Question: Prepare a classified income statement for the year ended December 31,
ID: 2534095 • Letter: Q
Question
Question: Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, 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 period.
Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than one year.
Cash
$
98,400
Petty Cash Fund
600
Notes Receivable, due 2020
12,000
Accounts Receivable
139,600
Allowance for Doubtful Accounts
$
3,200
Interest Receivable
120
Merchandise Inventory
127,900
Warehouse Supplies
2,700
Office Supplies
640
Prepaid Insurance
4,040
Land
15,400
Building
104,000
Accumulated Depreciation—Building
16,400
Warehouse Equipment
19,200
Accumulated Depreciation—Warehouse Equipment
9,200
Office Equipment
8,800
Accumulated Depreciation—Office Equipment
3,600
Notes Payable, due 2020
14,400
Accounts Payable
56,300
Interest Payable
340
Loans Payable—Long-Term
14,000
Mortgage Payable
17,000
Colin O’Brien, Capital (Jan. 1)
321,020
Colin O’Brien, Drawing
70,050
Income Summary
130,800
127,900
Sales
1,098,300
Sales Returns and Allowances
7,800
Interest Income
520
Purchases
457,000
Freight In
9,200
Purchases Returns and Allowances
13,050
Purchases Discounts
8,640
Warehouse Wages Expense
108,000
Warehouse Supplies Expense
5,200
Depreciation Expense—Warehouse Equipment
2,800
Salaries Expense—Sales
151,100
Travel Expense
23,400
Delivery Expense
36,825
Salaries Expense—Office
84,400
Office Supplies Expense
1,160
Insurance Expense
9,275
Utilities Expense
7,400
Telephone Expense
3,220
Payroll Taxes Expense
31,000
Building Repairs Expense
3,100
Property Taxes Expense
15,800
Uncollectible Accounts Expense
2,980
Depreciation Expense—Building
5,000
Depreciation Expense—Office Equipment
1,560
Interest Expense
3,400
Totals
$
1,703,870
$
1,703,870
Cash
$
98,400
Petty Cash Fund
600
Notes Receivable, due 2020
12,000
Accounts Receivable
139,600
Allowance for Doubtful Accounts
$
3,200
Interest Receivable
120
Merchandise Inventory
127,900
Warehouse Supplies
2,700
Office Supplies
640
Prepaid Insurance
4,040
Land
15,400
Building
104,000
Accumulated Depreciation—Building
16,400
Warehouse Equipment
19,200
Accumulated Depreciation—Warehouse Equipment
9,200
Office Equipment
8,800
Accumulated Depreciation—Office Equipment
3,600
Notes Payable, due 2020
14,400
Accounts Payable
56,300
Interest Payable
340
Loans Payable—Long-Term
14,000
Mortgage Payable
17,000
Colin O’Brien, Capital (Jan. 1)
321,020
Colin O’Brien, Drawing
70,050
Income Summary
130,800
127,900
Sales
1,098,300
Sales Returns and Allowances
7,800
Interest Income
520
Purchases
457,000
Freight In
9,200
Purchases Returns and Allowances
13,050
Purchases Discounts
8,640
Warehouse Wages Expense
108,000
Warehouse Supplies Expense
5,200
Depreciation Expense—Warehouse Equipment
2,800
Salaries Expense—Sales
151,100
Travel Expense
23,400
Delivery Expense
36,825
Salaries Expense—Office
84,400
Office Supplies Expense
1,160
Insurance Expense
9,275
Utilities Expense
7,400
Telephone Expense
3,220
Payroll Taxes Expense
31,000
Building Repairs Expense
3,100
Property Taxes Expense
15,800
Uncollectible Accounts Expense
2,980
Depreciation Expense—Building
5,000
Depreciation Expense—Office Equipment
1,560
Interest Expense
3,400
Totals
$
1,703,870
$
1,703,870
Explanation / Answer
Income Statement For the year ended December 31, 2019 Operating revenue Sales 1,098,300 Less: Sales returns (7,800) Net sales 1,090,500 Cost of goods sold Opening stock 130,800 Purchases 457,000 Freight in 9,200 Delivered cost of purchases 466,200 Purchase returns (13,050) Purchase discounts (8,640) Net delivered cost of purchase 444,510 Total merchandise of sale 575,310 Less: Closing stock (127,900) Cost of goods sold 447,410 Gross profit on sales 643,090 Operating expenses Warehouse expenses Warehouse wages expense 108,000 Warehouse supplies expense 5,200 Depreciation expense—Warehouse equipment 2,800 Total warehouse expenses 116,000 Selling expenses Salaries expense—Sales 151,100 Travel and entertainment expense 23,400 Delivery wages expense 36,825 Total selling expenses 211,325 General and administrative expenses Salaries expense—Office 84,400 Office supplies expense 1,160 Insurance expense 9,275 Utilities expense 7,400 Telephone expense 3,220 Payroll taxes expense 31,000 Building repairs expenses 3,100 Property taxes expense 15,800 Uncollectible accounts expense 2,980 Depreciation expense—Building 5,000 Depreciation expense—Office equipment 1,560 Total general and administrative exp. 164,895 Total operating expenses 492,220 Income from operations 150,870 Other Income Interest Income 520 Other expenses Interest expenses (3,400) Net Non operating expenses (2,880) Net Income for the year 147,990 Statement of Owner's Equity For the year ended December 31, 2019 Colin O’Brien, Capital, January 1, 2019 321,020 Net income for year 147,990 Less: Withdrawals for year 70,050 Increase in capital 77,940 Colin O’Brien, Capital, December 31, 2019 398,960 Balance Sheet December 31, 2019 Assets Current assets Cash 98,400 Petty cash fund 600 Notes receivable 12,000 Accounts receivable 139,600 Less: Allowance for doubtful accounts (3,200) 136,400 Interest Receivable 120 Merchandise inventory 127,900 Prepaid expenses Warehouse supplies 2,700 Office supplies 640 Prepaid insurance 4,040 7,380 Total current assets 382,800 Plant and equipment Land 15,400 Building 104,000 Less: Accumulated depreciation (16,400) 87,600 Warehouse equipment 19,200 Less: Accumulated depreciation (9,200) 10,000 Office equipment 8,800 Less: Accumulated depreciation. (3,600) 5,200 Total plant and equipment 118,200 Total assets 501,000 Liability and Owner’s Equity Current liabilities Notes payable 14,400 Accounts payable 56,300 Interest payable 340 Total current liabilities 71,040 Long-term liabilities Mortgage payable 17,000 Loans payable 14,000 Total long term liabilities 31,000 Total liabilities 102,040 Owner's Equity Colin O’Brien, Capital 398,960 Total Liability and Owner’s Equity 501,000
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