Set forth below is the adjusted trial balance of the Trough Corp. as of 31 March
ID: 2334588 • Letter: S
Question
Set forth below is the adjusted trial balance of the Trough Corp. as of 31 March 20X2:
The following information describes the company’s April transactions and provides the data required for month-end adjustments:
Cash sales were $85,800.
Sales on account were $78,500.
Repaid $9,900 of note payable principal on 1 April.
Operating expenses of $24,750 were paid in cash.
Collected $40,590 in cash from customers on account.
Wrote off $1,980 of accounts receivable as uncollectible. No other accounts receivable are in doubt of collection.
Shareholders invested $19,900 in the business in exchange for 1,000 common shares.
Bought $81,900 of merchandise on account.
Ending merchandise inventory was $53,300.
Paid suppliers $36,900 on account.
Spent $4,900 for advertising to take place in May 20X2.
Paid $14,200 in cash for wages, and still owed $2,400 for wages at month-end.
The rent had previously been paid in advance to 31 July 20X2.
The equipment has a total useful life of 10 years, and salvage of $3,900. These estimates have not changed since the asset was first acquired.
The note payable bears an interest rate of 6% per year, and interest is due on 1 May.
Required:
1. Journalize the April transactions and adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)
2. Prepare a Statement of Comprehensive Income and Statement of Financial Position for the month of April.
Account Debit Credit Cash $ 24,300 Accounts receivable 70,800 Merchandise inventory 85,730 Prepaid rent 7,900 Equipment 48,300 Accumulated depreciation $ 8,910 Accounts payable 54,960 Note payable 38,700 Accrued interest payable 700 Capital stock 8,750 Retained earnings 125,010 $ 237,030 $ 237,030Explanation / Answer
1 Journal Entry Transactions Debit Credit Cash $85,800 To Sales $85,800 (Being cash sales recorded) Accounts Receivable $78,500 To Sales $78,500 (Being credit sales recorded) Note Payable $9,900 To Cash $9,900 (Being repayment of note payable) Operating Expenses $24,750 To Cash $24,750 (Being operating expenses paid) Cash $40,590 To Accounts receivable $40,590 (Being cash received on account from customers) Bad Debt Expense $1,980 To Uncollectible receivables $1,980 (Being write off of accounts receivable as uncollectible) Cash $19,900 To Capital Stock $19,900 (Being additional investment by shareholders) Purchases $81,900 To Accounts Payable $81,900 (Being merchandise purchase on account) No Entry Accounts Payable $36,900 To Cash $36,900 (Being amount paid to suppliers) Prepaid Advertising $4,900 To Cash $4,900 (Being prepaid advertising paid) Wages Expenses $16,600 To Cash $14,200 To Wages Payable $2,400 (Being wages expenses recorded) Rent Expense 1975 To Prepaid rent 1975 (7900/4) (Being rent expense recorded for April) Depreciation $4,440 To Accumulated Depreciation $4,440 (48300-3900)/10 (Being depreciation charge to equipment) Interest Expense $144 To Accrued Interest Payable $144 (38700-9900)*6%/12 (Being interest accrued for April) Trough Corp INCOME STATEMENT FOR THE MONTH APRIL 20X2 Sales $164,300 164300 Less : Cost of Goods Sold Opening Merchandise $85,730 Add : Purchases $81,900 Less : Closing Merchandise $53,300 $114,330 Gross Profit $49,970 Less : Wages Expense $16,600 Depreciation $4,440 Rent Expense $1,975 Operating Expenses $24,750 Bad Debt Expense $1,980 Interest Expense $144 $49,889 Net Income $81 COGS = 85730+81900-36900 Trough Corp FINANCIAL POSITION AS ON 30TH APRIL 20X2 Cash $79,940 (24300+85800-9900-24750+40590+19900-36900-4900-14200) Accounts Receivable $106,730 (70800+78500-40590-1980) Merchandise Inventory $53,300 Prepaid Rent $5,925 (7900-1975) Prepaid Advertising $4,900 Total Current assets $250,795 Equipment 48300 Less : Accumulated Depreciation 13350 $34,950 Total Assets $285,745 Liabilities Accounts Payable $99,960 (54960+81900-36900) Note Payable $28,800 (38700-9900) Accrued Interest Payable $844 (700+144) Wages Payable $2,400 Total Current Liabilities $132,004 Stockholers Equity $28,650 8750+19900 Common Stock $125,091 (125010+81) Retained Earnings Total Liabilities and Shareholders Equity $285,745
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