Required:
Prepare a partial income statement through gross profit on sales.
78. Countywide, Inc., reports the following information at the end of the year 2010:
Dividends Distributed
$ 560
Inventory, December 31, 2010
620
Income Taxes Payable
408
Accumulated Depreciation-Equipment
580
Cash
100
Sales Discounts
200
Unearned Rent
80
Purchase Returns
100
Accounts Receivable
2,160
Selling Expenses
800
Capital Stock
1,700
Prepaid Insurance
20
Sales Revenue
6,000
Income Tax Expense
408
Inventory, January 1, 2010
560
Bonds Payable, due December 31, 2013
2,100
Accounts Payable
70
Purchases
2,300
Allowance for Doubtful Accounts
10
Administrative Expenses
500
Equipment
3,600
Retained Earnings, January 1, 2010
160
Required:
In good form, prepare the following financial statements:
a.
income statement
b.
statement of retained earnings
c.
balance sheet
Sales revenue
$97,000
Less:
Sales returns and allowances
$ 2,000
Sales discounts taken
1,500
(3,500)
Net sales
$93,500
Cost of goods sold
Inventory, 1/1/06
$ 8,000
Purchases
70,000
Purchases returns and allowances
(2,000)
Purchases discounts taken
(1,000)
2,200
Cost of goods available for sale
$77,200
Less: Inventory, 12/31/06
(7,500)
Cost of goods sold
(69,700)
Gross profit on sales
$23,800
79. The following are selected data for the Young Company:
Administrative expenses
$ 120
Beginning inventory
140
Net sales
1,050
Net income
130
Ending inventory
180
Sales returns
80
Total operating expenses
380
Purchases
600
Required:
Compute the following:
80. The following are selected account balances for Streamline Services:
Selling Expenses
$ 500
Interest Expense
42
Purchases
2,000
Sales
3,900
Accounts Payable
90
Ending Inventory
?
Prepaid Insurance
84
Net Sales
3,620
Purchase Discounts
40
Beginning Inventory
300
Sales Returns and Allowances
?
Purchase Returns and Allowances
80
Cost of Goods Sold
1,700
Sales Discounts
70
Sales
b.
Purchase returns
Selling expenses
d.
Cost of goods sold
$1,130 (Net sales $1,050 + Sales returns $80)
b.
$20 (Net purchases = COGS $580 – BI $140 + EI $180 = $580; Purchase returns = Purchases $600 – Net purchases $580 = $20)
$260 (Total operating expenses $380 – Administrative expenses $120)
d.
$540 (Gross profit = Net income $130 + Total operating expenses $380 = $510; COGS = Net sales $1,050 – Gross profit $510 = $540)
Required:
Prepare a partial income statement through gross profit on sales. Do not prepare the heading.
81. Selected account balances from the December 31, 2010, trial balance of the Swift Company are listed
below:
Debit
Credit
Inventory, January 1, 2010
$12,500
Purchases
25,000
Salaries Expense
5,000
Rent Expense
3,250
General and Administrative Expenses
2,500
Sales
$61,000
Dividends Distributed
2,500
In addition, the following information is available:
·
The inventory value at December 31, 2010, is $7,500.
·
$720 of salaries have accrued as of December 31.
·
On March 30, Swift purchased a 12-month insurance policy for $240. The purchase was debited to Prepaid Insurance.
·
On December 1, the company paid 2 months’ rent in advance. The $500 payment was debited to Rent Expense.
·
In December, a customer paid $1,000 in advance for merchandise that will be shipped by Swift in 2011. The amount received was
credited to Sales.
·
Swift estimates its bad debts to be 1% of sales (after all adjustments).
·
The income tax rate is 30%.
Required:
Using a general journal format, prepare:
a.
the required adjusting entries
b.
the required closing entries for Swift Company at December 31, 2010
Sales
$3,900
Less:
Sales returns and allowances
$ 210
Sales discounts
70
280
Net sales
$3,620
Cost of goods sold:
Beginning inventory
$ 300
Purchases
$2,000
Less: Purchase returns and
allowances
$80
Purchase discounts
40
120
Net purchases
1,880
Goods available for sale
$2,180
Less: Ending inventory
480
Cost of goods sold
1,700
Gross profit on sales
$1,920
82. Selected accounts from the December 31, 2010, adjusted trial balance of the Hines Company are shown
below.
