(1) COMPLETE THE WORKSHEET (2) PREPARE ADJUSTING ENTRIES (3) PREPARE INCOME STAT
ID: 2554997 • Letter: #
Question
(1) COMPLETE THE WORKSHEET
(2) PREPARE ADJUSTING ENTRIES
(3) PREPARE INCOME STATEMENT
(4) PREPARE STATEMENT OF RETAINED EARNINGS
(5) CLOSING ENTRIES
(6) BALANCE SHEET
The following items should be considered in adjusting the accounts for financial statement preparation: 1. Franklin Products acquired a 8.4% bank loan for $65,550 on August 1, 2017, due in 1 year. 2. Prepaid insurance is the cost of a 18-month insurance policy, effective February 1. 3. Franklin Products rents warehouse storage for its seasonal heavy equipment. On November 1, 2017, Franklin Products paid $4,140 for a 6-month lease. 4. The physical inventory count of Merchandise Inventory indicated an amount $64,686. 5. Supplies on hand at December 31, 2017 total $3,918. 6. Equipment is depreciated on a straight-line basis; residual value is estimated to be $7,500 with an estimated service life of 7 years. The assets were held the entire year. 7. On October 1, Franklin Products issued Evergreen Industries a 6-month note receivable at a 6.4% annual interest rate. 8. The aging schedule of accounts receivable indicates total estimated bad debt will be $8,166. 9. Salaries & Wages of $1,498 are accrued and unpaid at December 31, 2017. 10. December utilities totaled $1,143 and remain unrecorded at December 31, 2017. Unadjusted Adjusted Account Title Trial Balance Adjustments Trial Balance Income Statement Balance Sheet DR CR DR CR DR CR DR CR DR CR Cash 23,414 Accounts Receivable 92,552 Allowance for Doubtful Accounts 451 Interest Receivable Note Receivable 5,290 Merchandise Inventory 66,516 Prepaid Insurance 2,484 Prepaid Rent 4,140 Supplies 10,488 Equipment 94,392 Accumulated Depreciation - Equipment 10,212 Accounts Payable 9,669 Salaries & Wages Payable Interest Payable Utilities Payable Note Payable (final payment due 2020) 65,550 Common Stock 27,600 Retained Earnings 78,200 Dividends 22,540 Sales 989,690 Sales Returns and Allowances 5,520 Sales Discounts 11,868 Cost of Goods Sold 681,214 Salaries & Wages Expense 149,868 Depreciation Expense - Equipment Bad Debt Expense Insurance Expense Rent Expense Supplies Expense Utilities Expense 11,086 Interest Revenue Interest Expense 1,181,372 1,181,372 Net IncomeExplanation / Answer
Income statement For the year ended December 31, 2017 Sales 989690 Less: Sales Returns and allowances 5520 Sales Discounts 11868 17388 Net Sales 972302 Cost of goods sold 683044 Gross Profit 289258 Selling and administrative expenses: Salaries and wages expense 151366 Depreciation expense 12413 Bad Debt expense 7715 Insurance Expense 1518 Rent Expense 1380 Supplies Expense 6570 Utilities Expense 12229 Total selling and edministrative expenses 193191 Operating Income 96067 Other incomes/ expenses Interest Revenue 85 Interest Expense -2294 -2209 Net income 93858 Income statement Balance Shet as at December 31, 2017 Assets Cash 23414 Accounts Receivable 92552 Allowance for doubtful accounts 8166 84386 Interest Receivable 85 Note Receivable 5290 Merchandise Inventory 64686 Prepaid Insurance 966 Prepaid Rent 2760 Supplies 3918 Total Current Assets 185505 Equipment 94392 Accumulated Depreciation - Equipment 22625 71767 Total Assets 257272 Liabilities and Stockholders' Equity Accounts Payable 9669 Salaries & wages payable 1498 Interest Payable 2294 Utilities Payable 1143 Note Payable 65550 Total Liabilities 80154 Stockholders' equity Common Stock 27600 Retained Earnings 149518 Total stockholders' equity 177118 Total liabilities and stockholders' equity 257272 Statement of Retained Earnings For the year ended December 31, 2017 Balance as at January 1, 2017 78200 Nt income for the year 93858 Dividends paid during the year -22540 Balance as at December 31, 2017 149518 Closing Entries for the ended December 31, 2017 Account Title Debit Credit Sales 989690 Interest revenue 85 Sales returns and allowances 5520 Sales Discounts 11868 Income summary 972387 (Closing of revenue accounts) Income summary 878529 Cost of goods sold 683044 Salaries and wages expense 151366 Depreciation expense 12413 Bad Debt expense 7715 Insurance Expense 1518 Rent Expense 1380 Supplies Expense 6570 Utilities Expense 12229 Interest Expense 2294 (Closing expense accounts) Income Summary 93858 Retained earnings 93858 (Closing income summary account) Retained earnings 22540 Dividends 22540 (Closing dividends account) Worksheet trial balance for the month ending December 31, 2017 Account Unadjusted Adjustments Adjusted Income Statement Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash 23414 23414 23414 Accounts Receivable 92552 92552 92552 Allowance for doubtful accounts 451 7715 8166 8166 Interest Receivable 85 85 85 Note Receivable 5290 5290 5290 Merchandise Inventory 66516 1830 64686 64686 Prepaid Insurance 2484 1518 966 966 Prepaid Rent 4140 1380 2760 0 2760 0 Supplies 10488 6570 3918 3918 Equipment 94392 94392 0 94392 0 Accumulated Depreciation - Equipment 10212 12413 22625 22625 Accounts Payable 9669 9669 9669 Salaries & wages payable 1498 1498 1498 Interest Payable 2294 2294 2294 Utilities Payable 1143 1143 1143 Note Payable 65550 0 65550 0 65550 Common Stock 27600 0 27600 0 27600 Retained Earnings 78200 0 78200 0 149518 Dividends 22540 22540 Sales 989690 0 989690 0 989690 Sales Returns and allowances 5520 5520 5520 Sales Discounts 11868 11868 11868 Cost of goods sold 681214 1830 683044 683044 Salaries and wages expense 149868 1498 151366 151366 Depreciation expense 12413 12413 12413 Bad Debt expense 7715 7715 7715 Insurance Expense 1518 1518 1518 Rent Expense 1380 1380 1380 Supplies Expense 6570 6570 6570 Utilities Expense 11086 1143 12229 12229 Interest Revenue 85 85 0 85 Interest Expense 2294 2294 2294 Total 1181372 1181372 36446 36446 1206520 1206520 895917 989775 288063 288063 Net Income 93858 Grand Total 1181372 1181372 36446 36446 1206520 1206520 989775 989775 288063 288063
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