Question
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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