Superior Hardwood Company distributes hardwood products to small furniture manuf
ID: 2535548 • Letter: S
Question
Superior Hardwood Company distributes hardwood products to small furniture manufacturers. The adjusted trial balance data given below is from the firm's worksheet for the year ended December 31, 2019 Credit $ 22,498 688 18,188 88,808 Petty Cash Fund Notes Receivable, due 2828 Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Warehouse Supplies Office Supplies Prepaid Insurance Land Building Accumulated Warehouse Equipment Accumulated Depreciation-Warehouse Equipment Delivery Equipment Accumulated Depreciation-Delivery Equipment Office Equipment Accumulated Depreciation-Office Equipment Notes Payable, due 2828 Accounts Payable Interest Payable Mortgage Payable Loans Payable, Long-term Charles Ronie, Capital (Jan. 1) Charles Ronie, Drawing Income $4,308 217,800 5,188 29,808 ding 28,588 42,588 16, 5e0 43,888 12,308 16, 298 6,90e 18, 5e8 37,300 52,588 8,508 386,768 125,38e 227,808 16,508 758,8e8 12,188 217,80e 1,699,88e Sales Returns and Allowances Interest Income 1,418 Freight In Purchases Returns and Allowances Purchases Discounts Warehouse Wages Expense Warehouse Supplies Expense Depreciation Expense-Warehouse Equipment Salaries Expense-Sales Travel and Entertainment Expense Delivery Depreciation Expense-Delivery Equipment Salaries Expense-Office Office Supplies Expense Insurance Expense Utilities Expense Telephone Expense Payroll Taxes Expense Property Taxes Expense Uncollectible Accounts Expense Depreciation Expense-Building Depreciation Expense-office Equipment Interest Expense Totals 6,748 182,600 4,188 252, 288 19,888 58,638 8,188 68,988 Wages Expense 4,588 7,598 4, 828 5,588 4,188 7,308 6,588 $2,441,888 $2,441,888 Requlrec 1. Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expenses. 2. Prepare a statement of owner's equity for the year ended December 31, 2019. No additional investments were made during the IO 3. Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than a year Analyze: What is the current ratio for this business?Explanation / Answer
Answer 1. Superior Hardwood Company Income Statement For the Month Ended Dec 31, 2019 Sales Revenue Sales 1,699,000.00 Less: Sales Return & Allowances 16,500.00 Net Sales 1,682,500.00 Less: Cost of Goods Sold Merchandise Inventory, Beginning 227,000.00 Purchases 750,000.00 Less: Purchases Discount 9,460.00 Less: Purchases Returns & Allowances 6,740.00 Net Purchases 733,800.00 Goods Available for Sale 960,800.00 Add: Freight In 12,100.00 Net Cost of Goods Purchased 972,900.00 Less: Merchandise Inventory, Ending 217,000.00 Cost of Goods Sold 755,900.00 Gross Margin 926,600.00 Warehouse Expenses Warehouse Wages Expenses 182,600.00 Warehouse Supplies Expenses 5,400.00 Depreciation Exp. - Warehouse Equipment 4,100.00 192,100.00 Selling Expenses Salaries Expenses - Sales 252,200.00 Travel & Entertainment Exp. 19,800.00 Delivery Wages Expenses 58,630.00 Depreciation Exp. - Delivery Equipment 8,100.00 338,730.00 General & Administrative Expenses Salaries Expenses - Office 68,900.00 Office Supplies Expenses 2,300.00 Insurance Expenses 4,500.00 Utilities Expenses 7,590.00 Telephone Expenses 4,820.00 Payroll Taxes Expenses 50,500.00 Property Taxes Expenses 3,900.00 Uncollectible Account Expenses 4,100.00 Depreciation Expense - Building 7,300.00 Depreciation Expense - Office Equipment 2,300.00 156,210.00 Net Operating Income 239,560.00 Other Income & Losses Interest Expense 6,500.00 Interest Revenue 1,410.00 5,090.00 Net Income (Loss) 234,470.00 Answer 2. Owners' Equity Statement As of Dec 31, 2019 Charles Ronie, Capital - Jan 1, 2019 306,760.00 Net Income (Loss) 234,470.00 Sub-total 541,230.00 Less: Chales Ronie, Drawings (125,300.00) Ending Balance 415,930.00 Answer 3. Superior Hardwood Company Balance Sheet As of Dec 31, 2019 Assets Current Assets Cash 22,400.00 Petty Cash Fund 600.00 Notes Receivable due 2020 10,100.00 Accounts Receivable 80,000.00 Allowance for Doubtful Accounts (4,300.00) 75,700.00 Merchandise Inventory 217,000.00 Warehouse Supplies 2,690.00 Office Supplies 1,250.00 Prepaid Insurance 5,100.00 Total Current Assets 334,840.00 Property, Plant & Equipment Land 29,000.00 Building 161,000.00 Accumulated Depreciation - Building (43,800.00) 117,200.00 Warehouse Equipment 28,500.00 Accumulated Depreciation - Warehouse Equip. (12,300.00) 16,200.00 Delivery Equipment 42,500.00 Accumulated Depreciation - Delivery Equip. (16,200.00) 26,300.00 Office Equipment 16,500.00 Accumulated Depreciation - Office Equip. (6,900.00) 9,600.00 Total Property, Plant & Equipment 198,300.00 Total Assets 533,140.00 Liabilities & Owners' Equity Liabilities Current Liabilities Notes Payable due 2020 18,500.00 Accounts Payable 37,300.00 Interest Payable 410.00 Total Current Liabilities 56,210.00 Long Term Liabilities Mortgage Payable 52,500.00 Loans Payable - Long Term 8,500.00 Total Long Term Liabilities 61,000.00 Total Liabilities 117,210.00 Owners' Equity 415,930.00 Total Laibilities & Owners' Equity 533,140.00 Current ratio = Current Assets / Current Liabilities Current ratio = $334,840 / $56,210 Current ratio = 5.96 : 1 (Approx.)
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