The Artisan Wines is a retail store selling vintage wines. On December 31, 2019,

Question

The Artisan Wines is a retail store selling vintage wines. On December 31, 2019, the firm’s general ledger contained the accounts and balances below. All account balances are normal.

Required:

Prepare a classified income statement for the year ended December 31, 2019. The company does not classify its operating expenses as selling expenses and general and administrative expenses.

Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the year.

Prepare a classified balance sheet as of December 31, 2019.

Analyze:
What is the inventory turnover for Artisan Wines?

Office Updato To koop up-to -date with socurity uplates, fixes, and Improvements, choose Check for Updates. 031 Year Enderd December 31, 2019 Ad ustments Adjusted Trial Balance Income Staterment halance Short Trial Balance Credit Credit DebiCrodit 27,886.00 Account Name Debit 2789600 430 920 27886 00 S Acoounts Receivable s Propaid Advertising 1,38000 250 920 75 11,50000 22 500.00 460 175 1500.00 1.50000 22 500.0 8 Machindise Inventory 9 Store Equipment 0 Accumalated Deprecistion Store Equipement 11 Office 2,500.00 5.500.00 4.500.00 950 450.00 500.00 2 400.00 13 Notes Poable, due 2020 14 Accounts Payable s Wa 31 6 Social Sccurity Tax Paysble 7 Medicare Tax Payable 31 1.25 725 ,500.00 3,000.00 87.5 34950 00 950 4,950.0 Vincent Arroyo Drawing 1 4,500.00 4.500.00 Seminar Fee Income Purchasos Retums and Allowanees 175 23 Rent 00.00 23,500 Depeeciation Expensc Office Equinment 4 Advertib Expense 950 187.5 213,02300 213.025.00 34.210.15 |229.100.75:147,659 75 075 164,42000|81,441.00 64.6so 75 16.760 25 164,420.00 164,420.00 81,441.00 8144100

Explanation / Answer

Answers

Operating Revenue

Sales

$              148,970.00

Less: Sales Discounts

$                       150.00

Net Sales

$              148,820.00

Cost of Goods Sold

Merchandise Inventory Jan 1, 2019

$               14,500.00

Purchases

$                             88,500.00

Freight In

$                                   175.00

Delivered cost of purchases

$                             88,675.00

Purchase Returns & Allowances

$                                 (950.00)

Net delivered cost of purchases

$               87,725.00

Goods available for sale

$             102,225.00

Less: Merchandise Inventory Dec 31, 2019

$               11,500.00

Cost of Goods Sold

$                 90,725.00

Gross Profit on Sales

$                 58,095.00

Operating Expenses

Wages Expenses

$               24,000.00

Supplies expenses

$                     175.00

Depreciation expenses - Store Equipment

$                 3,000.00

Rent Expenses

$               12,700.00

Advertising expense

$                     460.00

Payroll Taxes expenses

$                 2,862.25

Depreciation expenses - Office Equipment

$                    950.00

Total Operating Expenses

$                 44,147.25

Income from Operations

$                 13,947.75

Other Income

Seminar Fees Income

$                 3,000.00

Other Expense

Interest Expense

$                   (187.50)

Net Non operating expenses

$                   2,812.50

Net Income for the year

$                 16,760.25

Beginning Balance - Vincent Capital

$                     34,950.00

Add: Net Income

$        16,760.25

Less: Drawings

$        13,610.00

Increase in capital balance

$                        3,150.25

ENding Balance - Vincent Capital

$                     38,100.25

ASSETS

Current Assets:

Cash

$ 27,886.00

Accounts receivables

$        450.00

Prepaid Advertising

$        920.00

Supplies

$          75.00

Merchandise Inventory

$ 11,500.00

Total Current Assets

$          40,831.00

Plant & Equipment:

Store Equipment

$       22,500.00

Accumulated Depreciation - Store Equipment

$        (5,500.00)

$ 17,000.00

Office Equipmentr

$           4,500.00

Accumulated Depreciation - Office Equipment

$        (2,400.00)

$    2,100.00

Total Plant & Equipment

$          19,100.00

Total ASSETS

$          59,931.00

LIABILITIES & OWNER'S EQUITY

Current Liabilities:

Notes Payable due 2020

$ 17,500.00

Accounts Payable

$    2,205.00

Wages Payable

$        500.00

Social Security Tax Payable

$          31.00

Medicare Tax Payable

$            7.25

Unearned Seminar Fees

$    1,500.00

Interest Payable

$          87.50

Total Current Liabilities

$          21,830.75

Owner's Equity:

Ending Balance - Capital

$          38,100.25

Total LIABILITIES & OWNER'S EQUITY

$          59,931.00

A [See Income Statement]

Cost of Goods Sold

$        90,725.00

B [See Income Statement]

Beginning Inventory

$        14,500.00

C [See Income Statement]

Ending Inventory

$        11,500.00

D = B+C

Total of inventory

$        26,000.00

E=D/2

Average Inventory

$        13,000.00

F = A / E

Inventory Turnover ratio

6.98 times

Operating Revenue

Sales

$              148,970.00

Less: Sales Discounts

$                       150.00

Net Sales

$              148,820.00

Cost of Goods Sold

Merchandise Inventory Jan 1, 2019

$               14,500.00

Purchases

$                             88,500.00

Freight In

$                                   175.00

Delivered cost of purchases

$                             88,675.00

Purchase Returns & Allowances

$                                 (950.00)

Net delivered cost of purchases

$               87,725.00

Goods available for sale

$             102,225.00

Less: Merchandise Inventory Dec 31, 2019

$               11,500.00

Cost of Goods Sold

$                 90,725.00

Gross Profit on Sales

$                 58,095.00

Operating Expenses

Wages Expenses

$               24,000.00

Supplies expenses

$                     175.00

Depreciation expenses - Store Equipment

$                 3,000.00

Rent Expenses

$               12,700.00

Advertising expense

$                     460.00

Payroll Taxes expenses

$                 2,862.25

Depreciation expenses - Office Equipment

$                    950.00

Total Operating Expenses

$                 44,147.25

Income from Operations

$                 13,947.75

Other Income

Seminar Fees Income

$                 3,000.00

Other Expense

Interest Expense

$                   (187.50)

Net Non operating expenses

$                   2,812.50

Net Income for the year

$                 16,760.25

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