Problem 5-6A Debit Credit Journalize the adjusting entries. Create T-accounts fo

Question

Problem 5-6A

Debit

Credit

Journalize the adjusting entries.

Create T-accounts for all accounts used in part a. Enter the trial balance amounts into the T-accounts and post the adjusting entries.

Prepare an adjusted trial balance.

Prepare a multiple-step income statement for the year ended December 31, 2017.
Prepare a retained earnings statement for the year ended December 31, 2017. (List items that increase retained earnings first.)
Prepare a classified balance sheet at December 31, 2017. (List current assets in order of liquidity and property, plant and equipment in order of land, buildings and equipment.)

Problem 5-6A

The trial balance of People’s Choice Wholesale Company contained the following accounts shown at December 31, the end of the company’s fiscal year.
PEOPLE’S CHOICE WHOLESALE COMPANY
Trial Balance
December 31, 2017

Debit

Credit

Cash $ 69,080 Accounts Receivable 82,720 Inventory 154,000 Land 202,400 Buildings 440,000 Accumulated Depreciation—Buildings $ 132,000 Equipment 183,700 Accumulated Depreciation—Equipment 89,100 Notes Payable 120,340 Accounts Payable 38,500 Common Stock 352,000 Retained Earnings 147,840 Dividends 22,000 Sales Revenue 2,028,620 Sales Discounts 13,200 Cost of Goods Sold 1,561,780 Salaries and Wages Expense 112,860 Utilities Expense 25,080 Maintenance and Repairs Expense 19,580 Advertising Expense 11,440 Insurance Expense 10,560 $2,908,400 $2,908,400
Adjustment data:
1. Depreciation is $17,600 on buildings and $15,400 on equipment. (Both are operating expenses.) 2. Interest of $9,900 is due and unpaid on notes payable at December 31. 3. Income tax due and unpaid at December 31 is $52,800.
Other data: $33,000 of the notes payable are payable next year.

Explanation / Answer

PEOPLE’S CHOICE WHOLESALE COMPANY Trial Balance December 31, 2017 Adjusting Entries Adjusted Trial Balance Debit Credit Debit Credit Debit Credit Cash 69080 69080 Accounts Receivable 82,720 82720 Inventory 1,54,000 154000 Land 2,02,400 202400 Buildings 4,40,000 440000 Accumulated Depreciation—Buildings 132000 17600 149600 Equipment 1,83,700 183700 Accumulated Depreciation—Equipment 89,100 15400 104500 Notes Payable 1,20,340 120340 Accounts Payable 38,500 38500 Incoem atx payable 52800 52800 Interest payable 9900 9900 Common Stock 3,52,000 352000 Retained Earnings 1,47,840 147840 Dividends 22,000 22000 Sales Revenue 20,28,620 2028620 Sales Discounts 13,200 13200 Cost of Goods Sold 15,61,780 1561780 Salaries and Wages Expense 1,12,860 112860 Utilities Expense 25,080 25080 Maintenance and Repairs Expense 19,580 19580 Advertising Expense 11,440 11440 Insurance Expense 10,560 10560 Deprecaition expenses-Building 17600 17600 Deprecaition expensesEquipment 15400 15400 Interest expenses 9900 9900 Incoem Tax expense 52800 52800 Total 2908400 2908400 95700 95700 3004100 3004100 Multiple Income Statement Sales Revenue 2028620 Sales Discounts 13200 Net sales Revenue 2015420 Cost of Goods Sold 1561780 Gross Profit 453640 Opearting Expenses Salaries and Wages Expense 112860 Utilities Expense 25080 Maintenance and Repairs Expense 19580 Advertising Expense 11440 Insurance Expense 10560 Deprecaition expenses-Building 17600 Deprecaition expensesEquipment 15400 Total operating expenses 212520 Net Operating Income 241120 Other Expenses Interest expenses 9900 Incoem Before taxes 231220 Incoem Tax expense 52800 Net income 178420 Statement of Retained Eranings Opening Balance 147840 Add: Net Income 178420 326260 Less: dividend -22000 Ending balance 304260 Balance Sheet For the year ended Dec 31 2017 Current assets Cash 69080 Accounts Receivable 82,720 Inventory 1,54,000 Total Current asset 305800 Property Plant & Equipment Land 202400 Building 440000 Acc dep-Building 149600 290400 Equipment 183700 Acc dep-Equipment 104500 79200 572000 Total Assets 877800 Liabilities & Stockholder Equity Current Liabilities Notes Payable 120340 Accounts Payable 38500 Incoem atx payable 52800 Interest payable 9900 Total current Liabilities 221540 Total Liabilities 221540 Stockholder Equity Common stock 352000 Retained Earnings 304260 total stockholder Equity 656260 Total Liabilities & Stockholder Equity 877800

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