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The work sheet and trial balance of Santos Corporation is reproduced on the following page. The information below is relevant to the preparation of adjusting

The work sheet and trial balance of Santos Corporation is reproduced on the following page. The information below is relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts.

Instructions

As the accountant for Santos, you are to prepare adjusting entries based on the following data, entering the adjustments on the work sheet and completing the additional columns with respect to the income statement and statement of financial position. Carefully key your adjustments and label all items. Round all calculations to the nearest dollar.

1. After an aging of accounts receivable, it was determined that three percent of the accounts will become uncollectible.

2. Depreciation is calculated using the straight-line method, with an eight-year life and $1,000 residual (salvage) value.

3. Salesmen are paid commissions of 11% of sales. Commissions on sales for the last week of December have not been paid.

4. The note was issued on October 1, 2013, with interest at 8%, due Feb. 1, 2014.

5. A physical inventory of supplies indicated $280 of supplies currently on hand.

6. Provisions of the companys lease contract specify rent payments must be made one month in advance, with monthly payments of $900/mo. This provision has been complied with as of Dec. 31, 2013.

Santos Corporation

Work Sheet

Year ended December 31, 2013

Trial Balance Adjustments Income Statement State of fin position

Accounts Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.

Cash 5,400

Marketable Securities 4,050

Accounts Receivable 40,000

Allow. for D. A. 420

Inventory 16,800

Supplies 1,040

Equipment 49,000

Accum. Depr.Equip. 9,500

Accounts Payable 4,400

Notes Payable 4,250

Common Shares 40,000

Retained Earnings 25,340

Cost of Goods Sold 238,520

Office Salaries 20,800

Sales Commissions 29,000

Rent Expense 7,200

Misc. Expense 2,200

Sales 330,100

Totals 414,010 414,010

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