The New England Trading Company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31:

During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year-end procedures are as follows:

1. Prepaid insurance, December 31 , was \(\$ 1,800\).

2. Depreciation expense on furniture and fixtures for the year was \(\$ 2,200\).

3. Depreciation expense on delivery equipment for the year was \(\$ 11,000\).

4. Salaries payable, December 31 ( \(\$ 1,900\) sales and \(\$ 1,200\) office), was \(\$ 3,100\).

5. Unused office supplies on December 31 were \(\$ 1,400\).

Required

a. Record the necessary adjusting entries at December 31 .

b. Prepare a multi-step income statement for the year. Combine all the operating expenses into one line on the income statement for selling, general and administrative expenses.

Transcribed Image Text:

Cash... Accounts receivable. Inventory.... $17,000 Sales revenue... $620,000 56,600 Cost of goods sold 394,000 74,000 Utilities expense... 4,800 Prepaid insurance.. 3,000 Sales salaries expense.. 77,000 Office supplies 4,200 Delivery expense 10,800 Furniture and fixtures. 21,000 Advertising expense.. 5,600 Accumulated depreciation- Rent expense.. 9,400 furniture and fixtures. 7,000 Office salaries expense 56,000 Delivery equipment.... 86,000 Income tax expense. 9,000 Accumulated depreciation- delivery equipment.. 12,000 Accounts payable.... 37,000 Long-term notes payable 28,000 Common stock.... 70,000 Retained earnings 56,400