INTERMEDIATE ACCOUNTING 1 CASE STUDY 1 Prepare a work sheet using the account ba

Question

INTERMEDIATE ACCOUNTING 1 CASE STUDY 1 Prepare a work sheet using the account balances taken from the ledger of Simpson Company as of December 31, 1996: (ALL ACCOUNTS HAVE NORMAL BALANCES) $86,000 L 92,800 A Accounts payable Accounts receivable Advertising expense Accumulated depreciation bldg Allowance for bad debts Building Common stock Cash Dividends declared Freight-in Insurance expense Interest expense Interest revenue Inventory (1/1/96) Land Long-term investments Mortgage payable Notes payable, short term Office expense Purchases Purchases discountS Real estate tax expense Retained earnings Salary expense Sales Sales discounts Sales returns Selling expense 8,000 21,000 1,700 210,000 300,000 30,500 8,000 7,000 1,400 3,530 890 69,900 52,000 8,100 29,000 16,000 19,200 347,420 8,100 12,870 9,130 50,200 490,000 16,500 9,600 12,500 2,300 upplies expense djustments on December 31 are required as follows: 1 Ending inventory is $90,610. urchages The allowance for doubtful accounts is to be increased to 3. The building is depreciated on a straight-line basis a balance of $3,500 based on a 20-year useful life. (no salvage value, record one full year) 4. Accrued salaries payable are $4,050 SSupplies on hand are $780 7. Unearned sales revenue should have a balance of $800. 8. Accrued real estate taxes are $700. 9. Accrued interest on the mortgage is $160 10. Income tax expense is estimated to be $3,850

Explanation / Answer

Adjusting entries in ten colume work sheet is not possible. So, adjusting entries work sheet are provided here. Accounts title Debit $ Credit $ 1 COGS 318610 Closing Inventory 90610 Purchases discounts 8100 Inventory (1/1/96) 69900 Purchases 347420 (being closing inventory worked out after adjusting opening inventory and purchases) 2 Bad Debts expenses 1800 Allow for bad debts 1800 (being allowance raised from 1700 to 3500) 3 Dep exp 10500 Acc Dep - Buildg 10500 (being dep. On building booked) 4 Salary exp 4050 Salary payable 4050 (being salary payable booked) 5 Supplies   780 supplies exp. 780 (being supplies closing balance booked of supplies exp.) 6 Prepaid Insu 860 Insurance exp 860 (being prepaid insurance booked) 7 Cash 800 Unearned sales revenue 800 (being unearned sales revenue booked) 8 Real estate tax expense 700 Estate tax payable 700 (being real estate tax payable booked) 9 Interest exp 160 Interest payable 160 (being interest exp. payable booked) 10 Income tax exp 3850 Income tax payable 3850 (being income tax payable booked)

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