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A/C Name Trial Balance DR CR Cash Accounts receivable Allowance for bad debt Merchandise Inventory Store Supplies 155,900 800,000 60,000 1,200,000 80,000 Prepaid Insurance 195,600 Prepaid rent 457,450 Furniture and fixtures 800,000 Accumulated depreciation-Furniture and Fixtures 79,000 Motor Truck 1,200,000 Accumulated depreciation - Motor Truck Salary payable Interest payable Accounts payable Unearned Sales revenue Long-term loan Capital Withdrawals Sales revenue 31,330 98,105 608,900 600,000 2,750,000 55,500 4,312,465 Sales discount 205,000 Sales returns and allowances Cost of goods sold Salaries expense 185,000 1,100,000 855,000 Insurance Expense Utilities Expense Rent Expense 220,050 550,000 522,800 Depreciation Expense - Furniture & Fixtures Depreciation Expense - Motor Truck Store Supplies Expense Gain on Disposal of Old Motor Truck Bad-Debt Expense Interest Expense 42,500 8,582,300 8,582,300

A/C Name Trial Balance DR CR Cash Accounts receivable Allowance for bad debt Merchandise Inventory Store Supplies 155,900 800,000 60,000 1,200,000 80,000 Prepaid Insurance 195,600 Prepaid rent 457,450 Furniture and fixtures 800,000 Accumulated depreciation-Furniture and Fixtures 79,000 Motor Truck 1,200,000 Accumulated depreciation - Motor Truck Salary payable Interest payable Accounts payable Unearned Sales revenue Long-term loan Capital Withdrawals Sales revenue 31,330 98,105 608,900 600,000 2,750,000 55,500 4,312,465 Sales discount 205,000 Sales returns and allowances Cost of goods sold Salaries expense 185,000 1,100,000 855,000 Insurance Expense Utilities Expense Rent Expense 220,050 550,000 522,800 Depreciation Expense - Furniture & Fixtures Depreciation Expense - Motor Truck Store Supplies Expense Gain on Disposal of Old Motor Truck Bad-Debt Expense Interest Expense 42,500 8,582,300 8,582,300

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 59E: Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements...
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Question

The following additional information is available at June 30, 2022:

 

  • Store Supplies on hand at June 30, 2022 amounted to $15,485.
  • Insurance of $195,600 was paid on April 1, 2022, for 8-months to November 2022
  • Rent was prepaid on March 1, 2022, for 7-months to September 2022.
  • The furniture and fixtures have an estimated useful life of 10 years and is being depreciated on the straight-line method down to a residual value of $10,000.
  • The motor truck was acquired on May 1, 2022, and is being depreciated

 over 5 years on the double-declining balance method of depreciation, down to 

  a residue of $10,000

  • Salaries earned by employees not yet paid amounted to $205,105 at June 30, 2022.
  • Accrued interest expense as of June 30, 2022, $104,000.
  • On June 30, 2022, $545,000 of the previously unearned sales revenue had been earned.
  • The aging of the Accounts Receivable schedule at June 30, 2022 indicated that the

       Allowance for Bad Debts should be $80,000.

  • After making all other adjustments, a physical count of inventory was done, which

       reveals that there was $1,000,000 worth of inventory on hand at June 30,2022

Other data:

(xi)            The business is expected to make principal payments totalling $165,000 towards the

                  loan during the fiscal year to June 30 ,2023

 

 

Question:

 

1. Prepare the necessary adjusting journal entries on June 30, 2022

 

2. Prepare the Adjusted Trial balance at June 30, 2022

 

3. Prepare the company’s multiple-step income statement for the period ending June 30, 2022

 

A/C Name Trial Balance DR CR Cash Accounts receivable Allowance for bad debt Merchandise Inventory Store Supplies 155,900 800,000 60,000 1,200,000 80,000 Prepaid Insurance 195,600 Prepaid rent 457,450 Furniture and fixtures 800,000 Accumulated depreciation-Furniture and Fixtures 79,000 Motor Truck 1,200,000 Accumulated depreciation - Motor Truck Salary payable Interest payable Accounts payable Unearned Sales revenue Long-term loan Capital Withdrawals Sales revenue 31,330 98,105 608,900 600,000 2,750,000 55,500 4,312,465 Sales discount 205,000 Sales returns and allowances Cost of goods sold Salaries expense 185,000 1,100,000 855,000 Insurance Expense Utilities Expense Rent Expense 220,050 550,000 522,800 Depreciation Expense - Furniture & Fixtures Depreciation Expense - Motor Truck Store Supplies Expense Gain on Disposal of Old Motor Truck Bad-Debt Expense Interest Expense 42,500 8,582,300 8,582,300
Transcribed Image Text:A/C Name Trial Balance DR CR Cash Accounts receivable Allowance for bad debt Merchandise Inventory Store Supplies 155,900 800,000 60,000 1,200,000 80,000 Prepaid Insurance 195,600 Prepaid rent 457,450 Furniture and fixtures 800,000 Accumulated depreciation-Furniture and Fixtures 79,000 Motor Truck 1,200,000 Accumulated depreciation - Motor Truck Salary payable Interest payable Accounts payable Unearned Sales revenue Long-term loan Capital Withdrawals Sales revenue 31,330 98,105 608,900 600,000 2,750,000 55,500 4,312,465 Sales discount 205,000 Sales returns and allowances Cost of goods sold Salaries expense 185,000 1,100,000 855,000 Insurance Expense Utilities Expense Rent Expense 220,050 550,000 522,800 Depreciation Expense - Furniture & Fixtures Depreciation Expense - Motor Truck Store Supplies Expense Gain on Disposal of Old Motor Truck Bad-Debt Expense Interest Expense 42,500 8,582,300 8,582,300
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