iew History Bookmarks Window Help Accounting Question Forum Ch 04 Homework Check
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iew History Bookmarks Window Help Accounting Question Forum Ch 04 Homework Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completi Required information Problem 4-5A Preparing adjusting entries and income statements; computing gross margin, acid-test and current ratios LO A1, A2, P3, P4 The following information applies to the questions displayed below The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company NELSON COMPANY Unadjasted Trial Balance January 31, 201 Merchandise inventory Store supplies Prepaid insurance Store equipment Aocumulated depreclatLon-store equipment 14,500 2.700 s 16,650 Retained earninga 116,40 sales discounts 2,000 Cost of goods sold 26,500 12,000 Rent expense and salaries expense are equaly divided between seling activities and general and administrative activities. Nelson Company uses a perpetual inventory system C Prev8 of 8 Next 2 3 4 5 6 8 0Explanation / Answer
Answer
Unadjusted Balance
Increase (Decrease) by adjustment entries
Adjusted Balance
Debit
Credit
Debit
Credit
Cash
$ 14,400.00
$ 14,400.00
Merchandise Inventory
$ 14,500.00
$ (3,900.00)
$ 10,600.00
Store Supplies
$ 5,700.00
$ (3,950.00)
$ 1,750.00
Prepaid Insurance
$ 2,700.00
$ (1,800.00)
$ 900.00
Store Equipment
$ 42,800.00
$ 42,800.00
Accumulated Depreciation Store Equipment
$ 16,650.00
$ 1,575.00
$ 18,225.00
Accounts Payable
$ 17,000.00
$ 17,000.00
Common Stock
$ 3,800.00
$ 3,800.00
Retained Earnings
$ 19,000.00
$ 19,000.00
Dividends
$ 2,300.00
$ 2,300.00
Sales
$ 116,400.00
$ 116,400.00
Sales Discount
$ 2,000.00
$ 2,000.00
Sales Return & Allowances
$ 2,150.00
$ 2,150.00
Cost of Goods Sold
$ 38,000.00
$ 3,900.00
$ 41,900.00
Depreciation expense Store Equipment
$ -
$ 1,575.00
$ 1,575.00
Salaries expenses
$ 26,500.00
$ 26,500.00
Insurance expenses
$ -
$ 1,800.00
$ 1,800.00
Rent Expenses
$ 12,000.00
$ 12,000.00
Store Supplies expense
$ -
$ 3,950.00
$ 3,950.00
Advertising expense
$ 9,800.00
$ 9,800.00
TOTAL
$ 172,850.00
$ 172,850.00
$ 174,425.00
$ 174,425.00
Multi Step Income Statement
Sales
$ 116,400.00
Less: Sales Discount
$ 2,000.00
Less: Sales return & Allowances
$ 2,150.00
$ 4,150.00
Net Sales
$ 112,250.00
Cost of Goods Sold
$ 41,900.00
Gross Profits
$ 70,350.00
Expenses:
Selling Expenses:
Depreciation Expense Store Equipment
$ 1,575.00
Sales Salaries expenses
$ 13,250.00
Store Supplies expense
$ 3,950.00
Advertising Expenses
$ 9,800.00
Rent Expense Store Space
$ 6,000.00
Total Selling Expenses
$ 34,575.00
General & Administrative expenses:
Rent Expenses Office Space
$ 6,000.00
Office Salaries expenses
$ 13,250.00
Insurance expense
$ 1,800.00
Total General & Administrative expenses
$ 21,050.00
Net Income - Operating Net Income
$ 14,725.00
Income Statement - Single Step
Net Sales
$ 112,250.00
Expenses:
Cost of Goods Sold
$ 41,900.00
Selling Expenses
$ 34,575.00
General Administrative Expenses
$ 21,050.00
Total Expenses
$ 97,525.00
Net Income
$ 14,725.00
Unadjusted Balance
Increase (Decrease) by adjustment entries
Adjusted Balance
Debit
Credit
Debit
Credit
Cash
$ 14,400.00
$ 14,400.00
Merchandise Inventory
$ 14,500.00
$ (3,900.00)
$ 10,600.00
Store Supplies
$ 5,700.00
$ (3,950.00)
$ 1,750.00
Prepaid Insurance
$ 2,700.00
$ (1,800.00)
$ 900.00
Store Equipment
$ 42,800.00
$ 42,800.00
Accumulated Depreciation Store Equipment
$ 16,650.00
$ 1,575.00
$ 18,225.00
Accounts Payable
$ 17,000.00
$ 17,000.00
Common Stock
$ 3,800.00
$ 3,800.00
Retained Earnings
$ 19,000.00
$ 19,000.00
Dividends
$ 2,300.00
$ 2,300.00
Sales
$ 116,400.00
$ 116,400.00
Sales Discount
$ 2,000.00
$ 2,000.00
Sales Return & Allowances
$ 2,150.00
$ 2,150.00
Cost of Goods Sold
$ 38,000.00
$ 3,900.00
$ 41,900.00
Depreciation expense Store Equipment
$ -
$ 1,575.00
$ 1,575.00
Salaries expenses
$ 26,500.00
$ 26,500.00
Insurance expenses
$ -
$ 1,800.00
$ 1,800.00
Rent Expenses
$ 12,000.00
$ 12,000.00
Store Supplies expense
$ -
$ 3,950.00
$ 3,950.00
Advertising expense
$ 9,800.00
$ 9,800.00
TOTAL
$ 172,850.00
$ 172,850.00
$ 174,425.00
$ 174,425.00
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