Devlin Company has prepared the following partially completed worksheet for the

Question

Devlin Company has prepared the following partially completed worksheet for the year ended December 31, 2016:

PLEASE SHOW WORK, SPECIALLY ON ADJUSTMENTS.

The following additional information is available: (a) salaries accrued but unpaid total $250; (b) the $80 heat and light bill for December has not been recorded or paid; (c) depreciation expense totals $810 on the buildings and equipment; (d) interest accrued on the note payable totals $380 (this will be paid when the note is repaid); (e) the company leases a portion of its floor space to KT & Daniel Specialty Company for $50 per month, and KT & Daniel has not yet paid its December rent; (f) interest accrued on the note receivable totals $80; (g) bad debts expense is $70; and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2017.

Required:

Complete the worksheet. (Round to the nearest dollar.)

Prepare the company's financial statements.

Prepare (a) adjusting and (b) closing entries in the general journal.

Explanation / Answer

Unadjusted trial balance Adjusting entries Adjusting trial balance Debit Credit Debit Credit Debit Credit Cash 1000 1000 Accounts receivable 2700 2700 Allowance for doubtful accounts 30 70 100 Interest receivable 80 80 Rent receivable 50 50 Notes receivable 1200 1200 0 Inventory 9200 9200 Land 4500 4500 Building and equipment 20600 20600 Accumulated depreciation 8790 810 9600 Accounts payable 4050 80 4130 Salaries payable 0 250 250 Interest payable 380 380 Income tax payable 3105 3105 Notes payable 4000 4000 Common stock 5000 5000 Retained earnings 6120 6120 Dividends 600 600 Sales revenue 25140 25140 Rent revenue 550 50 600 Interest revenue 80 80 Cost of goods sold 9050 9050 Salaries expense 2750 250 3000 Depreciation expense 810 810 Interest expense 380 380 Bad debt expense 70 70 Income tax expense 3105 3105 Delivery expense 720 720 Heat and light expense 820 80 900 Other expense 540 540 Total 53680 53680 4825 4825 58505 58505

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