John Neff owns and operates Waikiki Surf Shop. A year-end trial balance is provided on page 561. Year-end adjustment data for the Waikiki Surf Shop are shown below. Neff uses the periodic inventory system. Year-end adjustment data are as follows:(a, b) A physical count shows that merchandise inventory costing $51,800 is on hand as of December 31, 20--.(c, d, e) Neff estimates that customers will be granted $2,000 in refunds of this year’s sales next year and the merchandise expected to be returned will have a cost of $1,200.(f) Supplies remaining at the end of the year, $600.(g) Unexpired insurance on December 31, $2,600.(h) Depreciation expense on the building for 20--, $5,000.(i) Depreciation expense on the store equipment for 20--, $3,000.(j) Wages earned but not paid as of December 31, $1,800.(k) Neff also offers boat rentals which clients pay for in advance. Unearnedboat rental revenue as of December 31 is $3,000.Required1. Prepare a year-end spreadsheet.2. Journalize the adjusting entries.3. Compute cost of goods sold using the spreadsheet prepared for part (1). AWaikiki Surf Shop2Trial Balance3For the Year Ended December 31,20-4ACCOUNT TITLEDEBIT BALANCECREDIT BALANCE56Cash30,000.0022,500.0056,200.007 Accounts Receivable8 Merchandise ImentoryEstimated Returns Inventory10 Supplies800.002,700.003,600.0011 Prepaid Insurance12 Land115,000.0013 Bulding14 Accumulated Depreciation-Buikling15 Store Equipment135,000.0024,000.0075,000.0016 Accumulated Depreciation-Store Equipment17 Accounts Payable18 Custormer Refunds Payable22,500.0015,000.001,100.0019 Wages Payable20 Unearned Boat Rent Revenue33,000.0021 J. Neff, Capital22 J. Heff, Drawing240,100.0040,875.0023 Income Summary2425 Sales404,950.0026 Sales Returns and Allowances27 Boat Rental Reverue28 Purchases6,000.00157,500.0029 Purchases Retumsand Allowances1200.001,500.0030 Purchases Discounts675.0031 Freight-in32 Wages Expense33 Advertising Expese34 Supplies Expense35 Phone Experse36 Utdities Expense63,000.0011,290.005,290.0018,000.0037 Insurance Expense38 Deprediation Expense-Building39 Deprediation Expense-Equipment40743,350.00743,350.0041

Journal entry is a primary entry that records the financial transactions initially.

Answered: A Waikiki Surf Shop 2 Trial Balance 3…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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John Neff owns and operates Waikiki Surf Shop. A year-end trial balance is provided on page 561. Year-end adjustment data for the Waikiki Surf Shop are shown below. Neff uses the periodic inventory system. Year-end adjustment data are as follows:
(a, b) A physical count shows that merchandise inventory costing $51,800 is on hand as of December 31, 20--.
(c, d, e) Neff estimates that customers will be granted $2,000 in refunds of this year’s sales next year and the merchandise expected to be returned will have a cost of $1,200.
(f) Supplies remaining at the end of the year, $600.
(g) Unexpired insurance on December 31, $2,600.
(h) Depreciation expense on the building for 20--, $5,000.
(i) Depreciation expense on the store equipment for 20--, $3,000.
(j) Wages earned but not paid as of December 31, $1,800.
(k) Neff also offers boat rentals which clients pay for in advance. Unearned
boat rental revenue as of December 31 is $3,000.
Required
1. Prepare a year-end spreadsheet.
2. Journalize the adjusting entries.
3. Compute cost of goods sold using the spreadsheet prepared for part (1).

A
Waikiki Surf Shop
2
Trial Balance
3
For the Year Ended December 31,20-
4
ACCOUNT TITLE
DEBIT BALANCE
CREDIT BALANCE
5
6
Cash
30,000.00
22,500.00
56,200.00
7 Accounts Receivable
8 Merchandise Imentory
Estimated Returns Inventory
10 Supplies
800.00
2,700.00
3,600.00
11 Prepaid Insurance
12 Land
115,000.00
13 Bulding
14 Accumulated Depreciation-Buikling
15 Store Equipment
135,000.00
24,000.00
75,000.00
16 Accumulated Depreciation-Store Equipment
17 Accounts Payable
18 Custormer Refunds Payable
22,500.00
15,000.00
1,100.00
19 Wages Payable
20 Unearned Boat Rent Revenue
33,000.00
21 J. Neff, Capital
22 J. Heff, Drawing
240,100.00
40,875.00
23 Income Summary
24
25 Sales
404,950.00
26 Sales Returns and Allowances
27 Boat Rental Reverue
28 Purchases
6,000.00
157,500.00
29 Purchases Retumsand Allowances
1200.00
1,500.00
30 Purchases Discounts
675.00
31 Freight-in
32 Wages Expense
33 Advertising Expese
34 Supplies Expense
35 Phone Experse
36 Utdities Expense
63,000.00
11,290.00
5,290.00
18,000.00
37 Insurance Expense
38 Deprediation Expense-Building
39 Deprediation Expense-Equipment
40
743,350.00
743,350.00
41

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