Question

In-Class Case #3 Chapter 3 THIS IS A CONTINUATION OF ICC 2B. Hawking, Inc. had the following activities occur in the current year: 6. 7. 8. 9. Purchased $189,000 of inventory on account. Earned $536,000 worth of sales revenue, receiving 85% in cash. Incurred selling expenses of $210,000, paying half in cash and still owing the rest. Incurred $33,000 in interest expense to be paid at the beginning of next year. b) Required Show the effects of the above transactions on the accounting equation. Prepare journal entries for each transaction. Post journal entries to the general ledger/T-accounts, summarize accounts, and find balances. Prepare an unadjusted trial balance. Match your numbers to the prepared financial statements: Income Statement, Retained Earnings Statement, and Balance Sheet.

Answer 1

a.

Trasnsaction	Assets		=	Liabilities		+	Stockholder's Equity
6	Inventory	$       1,89,000		Accounts Payable	$      1,89,000
7	Cash	$       4,55,600					Sales Revenue	$ 5,36,000
	Accounts Receivable	$          80,400
8	Cash	$      -1,05,000		Accrued Liabilities	$      1,05,000		Selling Expenses	$ -2,10,000
9				Interest Payable	$          33,000		Interest Expense	$    -33,000

b.

	Account Titles	Debit	Credit
6	Inventory	$       1,89,000
	Accounts Payable		$               1,89,000
7	Cash	$       4,55,600
	Accounts Receivable	$          80,400
	Sales Revenue		$               5,36,000
8	Selling Expenses	$       2,10,000
	Cash		$               1,05,000
	Accrued Liabilities/Accounts Payable		$               1,05,000
9	Interest Expense	$          33,000
	Interest Payable		$                  33,000

Beginning balances and previous information not provided for other parts