96-2 (K:P3-6 p119); 97-1
9.(Financials statements, adjusting and closing Entries)
The trial balance of Gordon Company contained the following
accounts at December 31, the ending of the company’s fiscal years
Gordon Company
Trial Balance
December 31, 2006
Debit
Credit
Cash
$26,700
Accounts Receivable
33,700
Merchandise Inventory
45,000
Store supplies
5,500
Store Equipment
85,000
Accumulated Depreciation-Store Equipment
$18,000
Delivery Equipment
48,000
Accumulated Depreciation-Delivery Equipment
6,000
Notes Payable
51,000
Account Payable
48,500
Common Stock
90,000
Retained Earnings
8,000
Sales
757,200
Sales Returns and Allowances
4,200
Cost of Goods Sold
497,400
Salaries Expense
140,000
Advertising Expense
26,400
Utilities Expense
14,000
Repair Expense
12,100
Delivery Expense
16,700
Rent Expense
24,000
$978,700
$978,700
Adjustment data:
1. Store supplies on hand totaled $3,500.
2. Depreciation is $9,000 on the store equipment and $7,000 on the
delivery equipment.
3. Interest of $11,000 is accrued on notes payable at December 31.
Other data:
1. Salaries expense is 70% selling and 30% administrative.
2. Rent expense and utilities expenses are 80% selling and 20%
administrative.
3. $30,000 of notes payable are due for payment next year.
4. Repair expense is 100% administrative.
Instructions:
a) Journalize the adjusting entries
Accounting Title
Debit
Credit
1
Store Supplies Expense
$________
Store Supplies
$_________
2
Depreciation Expense
$________
Accumulated Depreciation
-Store Equipment
$_________
3
Depreciation Expense
$________
Accumulated Depreciation
-Delivery Equipment
$_________
4
Interest Expense
Interest Payable
$________
$_________
b) Journalize the closing entries:
1
Sales
$________
Income Summary
$________
2
Income Summary
Sales Returns and
Allowance
$________
$________
Cost of Goods Sold
$________
Salaries Expense
$________
Advertising Expense
$________
Utilities Expense
$________
Repair Expense
$________
Delivery Expense
$________
Rent Expense
$________
Store Supplies Expense
$________
Depreciation Expense
-Store Equipment
$________
Depreciation Expense
-Delivery Equipment
$________
Interest Expense
$________
________
3
Retained Earnings
Income Summary
$_________
$________
c) Prepare a multiple-step income statement and retained
earnings statement for the year and a classified balance sheet as
of December 31, 2006.
Gordon Company
Income Statement
For the Year Ended December 31, 2006
Sales revenue:
Sales
$_________
Less: Sales returns and allowances
__________
Net Sales
__________
Cost of goods sold
__________
Gross profit
__________
Operating expenses
Selling expenses:
4)Sales salaries expense $ _________
5)Advertising expense
__________
9)Rent expense
__________
8)Delivery expense
__________
6)Utilities expense
__________
11)Depreciation expense
-store equipment
__________
12)Depreciation expense
-delivery equipment __________
10)Store supplies expense __________
Total selling expenses
$_________
Administrative expenses:
4)Salaries expenses
__________
7)Repair expense
__________
9)Rent expense
_________
6)Utilities expense
_________
Total Administrative expenses
$__________
Totals operating expense
$ ________
Income from operations
$_________
Other expenses and losses
Interest expense
________
Net Income (Net loss)
$_________
Gordon Company
Retained Earning Statement
For the Year Ended December 31, 2006
Beginning Retained Earnings
Less: net loss
Ending Retained earnings
$______
_____
$
Gordon Company
Balance Sheet
December 31, 2006
Assets
Current assets
Cash
$_______
Accounts receivable
________
Merchandise inventory
________
Store supplies
________
Total current assets
$________
Property, plant, and equipment
Store equipment
$_______
Accu. Depr.-store equip. _______ $_______
Delivery equipment
_______
Accu. Depr.-delivery equip $_______ _______ ________
Total assets
$_______
Liabilities and stockholders’ Equity
Current liabilities:
Notes payable due next year
$________
Accounts payable
________
Interest payable
________
Total current liabilities
________
Long-term liabilities
Notes payable
________
Total liabilities
_________
Stockholders’ equity
Common Stock
$_______
Retained Earnings
________ _______
Total Liabilities and stockholders’ Equity
$_______