Question

Eric Shehan is a student working on an internship at Mahon Ltd. On December 31, 2020, the company had its year end. Eric's boss brought him the following information: Accounts Payable Cash Notes Payable Inventory Common Shares Sales Revenue Retained Earnings (at January 1, 2020) Cost of Goods Sold Utilities Expense Interest Revenue Accounts Receivable Interest Expense $219,000 Wages Expense 115,000 Notes Receivable 247,000 Rent Expense 311,000 Dividends Declared 352,000 Supplies 3,424,000 Insurance Expense 1,117,000 Equipment 2,049,000 Accumulated Depreciation, Equipment 87,000 Miscellaneous Expense 10,000 Unearned Revenue 425,000 Advertising Expense 6,000 $358,000 202,000 33,000 182,000 11,000 17,000 1,676,000 160,000 32,000 30,000 55,000 These account amounts are correct, but Eric's boss advised him that the information did not reflect the following information: 1. Accrued interest of $6,000 on the notes receivable. 2. Employees earned $79,000 in bonuses based on achieving sales targets. These are payable on January 10, 2021. 3. Accrued interest on the note payable amounting to $4,000 is due in January 2021. 4. As of December 31, 2020, the supplies still on hand had a cost of $7,000. 5. The insurance expense includes $4,000 in premiums related to coverage for 2021. 6. Depreciation for 2020 is $167,000 on the equipment. 7. The company's board declared additional dividends of $249,000, which are payable to shareholders on January 15, 2021.

Answer 1

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Due to character limit I am attaching the image for Balance Sheet.

Amount $ Amount $ Balance Sheet Assets Current Assets Cash Accounts Receivable Notes Receivable Interest Receivable Inventory Supplies Prepaid Insurance Total Current Assets Plant Property & Equipment Equipment Accumulated Depreciation- Equipment Total Assets 115,000.00 425,000.00 202,000.00 6,000.00 311,000.00 7,000.00 4,000.00 1,070,000.00 1,676,000.00 (327,000.00) 1,349,000.00 2,419,000.00 Liabilities & Shareholder's Equity Liabilities Notes Payable Accounts Payable Dividend Payable Unearned Revenue Wages Payable Interest Payable Total Liabilities Shareholder's Equity Common Shares Retained Earnings Total Shareholder's Equity Total Liabilities & Shareholder's Equity 247,000.00 219,000.00 249,000.00 30,000.00 79,000.00 4,000.00 828,000.00 352,000.00 1,239,000.00 1,591,000.00 2,419,000.00

Eric Shehan
Work Sheet	Unadjusted	Adjustments	Adjusted	Remarks
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit
Cash	115,000.00				115,000.00
Accounts Receivable	425,000.00				425,000.00
Notes Receivable	202,000.00				202,000.00
Interest Receivable			6,000.00		6,000.00		Accrued interest on notes receivable $ 6,000.
Inventory	311,000.00				311,000.00
Supplies	11,000.00			4,000.00	7,000.00		Supplies on hand at year-end, $7,000. So $ 4,000 consumed.
Prepaid Insurance			4,000.00		4,000.00		Insurance of $ 4,000 is for 2021.
Equipment	1,676,000.00				1,676,000.00
Accumulated Depreciation- Equipment		160,000.00		167,000.00		327,000.00	Depreciation on equipment for current period $ 167,000.
Notes Payable		247,000.00				247,000.00
Accounts Payable		219,000.00				219,000.00
Dividend Payable				249,000.00		249,000.00	Additional dividend payable of $ 249,000 payable on 15th Jan 2021.
Unearned Revenue		30,000.00				30,000.00
Wages Payable				79,000.00		79,000.00	Bonus of $ 79,000.
Interest Payable				4,000.00		4,000.00	Accrued interest on notes payable $ 4000.
Common Shares		352,000.00				352,000.00
Retained Earnings		1,117,000.00				1,117,000.00
Dividends	182,000.00		249,000.00		431,000.00		Additional dividend payable of $ 249,000 payable on 15th Jan 2021.
Sales Revenue		3,424,000.00				3,424,000.00
Interest Revenue		10,000.00		6,000.00		16,000.00	Accrued interest on notes receivable $ 6,000.
Cost of goods sold	2,049,000.00				2,049,000.00
Wages Expense	358,000.00		79,000.00		437,000.00		Bonus of $ 79,000.
Insurance Expense	17,000.00			4,000.00	13,000.00		Insurance of $ 4,000 is for 2021.
Utilities Expense	87,000.00				87,000.00
Miscellaneous Expense	32,000.00				32,000.00
Advertising Expense	55,000.00				55,000.00
Rent Expense	33,000.00				33,000.00
Depreciation- Equipment			167,000.00		167,000.00		Depreciation on equipment for current period $ 167,000.
Supplies Expense			4,000.00		4,000.00		Supplies on hand at year-end, $7,000. So $ 4,000 consumed.
Interest Expense	6,000.00		4,000.00		10,000.00		Accrued interest on notes payable $ 4000.
Total	5,559,000.00	5,559,000.00	513,000.00	513,000.00	6,064,000.00	6,064,000.00

Income Statement	Amount $
Sales Revenue	3,424,000.00
Interest Revenue	16,000.00
Total Revenue	3,440,000.00
Less: Expenses
Cost of goods sold	2,049,000.00
Wages Expense	437,000.00
Insurance Expense	13,000.00
Utilities Expense	87,000.00
Miscellaneous Expense	32,000.00
Advertising Expense	55,000.00
Rent Expense	33,000.00
Depreciation- Equipment	167,000.00
Supplies Expense	4,000.00
Interest Expense	10,000.00
Total Expenses	2,887,000.00
Net Income	553,000.00
Statement of Retained Earnings	Amount $
Opening Balance	1,117,000.00
Add: Net Income	553,000.00
Less: Dividends	431,000.00
Closing balance	1,239,000.00