GL1201 - Based on Exercise 12-11 LO P2, P3, A1 Use the following financial statements and additional Information QUALITY FIRST INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 Assets Cash $120,200 $ 72,800 Accounts receivable, net 76, eee 59,eee Inventory 68,eee 94, Prepaid expenses 4,600 5,888 Total current assets 268,888 231,600 Equipment 137,eee 127, eee Accum. depreciation-Equipment (33,600) (11,eee) Total assets $372,800 $347,600 Liabilities and Equity Accounts payable $ 31, eee $ 38,00 Wages payable 8,000 19,600 Income taxes payable 4,100 4,600 Total current liabilities 43, 100 61,600 Notes payable (long tern) 40,000 80, eee Total liabilities 83,100 141,600 Equity Connon stock, 55 par value 240,000 170,eee Retained earnings 49,700 36,eee Total liabilities and equity $372,888 $347,600 $727, eee 445, eee 282,200 QUALITY FIRST INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $63, eee Other expenses 71,eee Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 134, eee 148,00 2,400 150,400 46,048 $184,360 Additional Information a. A $40.000 note payable is retired at its $40,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net Income and cash dividends pald. c. New equipment is acquired for $62,000 cash. d. Received cash for the sale of equipment that had cost $52.000. ylelding a $2,400 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. Requirement Journal Geral Ladigar Trial Balance Direct Method Indirect Method Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year. Upon completion, the trial balance tab should agree with the June 30, 2019 balances. No Date Account To Debit Credit 1 Jun 30 710.000 Accounts receivable, not 17.000 Sales 727,000 2 Jun 30 445.000 Cost of goods sold Accounts payable Inventory 3 Jun 30 Depreciation experte Accumulated depreciation..oment Jun 30 Other expenses Wagns payable Prepaid expenses Cash 5 Jun 30 Cash Accumulated depreciation Equipment Equipment Gain on sale of equipment Jun 30 Income tax expense Income payable Cash 7 Jun 30 Notes payable conglom Cash 8 Jun 30 Equipment Cash 9 Jun 30 Cash Common stock. $5 per value 10 Jun 30 Sales Gain on sale of equipment Income summary 11 Jun 30 Income may Cost of goods sold Depreciation expense Other expenses Income tax expense 12 Jun 30 Income Summary Retained amings 13 Jun 30 Retained Amings 36.000 35.000