
Concept explainers
Fun Depot is a retail store that sells toys, games, and bicycles. On December 31, 2019, the firm’s general ledger contained the following accounts and balances.
INSTRUCTIONS
- 1. Prepare the
Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2019. - 2. Enter the adjustments below in the Adjustments section of the worksheet. Identify each adjustment with the appropriate letter.
- 3. Complete the worksheet.
ACCOUNTS AND BALANCES
ADJUSTMENTS
a.–b. Merchandise inventory on December 31, 2019, is $148,000.
c. During 2019, the firm had net credit sales of $440,000. The firm estimates that 0.7 percent of these sales will result in uncollectible accounts.
d. On December 31, 2019, an inventory of the supplies showed that items costing $2,960 were on hand.
e. On September 1, 2019, the firm signed a six-month advertising contract for $5,280 with a local newspaper and paid the full amount in advance.
f. On January 2, 2018, the firm purchased store equipment for $32,500. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $3,700.
g. On January 2, 2018, the firm purchased office equipment for $8,400. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $1,200.
h. On December 31, 2019, the firm owed salaries of $8,000 that will not be paid until 2020.
i. On December 31, 2019, the firm owed the employer’s social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $8,000 of accrued wages.
j. On December 31, 2019, the firm owed federal
Analyze: If the adjustment for advertising had not been recorded, what would the reported net income have been?

Want to see the full answer?
Check out a sample textbook solution
Chapter 12 Solutions
GEN COMBO COLLEGE ACCOUNTING; CONNECT ACCESS CARD
- Provide correct answer general accounting questionarrow_forwardNeed help with this question solution general accountingarrow_forwardConsider a four-year project with the following information: Initial fixed asset investment = $555,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $37; variable costs = $25; fixed costs = $230,000; quantity sold = 79,000 units; tax rate = 24 percent. How sensitive is OCF to changes in quantity sold?arrow_forward
- Light emitting diodes (LED) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.39 and lasts 1,000 hours. A 15-watt LED, which provides the same light, costs $3.10 and lasts for 12,000 hours. A kilowatt-hour of electricity costs $.115. A kilowatt-hour is 1,000 watts for 1 hour. If you require a return of 11 percent and use a light fixture 500 hours per year, what is the equivalent annual cost of each light bulb? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.arrow_forwardRecently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: From an investor standpoint, do you think that the effect of the inventory write-down should be considered when…arrow_forwardFinancial accountingarrow_forward
- Dont use ai solution general Accounting questionarrow_forwardNeed correct answer general Accountingarrow_forwardYear 0123 Cash Flow -$ 19,000 11,300 10,200 6,700 a. What is the profitability index for the set of cash flows if the relevant discount rate is 11 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. What is the profitability index for the set of cash flows if the relevant discount rate is 16 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. What is the profitability index for the set of cash flows if the relevant discount rate is 23 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability indexarrow_forward
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning

