The Artisan Wines is a retail store selling vintage wines. On December 31, 2019,

Question

The Artisan Wines is a retail store selling vintage wines. On December 31, 2019, the firm’s general ledger contained the accounts and balances below. All account balances are normal.

Prepare a classified income statement for the year ended December 31, 2019. The company does not classify its operating expenses as selling expenses and general and administrative expenses. (Round your answers to 2 decimal places.)

Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the year. (Round your answers to 2 decimal places.)

repare a classified balance sheet as of December 31, 2019. (Round your answers to 2 decimal places.)

What is the inventory turnover for Artisan Wines? (Round your answer to 2 decimal places.)

Artisan Wines
Worksheet
Year Ended December 31, 2019 Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Account Name Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash $ 29,086.00 $ 29,086.00 $ 29,086.00 Accounts Receivable 570.00 570.00 570.00 Prepaid Advertising 900.00 300.00 600.00 600.00 Supplies 370.00 235.00 135.00 135.00 Merchandise Inventory 15,700.00 12,700.00 15,700.00 12,700.00 12,700.00 Store Equipment 28,500.00 28,500.00 28,500.00 Accumulated Depreciation—Store Equipment 3,700.00 3,300.00 7,000.00 7,000.00 Office Equipment 5,700.00 5,700.00 5,700.00 Accumulated Depreciation—Office Equipment 1,570.00 1,070.00 2,640.00 2,640.00 Notes Payable, due 2020 23,500.00 23,500.00 23,500.00 Accounts Payable 3,405.00 3,405.00 3,405.00 Wages Payable 600.00 600.00 600.00 Social Security Tax Payable 37.20 37.20 37.20 Medicare Tax Payable 8.70 8.70 8.70 Unearned Seminar Fees 8,100.00 5,400.00 2,700.00 2,700.00 Interest Payable 117.50 117.50 117.50 Vincent Arroyo, Capital 31,230.00 31,230.00 31,230.00 Vincent Arroyo, Drawing 14,810.00 14,810.00 14,810.00 Income Summary 15,700.00 12,700.00 15,700.00 12,700.00 15,700.00 12,700.00 Sales 160,970.00 160,970.00 160,970.00 Sales Discounts 270.00 270.00 270.00 Seminar Fee Income 5,400.00 5,400.00 5,400.00 Purchases 94,500.00 94,500.00 94,500.00 Purchases Returns and Allowances 1,070.00 1,070.00 1,070.00 Freight In 295.00 295.00 295.00 Rent Expense 13,900.00 13,900.00 13,900.00 Wages Expense 24,700.00 600.00 25,300.00 25,300.00 Payroll Taxes Expense 4,024.00 45.90 4,069.90 4,069.90 Depreciation Expense—Store Equipment 3,300.00 3,300.00 3,300.00 Depreciation Expense—Office Equipment 1,070.00 1,070.00 1,070.00 Advertising Expense 300.00 300.00 300.00 Supplies Expense 235.00 235.00 235.00 Interest Expense 220.00 117.50 337.50 337.50 Totals $ 233,545.00 $ 233,545.00 $ 39,468.40 $ 39,468.40 $ 251,378.40 $ 251,378.40 $ 159,277.40 $ 180,140.00 $ 92,101.00 $ 71,238.40 Net Income 20,862.60 20,862.60 $ 180,140.00 $ 180,140.00 $ 92,101.00 $ 92,101.00

Explanation / Answer

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Analyze:

Inventory turnover = Cost of goods sold/Average inventory = $96725/$14200 = 6.81

Average inventory = (Beginning inventory + Ending inventory)/2 = ($15700 + $12700)/2 = $28400/2 = $14200

ARTISAN WINES Income Statement For the Year Ended December 31, 2019 Operating revenue Sales 160970.00 Less: Sales discounts 270.00 Net sales 160700.00 Cost of goods sold Merchandise inventory, January 1, 2019 15700.00 Add: Purchases 94500.00 Freight-in 295.00 Delivered cost of purchases 94795.00 Less: Purchase returns and allowances 1070.00 Net delivered cost of purchases 93725.00 Goods available for sale 109425.00 Less: Merchandise inventory, December 31, 2019 12700.00 Cost of goods sold 96725.00 Gross profit 63975.00 Operating expenses Rent expense 13900.00 Wages expense 25300.00 Payroll taxes expense 4069.90 Depreciation expense-store equipment 3300.00 Depreciation expense-office equipment 1070.00 Advertising expense 300.00 Supplies expense 235.00 Total operating expenses 48174.90 Income from operations 15800.10 Other income Seminar fee income 5400.00 5400.00 Other expenses Interest expense 337.50 337.50 Net nonoperating income 5062.50 Net income 20862.60

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