debit Credit Dec. 31 1. Sales 720000     Income summary 720000 2. Income summary 678976 Sales Return and Allowances 2800 Sales discount 5900 Cost of goods sold 533700 Sales salaries expense 58000 Advertising expense 8660 Salaries expense, Office and general 31000 Heat light and water expense 15100 Telephone expense 1700 Miscelleneous Office expense 400 Bad debt expense 3586 Depreciation expense 5800 Insurance expense 3900 Interest expense 8430 3 Income summary 41024    Retained earnings 41024 f. Indicate the adjusting entries that would be reversed. Following entries will be reversed: 4.   Interest at 12% is payable on the mortgage on January 1 of each year 5.   Sales salaries accrued, December 31, $4,000. 6.   Advertising expense paid in advance, $740. 7.   Office supplies on hand December 31, $1,600 (charged to Miscellaneous Office Expenses when purchased). 8.   Interest accrued on notes payable, December 31, $1,500.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.