Reference no: EM132515728

Question - At the end of the Hope Store's fiscal year on November 30, 2019, the following accounts appeared in its trial balance.

Unadjusted

Accounts payable 25,200

Accumulated Depr. Equip. 22,000

Cash 25,212

Cost of Goods Sold 507,000

Dividends 8,000

Equipment 154,300

Freight-out 6,500

Interest expense 6,100

Interest revenue 7,964

Inventory 26,000

Miscellaneous expense 452

Notes payable 37,000

Notes receivable 31,300

Prepaid insurance 10,500

Rent expense 15,000

Retained earnings 61,700

Salaries and wages expense 96,000

Sales commissions expense 6,500

Sales returns and allowances 9,000

Sales revenue 706,000

Share capital - ordinary 50,000

Utilities expense 8,000

Other data:

1. Depreciation expense for the month: 11,000.

2. Insurance expired for November: 7,000.

3. Property tax payable not yet recorded: 3,500.

4. Sales commission payable not yet recorded: 7,000.

5. Cash balance per bank, November 30: 25,121.

6. November bank service charge not recorded by the depositor: 28.

7. Deposits in transit, November 30: 1,500.

8. Bank collected 800 note for the company in November, plus interest 36, less fee 20. The collection has not been recorded by the company and no interest has been accrued.

9. Outstanding checks, November 30: 621.

10. Inventory on December 1, 2018: 20,000.

11. From an internal audit it is known that for the inventory, the same person perform ordering items, receiving the items, and receiving the invoice.

Instructions -

1. Prepare a bank reconciliation at November 30.

2. Journalize all the adjusting entries at November 30 needed on the books of the company.

3. Prepare an income statement

4. Prepare a retained earnings statement

5. Prepare a classified statement of financial position. Notes payable are due in 2023.

6. Journalize the closing entries that are necessary.

7. Compute Inventory turnover and Days in inventory. Explain your analysis.

8. Explain the weakness found in the company's internal control.