• 1

  Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any.

• 2

  Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any.

• 3

  Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any.

• 4

  Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any.

• 5

  Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any.

• 6

  Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any.

• 7

  Reconstruct the entry to record the retirement of the $42,000 note payable at its $42,000 carrying (book) value in exchange for cash.

• 8

  Reconstruct the entry for the purchase of new equipment.

• 9

  Reconstruct the entry for the issuance of common stock.

• 10

  Close all revenue and gain accounts to income summary.

• 11

  Close all expense accounts to income summary.

• 12

  Close Income Summary to Retained Earnings.

• 13

  Reconstruct the journal entry for cash dividends paid.

2018 FAIRHAVEN INCORPORATED Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 77,000 Accounts receivable, net 83,000 Inventory 69,000 Prepaid expenses 6, 200 Total current assets 235, 200 Equipment 199,000 Accumulated depreciation-Equipment (51,000) Total assets $ 383,200 Liabilities and Equity Accounts payable $ 33,000 Wages payable 7,000 Income taxes payable 4,700 Total current liabilities 44,700 Notes payable (long term) 43,000 Total liabilities 87,700 Equity Common stock, $5 par value 250,000 Retained earnings 45,500 Total liabilities and equity $ 383,200 $ 25,500 65,000 96,000 7,700 194,200 184,000 (17,000) $ 361,200 $ 40,000 18,000 5,200 63,200 85,000 148,200 180,000 33,000 $ 361,200 FAIRHAVEN INCORPORATED Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 89,000 Other expenses 105,000 Total operating expenses $ 1,059,000 648,000 411,000 $ 194,000 217,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 7,300 224,300 68,660 $ 155,640 Additional Information a. A $42,000 note payable is retired at its $42,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $87,000 cash. d. Received cash for the sale of equipment that had cost $72,000, yielding a $7,300 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. For Year Ended June 30, 2019 Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: FAIRHAVEN INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash Changes in current operating assets and liabilities