P5-3A Maine Department Store is located near the Village Shopping Mall. At the e

Question

P5-3A

Maine Department Store is located near the Village Shopping Mall. At the end of the company's fiscal year on December 31, 2008, the following accounts appeared in two of its trial balances.

Unadjusted Adjusted Unadjusted Adjusted

Accounts Payable $79,300 $79,300 Interest Revenue $4,000 $4,000
Accounts Receivable 50,300 50,300 Merchandise Inventory 75,000 75,000
Accumulated Depr. - Building 42,100 52,500 Mortgage Payable 80,000 80,000
Accumulated Depr. - Equipment 29,600 42,900 Office Salaries Expense 32,000 32,000
Building 190,000 190,000 Prepaid Insurance 9,600 2,400
Cash 23,800 23,800 Property Tax Expense 4,800
Common Stock 116,600 116,600 Property Taxes Payable 4,800
Cost of Goods Sold 412,700 412,700 Retained Earnings 60,000 60,000
Depr. Expense - Building 10,400 Sales Salaries Expense 76,000 76,000
Depr. Expense- Equipment 13,300 Sales 628,000 628,000
Dividends 28,000 28,000 Sales Commissions Expense 10,200 14,500
Equipment 110,000 110,000 Sales Commissions Payable 4,300
Insurance Expense 7,200 Sales Returns and Allowances 8,000 8,000
Interest Expense 3,000 11,000 Utilities Expense 11,000 12,000
Interest Payable 8,000 Utilities Expense Payable 1,000

Analysis reveals the following additional data.
1. Insurance Expense and utilities Expense are 60% selling and 40% administrative.

2. $20,000 of the mortgage Payable is due for payment next year.

3. Depreciation on the building and property Tax Expense are administrative Expenses; depreciation on the equipment is a selling Expense.

Complete a multiple-step income statement, a retained earnings statement, and a classified balance sheet. (List amounts from largest to smallest eg 10, 5, 3, 2. If amounts are the same, list alphabetically. List assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2.)

MAINE DEPARTMENT STORE
Income Statement
For the Year Ended December 31, 2008

Sales Revenues


Less:


Net sales




Gross profit


Operating Expenses

Selling Expenses


Total selling Expenses


Administrative Expense

Total administrative Expenses

Total operating Expenses

Income from operations

Other revenues and gains



Other Expenses and losses




Net income

MAINE DEPARTMENT STORE
Retained Earnings Statement
For the Year Ended December 31, 2008

Add:


Less:




MAINE DEPARTMENT STORE
Balance Sheet
December 31, 2008
Assets
Current Assets












Total current assets

Property, plant and equipment

$

Less:



Equipment

Less:




Total assets $


Liabilities and Stockholders' Equity
Current liabilities

$
















Total current liabilities

Long-term liabilities



Total liabilities

Stockholders' Equity






Total stockholders' equity

Total liabilities and stockholders' equity $







Journalize the adjusting entries that were made.
Date Description Debit Credit
Dec. 31
$


$

(To adjust depreciation on building.)
Dec. 31
$


$

(To adjust depreciation on equipment.)
Dec. 31
$


$

(To adjust Insurance Expense.)
Dec. 31
$


$

(To adjust interest Expense.)
Dec. 31
$


$

(To adjust property Tax Expense.)
Dec. 31
$


$

(To adjust sales Commissions Expense.)
Dec. 31
$


$

(To adjust utilities Expense.)






Journalize the closing entries that are necessary. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Date Description/Account Debit Credit
Dec. 31
$


$


$

(To close revenue account.)
Dec. 31
$


$


$


$


$


$


$


$


$


$


$


$

(To close Expense accounts.)
Dec. 31
$


$

(To close income summary.)
Dec. 31
$


$

(To close dividends.)

Explanation / Answer

Sales Revenue 628,000.00 Less : returns and Allowances (8,000.00) Net Sales 620,000.00 Less: Cost of Goods Sold (412,700.00) Gross Profit 207,300.00 less: Expenses Insurance Expense : Selling Expenses Insurance Expense :(60% of 7200) (4,320.00) Depreciation Expense- Equipment (13,300.00) Sales Salries (76,000.00) Sales Commission (14,500.00) Utilities (7,200.00) Administrative Expenses Insurance Expense :(40% of 7200) (2,880.00) Depreciation Expense-Building (10,400.00) Property TaxExpense (4,800.00) Utilities (4,800.00) Total Selling And Administrative Expenses (138,200.00) Other Expenses; Interest Expense (11,000.00) Net Income 58,100.00 Retained Earnings 60,000.00 Add: Net Income 58,100.00 Less:Dividends (28,000.00) Retained Earnings transferred to Stockholders' 90,100.00 Equity

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