Question

CREDIT 110,350 54600 8000 40,500 650 1200 183,200 Q No.3 AUSTIN SOUND SEREO CENTER, INC. TRIAL BALANCE DECEMBER 31,2012 TITLE OF ACCOUNT DEBIT Cash Account receivable Note receivable Interest receivable Inventory-opening Supplies Prepaid insurance Furniture and Fixture Accumulated depreciation-furniture Account payable Note payable (long-term) Capital-Frank Sales revenue Sales discount Sales return and allowance Interest revenue Purchases Purchases discount Purchases return and allowances Freight in Rent expense TOTAL 2400 47,000 12,600 100,000 338,000 1400 2000 600 89,300 3000 1200 5200 8400 504,800 504,800 ADJUSTMENT DATA: 1. Depreciation for the year $ 600 2. Inventory on hand at the end of the year $ 42.000 3. Tax rate is 40% applied INSTRUCTIOS: • Work sheet Multiple step Income Statement showing EBIT and EAT Classified Balance Sheet

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Answer 1

AUSTIN SOUND SERENO CENTER INC.,
Worksheet for Adjusted Trial Balance
	TRIAL BALANCE	ADJUSTMENTS	ADJUSTED TRIAL BALANCE
TITLE OF ACCOUNT	DEBIT	CREDIT	DEBIT	CREDIT	DEBIT	CREDIT
Cash	110,350				110,350	-
Account receivable	54,600				54,600	-
Note receivable	8,000				8,000	-
Interest receivable	-				-	-
Inventory-opening	40,500		42,000	40,500	82,500	40,500
Supplies	650				650	-
Prepaid insurances	1,200				1,200	-
Furniture and Fixture	183,200				183,200	-
Accumulated depreciation - furniture		2,400		600	-	3,000
Account payable		47,000			-	47,000
Note payable (long term)		12,600			-	12,600
Capital - Frank		100,000		1,500	-	101,500
Sales revenue		338,000			-	338,000
Sales discount	1,400				1,400	-
Sales return and allowance	2,000				2,000	-
Interest revenue		600			-	600
Purchases	89,300				89,300	-
Purchases discount		3,000			-	3,000
Purchases return and allowances		1,200			-	1,200
Freight in	5,200				5,200	-
Rent expense	8,400				8,400	-
Depreciation			600		600	-
	504,800	504,800	42,600	42,600	547,400	547,400
AUSTIN SOUND SERENO CENTER INC.,
Income Statement for the year ended December 31,2012
Sales revenue	338,000
Less:
Sales discount	(1,400)
Sales return and allowance	(2,000)
Net sales		334,600
Other income
Interest revenue		600
Total revenue		335,200
Opening Inventory	40,500
Add:
Purchases	89,300
Less:
Purchases discount	(3,000)
Purchases return and allowances	(1,200)
Freight in	5,200
Less: Closing Inventory	(42,000)
Cost of Goods Sold		88,800
Gross profit		246,400
Operating expenses
Rent expense	8,400
Depreciation	600
Total expenses		9,000
Earnings before interest and tax		237,400
Tax @ 40%		94,960
Earnings after tax		142,440
AUSTIN SOUND SERENO CENTER INC.,
Classified Balance Sheet
for the year ended December 31,2012
Current assets
Cash	110,350
Account receivable	54,600
Note receivable	8,000
Inventory	42,000
Supplies	650
Prepaid insurances	1,200
Total current assets		216,800
Non-current assets
Furniture and Fixture	183,200
Accumulated depreciation - furniture	(3,000)
Total non-current assets		180,200
Total assets		397,000
Current liabilities
Account payable	47,000
Accrued tax expenses	94,960
Total current liabilities		141,960
Non-current liabilities
Note payable (long term)		12,600
Total liabilities		154,560
Owner's equity
Capital - Frank	100,000
Add: Profit for current year	142,440
Total owner's equity		242,440
Total liabilities owner's equity		397,000
Note -
Increase in closing inventory would result in reduction of cost of goods sold and hence would result in
increase in net profits and an increase in the capital of Frank.The same has been represented in the
adjusted trial balance.While preparing the income statement,the inventory adjustment would be shown in the
computation of cost of goods sold.