Sweet Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses.

SWEET COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 59,200 74,000 277,000 3,000 413,200 241,000 (60,000) $ 594, 200 $64,200 57,000 253,000 3,800 378,000 165,000 (70,000) $ 473,000 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 54,200 17,000 71,200 72,000 143,200 117,000 10,000 127,000 54,000 181,000 182,000 66,000 203,000 594,200 160,000 0 132,000 473,000 $ 848,000 342,000 506,000 SWEET COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 24,000 Other expenses 193,000 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 217,000 (7,000) 282,000 49,000 $ 233,000 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7,000 (details in b). b. Sold equipment costing $62,000, with accumulated depreciation of $34,000, for $21,000 cash. c. Purchased equipment costing $138,000 by paying $32,000 cash and signing a long-term note payable for the balance. d. Borrowed $7,000 cash by signing a short-term note payable. e. Paid $88,000 cash to reduce the long-term notes payable. f. Issued 4,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $162,000. Requirement General Journal General Ledger Trial Balance Direct Method Indirect Method Journal entry worksheet Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Account Title Debit Credit Date December 31 Record entry Clear entry View general journal Journal entry worksheet 2 3 5 6 7 8 14 Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. ate Account Title Debit Credit December 31 Record entry Clear entry View general journal