Answered step by step
Verified Expert Solution
Question
1 Approved Answer
As a recently hired accountant for a small business, SMC , Inc., you are provided with last year s balance sheet, income statement, and post
As a recently hired accountant for a small business, SMC Inc., you are provided with last years balance sheet, income statement, and postclosing trial balance to familiarize yourself with the business.
SMC Inc.
Balance sheet:
December
Assets $
Cash $
Accounts receivable $
Supplies $
Total assets $
Liabilities and stockholders equity
Liabilities:
Accounts payable $
Salaries payable $
Income taxes payable $
Total liabilities $
Stockholders equity:
Capital stock shares outstanding $
Retained earnings $
Total stockholders equity $
Total liabilities and stockholders equity $
SMC Inc.
Income statement
For the year ended December
Sales revenue $
Rent revenue $
Total revenue $
Less cost of goods sold $
Gross profit $
Less operating expense:
Supplies expense $
Salaries expense $
Miscellaneous expense $ $
Income before taxes $
Less Income taxes $
Net income $
Earnings per share $ shares $
SMC Inc.
Postclosing trial balance, December :
Cash: Debit: $
Accounts receivable: Debit: $
Inventory: Debit: $
Supplies: Debit: $
Accounts payable: Credit: $
Salaries payable: Credit: $
Income taxes payable: Credit: $
Common stock: Credit: $
Retained earnings: Credit: $
Totals: Debit: $ Credit: $
You are also given the following Information that summarizes the business activity for the current year,
A Issued additional shares of common stock for $ cash on January st
B Borrowed $ on March from Downtown Bank as a longterm loan. The interest rate on the loan is and interest for the year is payable on January
C Paid $ cash on April to lease a building for one year.
D Received $ on May from a tenant for one years rent.
E Paid $ on June for a one year Insurance policy.
F Purchased $ of supplies for cash on June th
G Purchased inventory for $ on account on July
H August sold inventory for $ on account; cost of the merchandise sold was $
I. Collected $ cash from customers accounts receivable on August th
J September paid $ cash for inventories purchased earlier during the year.
K September th paid $ for sales reps salaries, including $ owed at the beginning of
L Dividends for $ were paid on October th
M The income taxes payable for the year of were paid on November th
N For adjusting entries, all prepaid expense are initially recorded as assets, and all unearned revenues are initially recorded as liabilities this is just informational
O At yearend, $ worth of supplies are on hand.
P At year end, an additional $ of sales salaries are owed, but have not yet been paid.
Q Prepare and adjusting entry to recognize the taxes owed for The corporate tax rate is of the income before income taxes. On the excel spreadsheet provided, perform the following tasks using the information from SMC Inc. provided above:
Journalize the transactions for the current year, using the accounts listed on the financial statements and other appropriate accounts.
Set up Taccounts and enter the beginning balances from the December postclosing trial balance for SMC Post all current year journal entries to the Taccounts.
Journalize and post any necessary adjusting entries at the end of Hint: Items b c d e o p and q require adjustment.
After the adjusting entries are posted, prepare the following:
an adjusted trial balance,
an income statement,
statement of retained earnings, and
a balance sheet for
The format of your statements should mirror those prepared by the company in doesnt mean you will use the exact same account titles
Journalize and postclosing entries for and prepare a postclosing trial balance.
Compute the Current Ratio and Debt to Total Assets Ratio for and
Interpretive Question: What is your overall assessment of the financial health of SMC Inc.?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started