ACG 2021 Lecture Notes - Lecture 4: Retained Earnings, Trial Balance, Current Liability
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PLEASE answer number 2 (worksheet) I am really struggling with it.
Below is the unadjusted trial balance for Walton Anvils as of December 31, 2016, and the data for the adjustments. There is also an Excel Template for this problem that you may download and use (or you may use your own).
Walton Anvils | ||
Unadjusted Trial Balance | ||
December 31, 2016 | ||
Balance | ||
Account Title | Debt | Credit |
Cash | $ 16,900.00 | |
Accounts Receivable | 17,500 | |
Prepaid Rent | 2,500 | |
Office Supplies | 1,900 | |
Equipment | 23,000 | |
Accumulated Depreciation - Equipment | $ 7,000.00 | |
Accounts Payable | 6,200.00 | |
Salaries Payable | ||
Unearned Revenue | 5,600.00 | |
Common Stock | 28,000.00 | |
Retained Earnings | 1,600.00 | |
Dividends | 4,500 | |
Service Revenue | 20,800.00 | |
Salaries Expense | 2,900 | |
Rent Expense | ||
Depreciation Expense - Equipment | ||
Supplies Expense | ||
Total | $ 69,200.00 | $ 69,200.00 |
Adjustment Data
a. Unearned revenue still unearned at December 31, 2016 | $1,800 |
b. Prepaid rent still in force at December 31, 2016 | $2,300 |
c. Office supplies used | $1,400 |
d. Depreciation | $380 |
e. Accrued Salaries Expense at December 31, 2016 | $210 |
Requirements
1.Open T-accounts using the balances in the unadjusted trial balance.
2.Complete the worksheet for the year ended December 31, 2016.
3.Prepare the adjusting entries and post to the T-accounts.
4.Prepare the adjusted trial balance.
5.Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form.
6.Prepare the closing entries and post to the T-accounts.
7.Prepare a post-closing trial balance.
8.Calculate the current ratio for the company.
Use the following financial statements and additional information.
SANCHEZ INC. | ||||||||
2017 | 2016 | |||||||
Assets | ||||||||
Cash | $ | 101,300 | $ | 48,900 | ||||
Accounts receivable, net | 68,000 | 53,000 | ||||||
Inventory | 69,000 | 96,000 | ||||||
Prepaid expenses | 5,700 | 7,100 | ||||||
Total current assets | 244,000 | 205,000 | ||||||
Equipment | 179,000 | 166,000 | ||||||
Accum. depreciationâEquipment | (45,000 | ) | (15,000 | ) | ||||
Total assets | $ | 378,000 | $ | 356,000 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 33,000 | $ | 40,000 | ||||
Wages payable | 7,000 | 17,000 | ||||||
Income taxes payable | 3,600 | 4,000 | ||||||
Total current liabilities | 43,600 | 61,000 | ||||||
Notes payable (long term) | 43,000 | 85,000 | ||||||
Total liabilities | 86,600 | 146,000 | ||||||
Equity | ||||||||
Common stock, $5 par value | 250,000 | 180,000 | ||||||
Retained earnings | 41,400 | 30,000 | ||||||
Total liabilities and equity | $ | 378,000 | $ | 356,000 | ||||
SANCHEZ INC. | ||||||
Sales | $ | 940,000 | ||||
Cost of goods sold | 575,000 | |||||
Gross profit | 365,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 77,000 | ||||
Other expenses | 93,000 | |||||
Total operating expenses | 170,000 | |||||
195,000 | ||||||
Other gains (losses) | ||||||
Gain on sale of equipment | 5,200 | |||||
Income before taxes | 200,200 | |||||
Income taxes expense | 61,280 | |||||
Net income | $ | 138,920 | ||||
Additional Information
a. A $43,000 note payable is retired at its $43,000 carrying (book) value in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid.
c. New equipment is acquired for $75,000 cash.
d. Received cash for the sale of equipment that had cost $62,000, yielding a $5,200 gain.
e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f. All purchases and sales of inventory are on credit.
Make a Journal entry worksheet
1. Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any.
2. Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any.
3. Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any.
4. Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any.
5. Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any.
6. Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any.
7. Reconstruct the entry to record the retirement of the $43,000 note payable at its $43,000 carrying (book) value in exchange for cash.
8. Reconstruct the entry for the purchase of new equipment.
9. Reconstruct the entry for the issuance of common stock.
10. Close all revenue and gain accounts to income summary.
11. Close all expense accounts to income summary.
12. Close Income Summary to Retained Earnings.
13. Reconstruct the journal entry for cash dividends paid.