Land 5,100 69 Advertis $5,400 for the office and $2,580 for the sales department
ID: 2413066 • Letter: L
Question
Land 5,100 69 Advertis $5,400 for the office and $2,580 for the sales department full in the id advertising account above rest accrued on ut e wi terest rate of 8% for the month of December. 31/2016 was Prepare an adjusted trial balance report for the company as of December 31, 2017, All accounts have normal balances (except cash which is currently an overdraft) liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment and total accumulated depreciation Prepare a multi-step income statement for the for the year ended December 31 2017 Prepare a statement of retained earnings for the year ended December 31,2017 ProblemAExplanation / Answer
1) adjusted trail balance (where adjustments required)
(w1) R/E
-here dividend decleared and paid so debit decrease in retained earnings
-if it just declared, in balance sheet debit cash dividend decleared (decleared before year end) it is not the case here
(w2) issuing bond
assuming bond issued for cash:
-debit cash for amount of bond
-credit bonds payable
(w3) depreciation
annual depreciation given only to account for 4th quarter's so *1/4
office= 5400*(1/4) =1350
sales dep= 2580*(1/4) =645
Debit depreciation and credit Accumulated depreciation)
(w4) advertising
prepaid advertising expense is for 12 months only 1 month belongs to this accounting year.
so 600-600*(11/12)=600-(500)
=100
600(Asset) is already added in trail balance so to reduce by consumed 100 for this year debit advertising expense by 100
(w5) interest on notes payable
8% is annual interest so 1 month rate 8*(1/12) =0.666 =0.67%
int= 29550*0.0067 =198
credit increase in liability
2)Balance sheet
Non Current Asset
land 135,200
equipment(60,260-645(w3) 59,615
building(81,380-1350(w3) 80030
current assets
Receivables 100,090
inventory 15,100
prepaid advertising(4910-100) 4810
cash or bank (-6380+50,000(bonds)-12000(dividend)) 31620
TOTAL ASSETS 426465
Equity
share capital ($1) 69,080
retained earnings(fron statement of RE below) 223767
non current liability
bonds payable (27340+50000(w2) 77340
current liability
int payable 433
notes payable(29550+198(w5) 29748
income tax payable 2970
TOTAL EQUITY AND LIABILITY 426465
Tips:Chance of Balance statement tally is absolute zero. but check for adjustments
3)income statement
Revenue 571,968
less:sales return and allowance (56427)
sales discount (24241)
net SALES REVENUE =491300
Cost of sales(w6) (142,100)
operating profit 349200
interest expense (2333)
utility expense (1300)
advertisind (1560)
selling expense (37,240)
(5000commision+32240 wages)
administration (22980)
(15000wage+depreciation7980(all office+sales))
PROFIT BEFORE TAX 283787
TAX @16% (283787*0.16) (45406)
pat 238381
(w6)cost of sales
opening inventory at 12/2016 -20,220
+ purchases -136980
-closing inventory (15,100)
cos 142100
4) Statement of reteained earning for year ended december 31
opening retained earnings is not given so here required statement of adjusted retained earnings
retained earnings as pet TB : 50366
adj: prior period adjustments net of tax
adjusted RE :50366
net income earned in 12/201 (from above) 238381
less: dividend paid (12000+52980) (64980)
RE at end of 12/2017 223767
equipment 60,260 Int expense 2,333 int payable 433 Retained Earning 50,366 (w1) 12,000 dividends 52,980 land 135,200 sales discount 24,241 purchases 136,980 accounts receivable 100,000 bond payable 27,340 (w2) 50,000 inventory 15,100 notes payable 29,550 (w5) 198 accumulated depreciation 24,365 (w3) 1350+645 prepaid advertising 4910 100 cash (6,380) (w2) 50,000 depreciation(office) 4050 (w3) 1350 depreciation(sales) 1,935 (w3) 645Related Questions
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