Question
The Boston Trading Company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31: Cash $15,000
The Boston Trading Company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31:
Cash | $15,000 |
Accounts Receivable | 56,600 |
Inventory | 74,000 |
Prepaid Insurance | 3,000 |
Office Supplies | 4,200 |
Furniture & Fixtures | 21,000 |
Accumulated Depreciation - Furn. & Fixtures | 7,000 |
Delivery Equipment | 86,000 |
Accumulated Depreciation - Delivery Equipment | 12,000 |
Accounts Payable | 43,000 |
Long-term Notes Payable | 28,000 |
Common Stock | 70,000 |
Retained Earnings | 56,400 |
Sales Revenue | 610,000 |
Cost of Goods Sold | 394,000 |
Utilities Expense | 4,800 |
Sales Salaries Expense | 77,000 |
Delivery Expense | 10,800 |
Advertising Expense | 5,600 |
Rent Expense | 9,400 |
Office salaries expense | 56,000 |
Income Tax Expense | 9,000 |
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 | $1,500 |
2. Depreciation Expense on furniture and fixtures for year | $2,000 |
3. Depreciation Expense on delivery equip. for the year | $11,000 |
4. Salaries Payable, December 31 ($1,800 Sales and $1,200 Office) | $3,000 |
5. Unused office supplies on December 31 | $1,200 |
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.
a. Date Dec. 31 31 31 31 To record expired insurance. Description 31 Salaries Expense General Journal To record depreciation expense for furniture for the year. To record depreciation expense for delivery equipment for the year. To record accrued salaries at December 31. To record office supplies used. " 46 4 Ref. 2 3 5 Debit 0 0 0 0 0 0 0 0 0 0 0 Credit 0 0 0 0 0 0 0 0 0 0 0 b. Do not use negative signs with your answers. BOSTON TRADING COMPANY Income Statement For the Year Ended December 31 Gross Profit on Sales Operating Expenses Income before Income Taxes Net Income < < $ 69 0 0 0 0 0 0 0
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