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P5-6A Wolcott Warehouse Store has an August 31 fiscal year end and uses a perpetual inventory system. An alphabetical list of its account balances at August 31, 2014, follows. All accounts have normal balances. $ 30,000 Interest revenue $ 960 Accounts payable Accounts receivable Accumulated depreciation- 20,000 57,440 Merchandise inventory Notes payable 36,000 equipment 26,720 Notes receivable 32,000 Cash 12,525 Rent expense 16,000 Cost of goods sold 569,680 Sales 703,360 Depreciation expense 6,680 Sales discounts 3,700 66,800 Sales returns and allowances 14,440 Equipment Freight out 4,720 Supplies expense 5,840 Insurance expense 2,895 Unearned revenue 6,040 2,160 V. Wolcott, capital 72,680 Interest expense Interest receivable 240 V. Wolcott, drawings 60,640 Additional information: 1. All adjustments have been recorded and posted except for the inventory adjustment. According to the inventory count, the company has $55,000 of merchandise on hand. 2. Last year Wolcott Warehouse Store had a gross profit margin of 20% and a profit margin of 10%. Instructions (a) Prepare any additional required adjusting entries. (b) Prepare a single-step income statement. (c) Prepare a multiple-step income statement.

P5-6A Wolcott Warehouse Store has an August 31 fiscal year end and uses a perpetual inventory system. An alphabetical list of its account balances at August 31, 2014, follows. All accounts have normal balances. $ 30,000 Interest revenue $ 960 Accounts payable Accounts receivable Accumulated depreciation- 20,000 57,440 Merchandise inventory Notes payable 36,000 equipment 26,720 Notes receivable 32,000 Cash 12,525 Rent expense 16,000 Cost of goods sold 569,680 Sales 703,360 Depreciation expense 6,680 Sales discounts 3,700 66,800 Sales returns and allowances 14,440 Equipment Freight out 4,720 Supplies expense 5,840 Insurance expense 2,895 Unearned revenue 6,040 2,160 V. Wolcott, capital 72,680 Interest expense Interest receivable 240 V. Wolcott, drawings 60,640 Additional information: 1. All adjustments have been recorded and posted except for the inventory adjustment. According to the inventory count, the company has $55,000 of merchandise on hand. 2. Last year Wolcott Warehouse Store had a gross profit margin of 20% and a profit margin of 10%. Instructions (a) Prepare any additional required adjusting entries. (b) Prepare a single-step income statement. (c) Prepare a multiple-step income statement.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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P5-6A Wolcott Warehouse Store has an August 31 fiscal year end and uses a perpetual inventory system. An alphabetical list of its account balances at August 31, 2014, follows. All accounts have normal balances. $ 960 Accounts payable Accounts receivable $ 30,000 20,000 Interest revenue Merchandise inventory Notes payable 57,440 Accumulated depreciation- 36,000 equipment 26,720 Notes receivable 32,000 Cash 12,525 Rent expense 16,000 Cost of goods sold 569,680 Sales 703,360 Depreciation expense 6,680 Sales discounts 3,700 66,800 Sales returns and allowances 14,440 Equipment Freight out 4,720 Supplies expense 5,840 Insurance expense 2,895 Unearned revenue 6,040 2,160 72,680 Interest expense Interest receivable V. Wolcott, capital V. Wolcott, drawings 240 60,640 Additional information: 1. All adjustments have been recorded and posted except for the inventory adjustment. According to the inventory count, the company has $55,000 of merchandise on hand. 2. Last year Wolcott Warehouse Store had a gross profit margin of 20% and a profit margin of 10%. Instructions (a) Prepare any additional required adjusting entries. (b) Prepare a single-step income statement. (c) Prepare a multiple-step income statement. (d) Calculate gross profit margin and profit margin. Compare with last year's margins and comment on the results. (e) Prepare the closing entries. Post to the Income Summary account. Before closing the Income Sum- mary account, check that the balance is equal to profit.
Transcribed Image Text:P5-6A Wolcott Warehouse Store has an August 31 fiscal year end and uses a perpetual inventory system. An alphabetical list of its account balances at August 31, 2014, follows. All accounts have normal balances. $ 960 Accounts payable Accounts receivable $ 30,000 20,000 Interest revenue Merchandise inventory Notes payable 57,440 Accumulated depreciation- 36,000 equipment 26,720 Notes receivable 32,000 Cash 12,525 Rent expense 16,000 Cost of goods sold 569,680 Sales 703,360 Depreciation expense 6,680 Sales discounts 3,700 66,800 Sales returns and allowances 14,440 Equipment Freight out 4,720 Supplies expense 5,840 Insurance expense 2,895 Unearned revenue 6,040 2,160 72,680 Interest expense Interest receivable V. Wolcott, capital V. Wolcott, drawings 240 60,640 Additional information: 1. All adjustments have been recorded and posted except for the inventory adjustment. According to the inventory count, the company has $55,000 of merchandise on hand. 2. Last year Wolcott Warehouse Store had a gross profit margin of 20% and a profit margin of 10%. Instructions (a) Prepare any additional required adjusting entries. (b) Prepare a single-step income statement. (c) Prepare a multiple-step income statement. (d) Calculate gross profit margin and profit margin. Compare with last year's margins and comment on the results. (e) Prepare the closing entries. Post to the Income Summary account. Before closing the Income Sum- mary account, check that the balance is equal to profit.
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