Good to Go Auto Products distributes automobile parts to service stations and re

Question

Good to Go Auto Products distributes automobile parts to service stations and repair shops. The adjusted trial balance data that follows is from the firm’s worksheet for the year ended December 31, 2019.

Required:

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.

Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period.

Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than one year.

Analyze:
What percentage of total operating expenses is attributable to warehouse expenses?

Accounts Debit Credit Cash $ 98,400 Petty Cash Fund 600 Notes Receivable, due 2020 12,000 Accounts Receivable 139,600 Allowance for Doubtful Accounts $ 3,200 Interest Receivable 120 Merchandise Inventory 127,900 Warehouse Supplies 2,700 Office Supplies 640 Prepaid Insurance 4,040 Land 15,400 Building 104,000 Accumulated Depreciation—Building 16,400 Warehouse Equipment 19,200 Accumulated Depreciation—Warehouse Equipment 9,200 Office Equipment 8,800 Accumulated Depreciation—Office Equipment 3,600 Notes Payable, due 2020 14,400 Accounts Payable 56,300 Interest Payable 340 Loans Payable—Long-Term 14,000 Mortgage Payable 17,000 Colin O’Brien, Capital (Jan. 1) 321,020 Colin O’Brien, Drawing 70,050 Income Summary 130,800 127,900 Sales 1,098,300 Sales Returns and Allowances 7,800 Interest Income 520 Purchases 457,000 Freight In 9,200 Purchases Returns and Allowances 13,050 Purchases Discounts 8,640 Warehouse Wages Expense 108,000 Warehouse Supplies Expense 5,200 Depreciation Expense—Warehouse Equipment 2,800 Salaries Expense—Sales 151,100 Travel Expense 23,400 Delivery Expense 36,825 Salaries Expense—Office 84,400 Office Supplies Expense 1,160 Insurance Expense 9,275 Utilities Expense 7,400 Telephone Expense 3,220 Payroll Taxes Expense 31,000 Building Repairs Expense 3,100 Property Taxes Expense 15,800 Uncollectible Accounts Expense 2,980 Depreciation Expense—Building 5,000 Depreciation Expense—Office Equipment 1,560 Interest Expense 3,400 Totals $ 1,703,870 $ 1,703,870

Explanation / Answer

1.

Income Statement

$

Revenue from Operation

1,090,500

Less

Cost of Sales

444,510

=

Gross Profit

645,990

Warehouse Expenses

116,000

Less

Selling Expenses

211,325

General and Administrative expenses

118,095

=

Income From Operation

200,570

Interest Income

520

Interest Expenses

3,400

Net Income Before Tax   

197,690

Tax Expenses

46,800

Net Income After Tax

150,890

Statement of Changes inequity

$

Collin O’Brien Capital 1st January

321,020

Add

Net Income

150,890

Less

Income Summery Balance

2900

Less

Collin O’Brien withdrawals

70,050

=

Collin O’Brien on December 31st 2017

398,960

The balance sheet as on 31st December 219

$

Current Asset

Cash  

99,000

Note receivables

12,000

Prepaid Insurance

4,040

Inventory

127,900

Office Supplies

640

Warehouse supplies

2,700

Interest Receivable

120

Accounts Receivables (Net)

136,400

Total Current Asset

382,800

Non Current Asset

Land

15,400

Building

87,600

Net Warehouse equipments

10,000

Office equipments

5,200

Total Non Current asset

118,200

Total Asset

501,000

Liability

Current Liability

Accounts Payable

56,300

Interest Payable

340

Notes Payable

14,400

Total current liability

71,040

Long Term liability

Loan Payable

14,000

Mortgage Payable

17,000

Total long Term liability

31,000

Total liability

102,040

Equity

398,960

Total liability and Equity

501,000

Note

All Asset are Net of Accumulate Depreciation.

Inventory is not adjusted against Cost of Goods Sold

2. percentage of warehousing expense to total operating expense =

(Warehousing expense/Total operating expense) *100

= (116,000 /445,420*)100 =26%

Total operating Expense = Warehouse expenses Selling Expense +General expenses.

$

Revenue from Operation

1,090,500

Less

Cost of Sales

444,510

=

Gross Profit

645,990

Warehouse Expenses

116,000

Less

Selling Expenses

211,325

General and Administrative expenses

118,095

=

Income From Operation

200,570

Interest Income

520

Interest Expenses

3,400

Net Income Before Tax   

197,690

Tax Expenses

46,800

Net Income After Tax

150,890

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