Debit
Credit
Inventory, January 1, 2010
$30,000
Sales Revenue
$90,000
Sales Returns
3,000
Purchases
40,000
Freight-In
2,500
Selling Expenses
14,000
Administrative Expenses
8,000
Bad Debts Expense
500
Depreciation Expense-Building
1,500
Interest Expense
2,000
Income Tax Expense
2,200
Dividends Distributed
2,100
Salaries Expense
Salaries Payable
Insurance Expense
Prepaid Insurance (9/12 ´ $240)
Prepaid Rent
Rent Expense
Sales
1,000
Unearned Revenue
1,000
Bad Debts Expense
Allowance for Doubtful Accounts
0.01 ($61,000 – $1,000)
Income Tax Expense
6,900
Income Taxes Payable
[0.3 ($61,000 – $25,000 – $5,000 – $3,250 –
$2,500 – $720 – $180 + $250 – $1,000 – $600)]
6,900
Sales ($61,000 – $1,000)
60,000
Inventory (12/31/10)
7,500
Income Summary
67,500
Income Summary
56,400
Purchases
25,000
Salaries Expense ($5,000 + $720)
5,720
General and Administrative Expenses
2,500
Rent Expense ($3,250 – $250)
3,000
Insurance Expense
Bad Debt Expense
Income Tax Expense
6,900
Inventory (1/1/07)
12,500
Income Summary
11,100
Retained Earnings
11,100
Retained Earnings
2,500
Dividends Distributed
2,500
On December 31, 2010 the inventory was $18,000.
Required:
a.
Prepare a 2010 income statement for the Hines Company.
b.
Prepare 2010 closing entries for the Hines Company.
Sales revenue
$90,000
Less: Sales returns
3,000
Net sales
$87,000
Cost of goods sold
Inventory, 1/1/10
$30,000
Purchases
40,000
2,500
Cost of goods available for sale
$72,500
Less:
Inventory, 12/31/10
18,000
Cost of goods sold
54,500
Gross profit on sales
$32,500
Operating expenses:
Selling expenses
$14,000
Administrative expenses
8,000
Depreciation expense-Building
1,500
Bad debts expense
500
Total operating expenses
Income from operations
$ 8,500
Interest expense
2,000
Income before income taxes
$ 6,500
Income tax expense
2,200
Net income
$ 4,300
Sales
90,000
Inventory (12/31/1010)
18,000
Income Summary
108,000
Income Summary
103,700
Sales Returns
3,000
Purchases
40,000
2,500
Selling Expenses
14,000
Administrative Expenses
8,000
Bad Debts Expense
Depreciation Expense-Building
1,500
Interest Expense
2,000
Income Tax Expense
2,200
Inventory (1/1/1010)
30,000
Income Summary
4,300
Retained Earnings
4,300
Retained Earnings
2,100
Dividends Distributed
2,100
83. Below are selected account balances from the December 31, 2010, trial balance of the Waco Company. The
inventory on hand at December 31, 2010 is $2,500.
Debit
Credit
Inventory, January 1, 2010
$1,500
Accounts Payable
$1,400
Purchases
5,400
Selling Expenses
500
General and Administrative Expenses
750
Sales
10,000
Retained Earnings, January 1, 2010
11,500
Income Tax Expense
1,100
Dividends Distributed
500
Required:
Using a general journal format, prepare the appropriate closing entries for Waco Company at December 31, 2010.
84. December 31 balances for selected accounts of the Carley Company are presented below.
Accounts Receivable
$ 500
Sales
2,000
Interest Revenue
600
Dividends Distributed
300
Allowance for Doubtful Accounts
100
Salaries Expense
800
Depreciation Expense
400
Unearned Rent
200
Sales
10,000
Income Summary
12,500
Income Summary
9,250
Purchases
5,400
Selling Expenses
500
General and Administrative Expenses
750
Income Tax Expense
1,100
Inventory (January 1, 2010)
1,500
Income Summary
3,250
Retained Earnings
3,250
Retained Earnings
500
Dividends Distributed
500
Required:
Prepare whatever closing entries are appropriate for the accounts above.
85. Figure APC-1 is the condensed worksheet for the Ajax Company as of December 31, 2010.
Additional Information:
·
Prepaid insurance is for a two-year theft policy dated July 1, 2010.
·
The ending inventory amounts to $300.
·
The building is being depreciated over a 30-year life, straight-line, no salvage value.
·
The balance in Unearned Consulting Revenue pertains to a contract sold on September 1, 2010, to provide service to a client for one
year.
·
Office supplies on hand at year-end amount to $24.
·
At year-end, there are accrued salaries of $50.
·
Repair Service Revenue includes a contract for $120 received on July 1, 2010, for a one-year period of time.
·
The tax rate is 50%.
Sales
2,000
Interest Revenue
Income Summary
2,600
Income Summary
1,200
Salaries Expense
Depreciation Expense
Income Summary
1,400
Retained Earnings
1,400
Retained Earnings
Dividends Distributed
Required:
Complete the worksheet, assuming that adjusting entries are made only at December 31, 2010.
86. Figure APC-2 is the condensed worksheet for the Ralph Company as of December 31, 2010.
Additional Information:
·
Prepaid Insurance is for a two-year fire insurance policy dated July 1, 2010.
·
The ending inventory amounts to $76.
·
The building is being depreciated over a ten-year life, straight-line, no salvage value.
·
The balance in Unearned Repair Service Revenue pertains to a contract sold on November 1, 2010, to provide service to a client for one
year.
·
Office supplies on hand at year-end amount to $14.
·
At year-end, there are accrued salaries of $6.
·
Consulting Revenue includes a contract for $60 received on October 1, 2010, for a one-year period of time.
·
The tax rate is 50%.
Required:
Complete the worksheet, assuming that adjusting entries are made only at December 31.
