Reference no: EM131735274
Financial Statement Homework
Brown, Inc. December 31, 2016 Unadjusted Trial balance
|
Cash
|
42,000
|
|
|
Accounts Receivable
|
60,000
|
|
|
Allowance for Doubtful Accounts
|
|
6,000
|
|
Short Term Note Receivable
|
25,000
|
|
|
Interest Receivable
|
0
|
|
|
Supplies
|
5,000
|
|
|
Prepaid Insurance
|
48,000
|
|
|
Inventory
|
22,000
|
|
|
Vehicle
|
32,000
|
|
|
Equipment
|
102,000
|
|
|
Accumulated Depreciation
|
|
52,000
|
|
Accounts Payable
|
|
12,000
|
|
Unearned Revenue
|
|
48,000
|
|
Wages Payable
|
|
12,000
|
|
Long-Term Notes Payable
|
|
45,000
|
|
Common Stock
|
|
106,000
|
|
Retained Earnings (1/1/2016)
|
|
2,000
|
|
Dividends
|
2,000
|
|
|
Sales Revenue
|
|
517,000
|
|
Sales Returns & Allowances
|
20,000
|
|
|
Sales Discounts
|
2,000
|
|
|
Cost of Goods Sold
|
146,000
|
|
|
Delivery Expense
|
4,000
|
|
|
Depreciation Expense
|
22,000
|
|
|
Bad Debt Expense
|
0
|
|
|
Rent Expense
|
90,000
|
|
|
Insurance Expense
|
25,000
|
|
|
Wages Expense
|
95,000
|
|
|
Supplies Expense
|
16,000
|
|
|
Interest Revenue
|
|
0
|
|
Loss on Disposal
|
0
|
|
|
Interest Expense
|
6,000
|
|
|
Income Tax Expense
|
36,000
|
|
|
Total
|
800,000
|
800,000
|
Part 1: Prepare adjusting journal entries using the unadjusted trial balance on the previous page and the information provided below. Use only the account names provided on the previous page (do not create any new account names).
1. On Dec. 31, 2016 Brown, Inc. sold merchandise on account for $20,000 with a cost of $12,000 terms 5/10 net 30.
2. Brown, Inc. loaned Sulak Co. $25,000 (already on the TB) on Oct. 1, 2016 using a 6 month, 8% interest note. All interest and principal will be paid back at the end of the 6 months. Write the adjusting journal entry required by Brown, Inc. for its financial statements as of Dec. 31, 2016.
3. Uncollectable Accounts Receivables of $2,000 need to be written off for the year ended 2016.
4. Management estimates that of the remaining accounts receivable balance, $9,000 will be uncollectible. Record the adjustment based on this information. Hint: Use the AFDA balance AFTER the above write off during 2016. Use an AFDA T-account!
5. A piece of equipment was retired on Dec. 31, 2016. The equipment originally cost $35,000 and has related A/D of $22,000 as of Jan. 1, 2016. Additional depreciation of $3,000 needs to be recorded on this piece of equipment at Dec. 31, 2016. Update the depreciation below (#5). Then record the retirement (#6).
6. Record the retirement of the equipment (from #5) including the gain or loss.
Part 2: Post the adjusting journal entries to t-accounts:
Part 3: Prepare the Adjusted Trial Balance (i.e., use ending balances after the previous journal entries are posted)
Part 4: Prepare a Multi-step Income Statement
Prepare a Statement of Retained Earnings.
Part 5: Answer the following questions using the above completed financial statements:
What is the dollar amount for Gross Profit?
What is the dollar amount for Income from Operations?
What is the dollar amount for Income before for Income Tax? What is the dollar amount for Total Current Assets?
What is the dollar amount for Total Current Liabilities? What is the dollar amount for Net PPE?
If the company FAILS to record depreciation expense in the adjusting entries: What is the impact to the income statement?
What is the impact to the balance sheet?