Question

Comprehensive Accounting Cycle Review 6

On December 1, 2017, Shamrock, Inc. had the account balances shown below.

		Debits				Credits
Cash		$5,230		Accumulated Depreciation—Equipment		$1,490
Accounts Receivable		3,590		Accounts Payable		3,260
Inventory (2,900 x $0.60)		1,740		Common Stock		9,500
Equipment		20,300		Retained Earnings		16,610
		$30,860				$30,860

The following transactions occurred during December.

Dec. 3		Purchased 3,900 units of inventory on account at a cost of $0.68 per unit.
5		Sold 4,300 units of inventory on account for $0.80 per unit. (It sold 2,900 of the $0.60 units and 1,400 of the $0.68.)
7		Granted the December 5 customer $240 credit for 300 units of inventory returned costing $210. These units were returned to inventory.
17		Purchased 2,200 units of inventory for cash at $0.90 each.
22		Sold 2,100 units of inventory on account for $0.93 per unit. (It sold 2,100 of the $0.68 units.)

Adjustment data:

1.		Accrued salaries and wages payable $420.
2.		Depreciation on equipment $210 per month.
3.		Income tax expense was $220, to be paid next year.

Prepare an adjusted trial balance as of December 31, 2017.

Answer 1

ANSWER: SHAMROCK, INC. ADJUSTED TRIAL BALANCE As of December 31, 2017 Debit Credit Cash 3,250 $ Accounts Receivable 8,743 $ Inventory 2,462 $ Equipment 20,300 Accumulated Depreciation- Equipment 1,700 $ Accounts Payable 5,912 Salaries and wages payable Income tax payable 420 220 9,500 Common stock Retained Earnings 16,610 Sales Revenue 5,393 $ Cost of goods sold 3,910 Sales Return and Allowances 240 Salaries and wages expense $ 420 Depreciation expense 210 Income tax expense $ 220 $ 39,755 $ 39,755

WORKING NOTES: Account titles and explanations Debit Credit Date 03-Dec Inventory $ 2,652 Accounts Payable 2,652 (Purchased 3,900 units at $0.68 per unit) $ 05-Dec Accounts Receivable 3,440 $ Sales Revenue 3,440 (Sale of inventory on account,4,300 units at $0.80 per unit) Cost of goods sold $ 2,692 $ Inventory 2,692 |(to record cost of goods sold, (2900*$0.60)+(1400*$0.68)) 07-Dec Sales Return and Allowances 240 Accounts Receivable 240 (to record sales return and allowances) $ Inventory 210 Cost of goods sold 210 (to record adjustment of returned inventory) 17-Dec Inventory $ 1,980 $ Cash 1,980 (Purchase of inventory for cash) $ 22-Dec Accounts Receivable 1,953 $ Sales Revenue 1,953 (sale of inventory on account) Cost of goods sold $ 1,428 $ Inventory 1,428 |(to adjust cost of goods sold) ADJUSTING ENTRIES Account titles and explanations Debit Credit Date 31-Dec Salaries and wages expense $ 420 Salaries and wages payable (to record accrued salary and wages payable) $ 420 31-Dec Depreciation expense $ 210 Accumulated depreciation-Equipment 210 (to record depreciation expense) 31-Dec Income tax expense $ 220 Income tax payable $ 220 (to record income tax payable)