P5-4A Chapman Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company's fiscal year on November 30, 2012, these accounts appeared in its adjusted trial balance.

Accounts Payable

Accounts Receivable

Accumulated DepreciationEquipment

Common Stock Cost of Goods Sold Freight-out

s 26,800

17,200

68,000

8,000

35,000

614,300

6,200

Equipment

Depreciation Expense Dividends

Gain on Disposal of Plant Assets

Income Tax Expense

Insurance Expense

Interest Expense

Inventory

Notes Payable

Prepaid Insurance

Advertising Expense

Rent Expense

Retained Earnings Salaries and Wages Expense

Sales Revenue

Salaries and Wages Payable

Sales Returns and Allowances Utilities Expense

Additional data: Notes payable are due in 2016.

Instructions

$157,000

13,500

12,000

2,000

10,000

9,000

5,000

26,200

43,500

6,000 33,500

34,000

14,200

117,000

904,000

6,000

20,000

10,600

(a) Prepare a multiple-step income statement, a retained earnings statement, and a clas sified balance sheet.

P5-6A The trial balance of Dealer's Choice Wholesale Company contained the accounts shown at December 31, the end of the company's fiscal year.

DEALER'S CHOICE WHOLESALE COMPANY

Trial Balance

December 31, 2012

Cash Accounts Receivable

Inventory

Land

Buildings

Accumulated DepreciationBuildings

Equipment

Accumulated DepreciationEquipment

Notes Payable

Accounts Payable

Common Stock

Retained Earnings

Dividends

Sales Revenue

Sales Discounts

Cost of Goods Sold

Salaries and Wages Expense

Utilities Expense

Maintenance and Repairs Expense

Advertising Expense Insurance Expense Adjustment data:

Debit s 31,400

37,600

70,000

92,000

200,000

83,500

10,000

6,000

709,900

51,300

11,400

8,900

5,200

4, 800

s

Credit

60,000

40,500

54,700

17,500

160,000

67,200

922,100

1. Depreciation is $8,000 on buildings and $7,000 on equipment. (Both are operating expenses.)

2. Interest of $4,500 is due and unpaid on notes payable at December 31.

3. Income tax due and unpaid at December 31 is $24,000.

Other data: $15,000 of the notes payable are payable next year.

Instructions

(a) (b)

(c) (d)

Journalize the adjusting entries.

Create T accounts for all accounts used in part (a). Enter the trial balance amounts into the T accounts and post the adjusting entries. Prepare an adjusted trial balance.

Prepare a multiple-step income statement and a retained earnings statement for the year, and a classified balance sheet at December 31, 2012.

P5-3B At the beginning of the current season, the ledger of Highland Tennis Shop showed Cash $2,500; Inventory $1, 700; and Common Stock $4,200. The following trans actions were completed during April.

Apr.

4

6

8

10

11 13 14

15

17

18

20 21 27

30

Purchased racquets and balls from Harris Co. $980, terms 2/10, n/30. Paid freight on Harris Co. purchase $60.

Sold merchandise to members $750, terms n/30. The merchandise sold cost $480.

Received credit of $130 from Han-is Co. for damaged racquets that were returned.

Purchased tennis shoes from Happy Feet for cash $300.

Paid Harris Co. in full.

Purchased tennis shirts and shorts from Rivera Sportswear $1 ,300, terms 3/10, n/60.

Received cash refund of $50 from Happy Feet for damaged merchan-dise that was returned.

Paid freight on Rivera Sportswear purchase $60.

Sold merchandise to members $660, terms n/30. The cost of the mer-chandise sold was $440.

Received $500 in cash from members in settlement of their accounts. Paid Rivera Sportswear in full.

Granted an allowance of $30 to members for tennis clothing that did not fit properly.

Received cash payments on account from members $550.

The chart of accounts for the tennis shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, and Cost of Goods Sold.

Instructions

(a) (b)

(c) (d)

Journalize the April transactions using a perpetual inventory system.

Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions.

Prepare a trial balance on April 30, 2012.

Prepare an income statement through gross profit.