GL1201 - Based on Exercise 12-11 LO P1, P2, P3, A1 Use the following financial statements and additional information. SMITH INC Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity $116,500 60,500 53,000 88,000 5,500 207,000 118,000 11,000 $345,900 $314,000 68,000 63,000 4,400 251,900 127,000 33,000 $ 26,000 6,000 3,600 35,600 33,000 68,600 32,000 16,000 4,000 52,000 65,000 117,000 170,000 27,000 $345,900 $314,000 240,000 37,300 SMITH INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold Gross profit Operating expenses $685,000 419,000 266,000 Depreciation expense $60,000 68,000 Other expenses Total operating expenses 128,000 138,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,100 140,100 42,880 $ 97,220 Additional Information a. A $33,000 note payable is retired at its $33,000 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 $59,000 cash d. Received cash for the sale of equipment that had cost $50,000, yielding a $2,100 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. Journal entry worksheet 2 3 4 5 8 13 Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Journal entry worksheet 2 3 4 5 6 8 13 Reconstruct the entry to record the retirement of the $33,000 note payable at its $33,000 carrying (book) value in exchange for cash. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30