The adjusted trial balance for Chai Tea Company at December 31, 2010 is presente

Question

The adjusted trial balance for Chai Tea Company at December 31, 2010 is presented below:
                                              Debit                             Credit
Cash                                       10,500
Accounts receivable                130,000
Allowance for uncollectible accounts                              10,000
Prepaid rent                            5,000
Inventory                                25,000
Equipment                              300,000
Accumulated depreciation-equip                                   125,000
Accounts payable                                                          20,000
Notes payable

Explanation / Answer

Income Statement $349,500 Costs of goods sold $180,000 Salaries expense $120,000 Rent expense $15,000 Depreciation expense $ 30,000 Interest expense $2,000 Bad debt expense $2,500 (To record transfer of expense accounts to Income statement) Sales revenue 400,000 Income statement $400,000 (To record transfer of revenue accounts to Income statement)

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