Solution to Quiz 5

March 29, 2018 | Author: junjun | Category: Debits And Credits, Expense, Balance Sheet, Depreciation, Financial Accounting


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Quiz 5-Adjusting Entries/WorksheetDesign Home Furnishings is a retail store. On December 31, 2015, the firm's general ledger contained the following accou Adjustment data are shown below: Unadjusted Trial Balance Adjustments Debit Credit Debit Credit Cash $ 8,000 Accounts Receivable 7,000 Allowance for doubtful accounts - b $ 350 Merchandfise Inventory, January 1 40,000 Store Supplies 1,300 c 900 Prepaid Advertising 1,800 d 600 Store Equipment 8,000 Accumulated Depreciation-Store Equipmednt $ 1,400 e 1,400 Accounts Payable 3,600 Salaries Payable - f 3,000 Rich Gaza, Capital 36,500 Rich Gaza, Drawings 26,000 Income Summary - a 44,000 Merchandise Inventory, end a 44,000 Sales 278,500 Sales Returns and Allowances 6,800 Purchases 136,000 Purchanse returns and allowances 1,600 Rent Expense 36,000 Telephone Expense 900 Salaries Expense 45,000 f 3,000 Taxes and Licenses 3,600 Store Supplies expense c 900 Advertising expense 1,200 d 600 Depreciation Expense-Store Equipment - e 1,400 Doubtful Accounts Expense - b 350 $ 321,600 $ 321,600 $ 50,250 $ 50,250 Net Income Adjustments: a. Merchandise Inventory: December 31, 2015, is P44,000 (Record the ending inventory and carry forward the beginning inventory to the income statement account. The beginning inventory will be included in the closing of nominal accounts. b The firm estimates that 5% of the outstanding accounts receivable is doubtful of collection c On December 31, 2015, an inventory of store supplies showed that items costing P400 were on hand. d OnNovember 1, 2015, the firm signed a 6-month advertising contract for P1,800 and paid the full amount in advance. e On January 3, 2014, the firm purchased store equipment for P8,000. At that time, the equipment was estimated to have a useful life of five years and a salvage value of P1,000 f On December 31, 2015, the firm owed salaries of P3,000 to part-time employees. These salaries will not be paid until 2016. ADJUSTING ENTRIES a Merchandise Inventory, ending 44,000 Income Summary 44,000 b Doubtful Accounts Expense 350 Allowance for doubtful accounts 350 ($7,000 x .05) = $350 c Store Supplies expense 900 Store Supplies 900 ($1,300-$400) = $900 d Advertising expense 600 Prepaid Advertising 600 ($300 per month x 2 months) e Depreciation-store equipment 1,400 Accumulated depreciation-store equipment 1,400 ($8,000-$1,000) = $7,000/5 = $1,400 f Salaries expense 3,000 Salaries Payable 3,000 DESIGN HOME FURNISHINGS Worksheet December 31, 2015 Unadjusted Trial Balance Adjustments Debit Credit Debit Credit Cash ₱ 8,000 Accounts Receivable 7,000 Allowance for doubtful accounts - Merchandfise Inventory, January 1 40,000 Store Supplies 1,300 Prepaid Advertising 1,800 Store Equipment 8,000 Accumulated Depreciation-Store Equipmednt ₱ 1,400 Accounts Payable 3,600 Salaries Payable - Rich Gaza, Capital 36,500 Rich Gaza, Drawings 26,000 Income Summary - Merchandise Inventory, December 31 Sales 278,500 Sales Returns and Allowances 6,800 Purchases 136,000 Purchanse returns and allowances 1,600 Rent Expense 36,000 Telephone Expense 900 Salaries Expense 45,000 Taxes and Licenses 3,600 Store Supplies expense Advertising expense 1,200 Depreciation Expense-Store Equipment - Doubtful Accounts Expense - Total ₱ 321,600 ₱ 321,600 Net Income or Loss tained the following