Question
As a recently hired accountant for a small business, Integrated Health Services, Inc., you are provided with last years balance sheet, income statement, and post-closing
As a recently hired accountant for a small business, Integrated Health Services, Inc., you are provided with last years balance sheet, income statement, and post-closing trial balance to familiarize yourself with the business.
San Juan Health Services, Inc.
Balance Sheet
December 31, 2018
Assets
Cash ................................................................................ $ 22,100
Account Receivable......................................................... 27,000
Inventory ......................................................................... 13,500
Supplies........................................................................... 600
Total Assets..................................................................... $63,200
Liabilities and Stockholders Equity
Liabilities:
Account Payable ......................................................... 17,000
Salaries Payable ............................................................. 3,500
Income Taxes payable .................................................... 3,200
Total Liabilities................................................................. $23,700
Stockholders Equity:
Capital Stock (10, shares outstanding) .......................... $20,000
Retained earnings ........................................................... 19,500
Total Stockholders equity ............................................... $39,500
Totals Liabilities and Stockholders equity....................... $63,200
,
Integrated Health Services, Inc.
Income Statements
For the Year Ended December 31, 2018
Sales revenues..$143,000
Rent revenues$4,000
Total revenues $147,000
Less cost of goods sold 85,000
Gross margin.$62,000
Less operating expenses:
Supplies expense $1,200
Salaries expense. 31,000
Miscellaneous expense.6,400 $38,600
Income before taxes$23,400
Less income taxes.8,190
Net Income$15,210
Earnings per share ($15,210 / 10,000 shares) $1.52
Integrated Health Services, Inc.
Post-Closing Trial Balance
December 31, 2018
DebitoCrdito
Cash..$22,100
Account Receivable27,000
Inventory.13,500
Supplies...600
Account Payable$17,000
Salaries Payable3,500
Income Taxes Payable.3,200
Capital Stock. 20,000
Retained Earnings 19,500
Totals $63,200 $63,200
The following information summarizes the business activity for the year, 2019.
a. Issued 6,000 additional shares capital stock for $30,000 cash.
b. Borrowed $10,000 on January 2, 2018, from Metropolis Bank as a long-term loan. Interest for the year is $700, payable on January 2, 2019.
c. Paid $5, 100 cash on September 1 to lease a truck for six months rent.
d. Received $1,800 on November 1 from a tenant for six months rent.
e. Paid $900 on December 1 for a one-year insurance policy.
f. Purchased $250 of supplies for cash.
g. Purchased inventory for $80,000 on account.
h. Sold inventory for $105,000 on account; cost of the merchandise sold was $60,000.
i. Collected $95,000 cash from customers accounts receivable
j. Paid $65,000 cash for inventories purchased during the year.
k. Paid $34,000 for sales reps salaries, including $3,500 owed at the beginning of 2019.
l. No dividends were paid during the year.
m. The income taxes payable for 2019 were paid.
n. For adjusting entries, all prepaid expenses are initially recorded as assets, and all unearned revenues are initially recorded as liabilities.
o. At year-end, $400 worth of supplies are on hand.
p. At year-end, an additional $4,000 of sales salaries are owed, but have not yet been paid.
q. Income tax expense is based on a 35% corporate tax rate.
Complete the following:
1. Journalize the transactions for the current year, 2019, using the accounts listed
on the financial statements and other appropriate accounts (omit explanations).
2. Post the ledger-account for all accounts including the post-closing trial balance for Bearing, Inc.
3. Journalize and post any necessary adjusting entries at the end of 2019 (Hint: Items b, c, d, e, m, o, and p require adjustments).
4. After the adjusting entries are posted, prepare a trial balance, a balance sheet, and an Income statement for 2019 (Hint: Income before income taxes should equal $8,175.). Report the Financial Statements separated.
5. Journalize and post closing entries for 2019 and prepare a post-closing trial balance.
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