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Multi-step Income Statement and Adjusting Entries The Boston Trading Company, whose accounting year ends on December 31, had the following normal balances in its general

Multi-step Income Statement and Adjusting Entries The Boston Trading Company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31:

Cash $15,000
Accounts Receivable 56,600
Inventory 74,000
Prepaid Insurance 3,000
Office Supplies 4,200
Furniture & Fixtures 21,000
Accumulated Depreciation - Furn. & Fixtures 7,000
Delivery Equipment 86,000
Accumulated Depreciation - Delivery Equipment 12,000
Accounts Payable 43,000
Long-term Notes Payable 28,000
Common Stock 70,000
Retained Earnings 56,400
Sales Revenue 610,000
Cost of Goods Sold 394,000
Utilities Expense 4,800
Sales SalariesExpense 77,000
Delivery Expense 10,800
Advertising Expense 5,600
Rent Expense 9,400
Office salaries expense 56,000
Income Tax Expense 9,000

During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year-end procedures are as follows:

1. Prepaid insurance, December 31 $1,500
2. Depreciation Expense on furniture and fixtures for year $2,000
3. Depreciation Expense on delivery equip. for the year $11,000
4. Salaries Payable, December 31 ($1,800 Sales and $1,200 Office) $3,000
5. Unused office supplies on December 31 $1,200

Required

a. Record the necessary adjusting entries at December 31. b. Prepare a multi-step income statement for the year. Combine all the operating expenses into one line on the income statement for selling, general and administrative expenses.

a.

Dec. 31 Answer

1 Answer Answer
Answer
Answer Answer
To record expired insurance.
31 Answer
2 Answer Answer
Answer
Answer Answer
To record depreciation expense for furniture for the year.
31 Answer
3 Answer Answer
Answer
Answer Answer
To record depreciation expense for delivery equipment for the year.
31 Salaries Expense 4 Answer Answer
Answer
Answer Answer
Answer
Answer Answer
To record accrued salaries at December 31.
31 Answer
5 Answer Answer
Answer
Answer Answer
To record office supplies used.

b. Do not use negative signs with your answers.

Answer

$Answer
Answer
Answer
Gross Profit on Sales Answer
Operating Expenses
Answer
Answer
Income before Income Taxes Answer
Answer
Answer
Net Income

$

Answer

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