Use the following financial statements and additional information.
SANCHEZ INC.
Comparative Balance Sheets
June 30, 2017 and 2016
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.
Income Statement
For Year Ended June 30, 2017
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.
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.