accounts and balnces. Adjusted Income Statement Balance Sheet/ Trial Balance Statement of Financial Position Debit Credit Debit Credit Debit Credit $ 8,000 $ 8,000 7,000 7,000 $ 350 $ 350 40,000 $ 40,000 400 400 1,200 1,200 8,000 8,000 2,800 2,800 3,600 3,600 3,000 3,000 36,500 36,500 26,000 26,000 44,000 44,000 44,000 44,000 278,500 278,500 6,800 6,800 136,000 136,000 1,600 1,600 36,000 36,000 900 900 48,000 48,000 3,600 3,600 900 900 1,800 1,800 1,400 1,400 350 350 $ 370,350 $ 370,350 $ 275,750 $ 324,100 $ 94,600 $ 46,250 - 48,350 48,350 $ 324,100 $ 324,100 $ 94,600 $ 94,600 ME FURNISHINGS orksheet mber 31, 2015 Adjusted Trial Balance Income Statement Balance Sheet Debit Credit Debit Credit Debit Credit FINANCIAL STATEMENT PREPARATION From the adjusted balance trial balance of Design Home Furnishings, preparation of 1. Income Statement (Functional Form) ; 2. Statement of Changes in Equity; 3. Balance Sheet (Report period ending December 31, 2015. Adjusted Trial Balance Cash $ 8,000 Accounts Receivable 7,000 Allowance for doubtful accounts 350 Merchandise Inventory, January 1 40,000 Store Supplies 400 Prepaid Advertising 1,200 Store Equipment 8,000 Accumulated Depreciation-Store Equipmednt 2,800 Accounts Payable 3,600 Salaries Payable 3,000 Rich Gaza, Capital 36,500 Rich Gaza, Drawings 26,000 Sales 278,500 Sales Returns and Allowances 6,800 Purchases 136,000 Purchanse returns and allowances 1,600 Rent Expense 36,000 Telephone Expense 900 Salaries Expense 48,000 Taxes and Licenses 3,600 Store Supplies expense 900 Advertising expense 1,800 Depreciation Expense-Store Equipment 1,400 Doubtful Accounts Expense 350 Additional Information: Inventory count on December 31, 2015: P44,000. DESIGN HOMES FURNISHINGS Income Statement For the period ending December 31, 2015 Gross Sales Less: Sales Retiurns amd Allowances Net Sales Less: Cost of Sales Merchandise Inventory, Januiary 1 Add: Purchases $ 136,000 Less: Purchase Returns and Allowances 1,600 Goods Available for Sale Less: Merchandise Inventory, December 31 Cost of Sales Gross Profit Less: Expenses Administrative Expenses Salaries Expnse $ 48,000 Rent Expense 36,000 Taxes and Licenses 3,600 Telephone Expense 900 Doubtful Accounts Expense 350 Distribution Expenses Advertising Expense $ 1,800 Depreciation Expense-Store Equipment 1,400 Store Supplies Expense 900 Total Expenses Net Income DESIGN HOMES FURNISHINGS Statement of Changes in Owner's Equity For the period ending December 31, 2015 Rich Gaza, Capital January 1, 2015 Add: Net Income for the period Sub-Total Less: Rich Gaza, Drawings Rich Gaza, Capital Decem,ber 31, 2015 DESIGN HOMES FURNISHINGS Statement of Financial Position December 31, 2015 ASSETS Current Assets Cash Accounts Receivable $ 7,000 Less: Allowance for doubtful Accounts 350 Merchandise Inventory Store Supplies Prepaid Advertising Total Current Assets Non-Current Assets Store Equipment Less: Accumulated Depreciation Carrying Value Total Assets LIABILITIES AND EQUITY Current Liabilities Accounts Payable Salaries Payable Total Current Liabilities Equity reparation of quity; 3. Balance Sheet (Report Format) for the INGS er 31, 2015 $ 278,500 6,800 $ 271,700 $ 40,000 134,400 $ 174,400 44,000 130,400 $ 141,300 $ 88,850 4,100 92,950 $ 48,350 INGS er's Equity er 31, 2015 $ 36,500 48,350 $ 84,850 26,000 $ 58,850 INGS sition $ 8,000 6,650 44,000 400 1,200 $ 60,250 8,000 2,800 5,200 $ 65,450 $ 3,600 3,000 $ 6,600 58,850 $ 65,450
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