Question

The trial balance of Wildhorse Fashion Center contained the following accounts at November 30, the end of the company’s fiscal year.

WILDHORSE FASHION CENTER TRIAL BALANCE NOVEMBER 30, 2017
		Debit			Credit
Cash		$33,060
Accounts Receivable		36,940
Inventory		48,240
Supplies		8,740
Equipment		139,480
Accumulated Depreciation-Equipment					$26,240
Notes Payable					54,240
Accounts Payable					51,740
Common Stock					93,240
Retained Earnings					11,240
Sales Revenue					764,800
Sales Returns and Allowances		4,200
Cost of Goods Sold		495,400
Salaries and Wages Expense		138,680
Advertising Expense		27,520
Utilities Expenses		15,320
Maintenance and Repairs Expense		12,100
Delivery Expense		16,700
Rent Expense		25,120
Totals		$1,001,500			$1,001,500

Adjustment data:

1.		Supplies on hand totaled $4,740.
2.		Depreciation is $16,680 on the equipment.
3.		Interest of $11,810 is accrued on notes payable at November 30.

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.		Maintenance and repairs expense is 100% administrative.

1. Prepare a multiple-step income statement for the year. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2. Prepare retained earnings statement for the year.

3. Prepare a classified balance sheet as of November 30, 2017. (List current assets in order of liquidity.)

4. Journalize the closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
5. Prepare a post-closing trial balance.

Answer 1

Requirement 1:

WILDHORSE FASHION CENTER
Income Statement
NOVEMBER 30,2017
Sales Revenue	$        764,800
Less: Sales Returns and Allowances	$          (4,200)
Net sales		$   760,600
Less: Cost of Goods Sold		$ (495,400)
Gross profit		$   265,200
Operating expenses:
Selling expenses:
Salaries and Wages Expense (138,680 x 70%)	$          97,076
Utilities Expenses (15,320 x 80%)	$          12,256
Rent Expense (25,120 x 80%)	$          20,096
Administrative expenses:
Salaries and Wages Expense (138,680 x 30%)	$          41,604
Utilities Expenses (15,320 x 20%)	$            3,064
Rent Expense (25,120 x 20%)	$            5,024
Maintenance and Repairs Expense	$          12,100
Other:
Advertising Expense	$          27,520
Delivery Expense	$          16,700
Supplies expense (8,740 - 4,740)	$            4,000
Depreciation expense	$          16,680
Total Operating expenses		$   256,120
Operating Income		$        9,080
Non-Operating income(Expense)
Interest expense		$   (11,810)
Net income(loss)		$      (2,730)

Requirement 2:

WILDHORSE FASHION CENTER
STATEMENT OF RETAINED EARNINGS
NOVEMBER 30,2017
Retained earnings, beginning balance		$ 11,240
Less: Net loss		$ (2,730)
Retained earnings,ending balance		$    8,510

Requirement 3:

WILDHORSE FASHION CENTER
STATEMENT OF RETAINED EARNINGS
NOVEMBER 30,2017
Assets		Liabilities and stockholders' equity
Current assets:		Current liabilities:
Cash	$    33,060	Notes Payable	$    30,000
Accounts Receivable	$    36,940	Accounts Payable	$    51,740
Inventory	$    48,240	Interest payable	$    11,810
Supplies	$      4,740	Total current liabilities	$    93,550
Total current assets	$ 122,980	Notes Payable	$    24,240
		Total liabilities	$ 117,790
Property,plant, and equipment:
Equipment	$ 139,480	Stockholders' equity:
Accumulated Depreciation-Equipment	$ (42,920)	Common stock	$    93,240
Property,plant, and equipment-net	$    96,560	Retained earnings	$      8,510
		Total stockholders' equity	$ 101,750
Total assets	$ 219,540	Total liabilities and stockholders' equity	$ 219,540

Requirement 4:

Date	Account title and explanation	Debit	Credit
11/30/2017	Sales Revenue	764,800
	Income Summary		764,800
	[To close revenue accounts]
11/30/2017	Income summary	767,530
	Sales Returns and Allowances		4,200
	Cost of Goods Sold		495,400
	Salaries and Wages Expense		138,680
	Advertising Expense		27,520
	Utilities Expenses		15,320
	Maintenance and Repairs Expense		12,100
	Delivery Expense		16,700
	Rent Expense		25,120
	Supplies expense (8,740 - 4,740)		4,000
	Depreciation expense		16,680
	Interest expense		11,810
	[To close expenses accounts]
11/30/2017	Retained earnings	2730
	Income summary (767,530-764,800)		2,730
	[To close income summary account]

Requirement 5:

WILDHORSE FASHION CENTER
Post-closing Trial balance
NOVEMBER 30,2017
	Debit	Credit
Cash	$33,060
Accounts Receivable	36,940
Inventory	48,240
Supplies	4,740
Equipment	139,480
Accumulated Depreciation-Equipment		$42,920
Notes Payable		54,240
Accounts Payable		51,740
Interest payable		11,810
Common Stock		93,240
Retained Earnings		8,510
Totals	$262,460	$262,460