Question

P5.6A (LO4), AP The trial balance of People's Choice Wholesale Company contained the following accounts shown at December 31, the end of the company's fiscal year. Journalize, post and prepare adju trial balance and financial statem People's Choice Wholesale Company Trial Balance December 31, 2022 Debit Credit $ 31,400 37,600 70,000 92.000 200,000 $ 60,000 83,500 Cash Accounts Receivable Inventory Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation Equipment Notes Payable Accounts Payable Common Stock Retained Earnings Dividends Sales Revenue Sales Discounts Cost of Goods Sold Salaries and Wages Expense Utilities Expense Maintenance and Repairs Expense Advertising Expense Insurance Expense 40,500 54,700 17.500 160,000 67,200 10,000 922,100 6,000 709,900 51,300 11.400 8,900 5,200 4,800 $1,322,000 $1,322,000

Answer 1

(a)Adjusting Entries:

Depreciation A/c Dr 15000

To Accumulated depreciation- Building A/c 8000

To Accumulated depreciation- Equipment A/c 7000

(Being depreciation expense accounted)

Interest expense A/c Dr 4500

To interest unpaid on notes payable A/c 4500

(Being interest expense accounted and current liability recognised)

Income tax expense A/c Dr 24000

To Income tax liability A/c 24000

(Being income tax expense accounted and the current liability recognised)

(b)

	Debit				Credit
	Depreciation
Date	Particulars	Amount	Date	Particulars	Amount
31-12-2022	To Accumulated depreciation- Building A/c	8000
	To Accumulated depreciation- Equipment A/c	7000	31-12-2022	By balance c/f	15000
	Total	15000		Total	15000

Debit					Credit
Accumulated depreciation- Building A/c
Date	Particulars	Amount	Date	Particulars	Amount
			31-12-2022	By balance b/f	60000
31-12-2022	To balance c/f	68000	31-12-2022	By Depreciation	8000
	Total	68000		Total	68000

Debit					Credit
Accumulated depreciation- Equipment A/c
Date	Particulars	Amount	Date	Particulars	Amount
			31-12-2022	By balance b/f	40500
31-12-2022	To balance c/f	47500	31-12-2022	By Depreciation	7000
	Total	47500		Total	47500

Debit					Credit
Interest Expense
Date	Particulars	Amount	Date	Particulars	Amount
31-12-2022	To interest unpaid on notes payable A/c	4500
			31-12-2022	By balance c/f	4500
	Total	4500		Total	4500

Debit					Credit
Interest unpaid on notes payable A/c
Date	Particulars	Amount	Date	Particulars	Amount
			31-12-2022	By interest expense	4500
31-12-2022	To balance c/f	4500
	Total	4500		Total	4500

Debit					Credit
Income Tax Expense
Date	Particulars	Amount	Date	Particulars	Amount
31-12-2022	To Income tax liability A/c	24000
			31-12-2022	By balance c/f	24000
	Total	24000		Total	24000

Debit					Credit
Income tax liability A/c
Date	Particulars	Amount	Date	Particulars	Amount
			31-12-2022	By Income Tax expense	24000
31-12-2022	To balance c/f	24000
	Total	24000		Total	24000

(c)

People 's Choice Wholesale Company
Trial Balance
December 31, 2022
Particulars	Debit	Credit
Cash	31400
Accounts Receivable	37600
Inventory	70000
Land	92000
Building	200000
Accumulated depreciation - Building		68000
Equipment	83500
Accumulated depreciation - Equipment		47500
Notes payable		54700
Interest unpaid on notes payable		4500
Income tax liability		24000
Accounts Payable		17500
Common stock		160000
Retained Earnings		67200
Dividends	10000
Sales Revenue		922100
Sales Discounts	6000
Cost of goods sold	709900
Depreciation Expense	15000
Interest Expense	4500
Income tax expense	24000
Salaries and wages expense	51300
Utilities Expense	11400
Maintaining and Repairs expense	8900
Advertising expense	5200
Insurance Expense	4800
Total	1365500	1365500

(d)

People 's Choice Wholesale Company
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31,2022
PARTICULARS		AMOUNT
Revenues:
Sales revenue	922100
Less: sales discounts	6000
Total revenues		916100
Cost of goods sold		709900
Gross Profit		206200
Expenses:
Depreciation Expense	15000
Interest Expense	4500
Salaries and wages expense	51300
Utilities Expense	11400
Maintaining and Repairs expense	8900
Advertising expense	5200
Insurance Expense	4800
Total expenses		101100
Net Income Before Taxes		105100
Less: Income tax expense		24000
NET INCOME		81100

People 's Choice Wholesale Company
RETAINED EARNING STATEMENT
FOR THE YEAR ENDING DECEMBER 31,2022
PARTICULARS		AMOUNT
Retained earnings as on Dec 31,2022		67,200.00
Net income for the year ended on Dec 31,2022		81,100.00
Less: Dividends		-10,000.00
Retained earning at the end of Dec 31,2022		1,38,300.00

BALANCE SHEET OF PEOPLE'S CHOICE WHOLESALE COMPANY AS AT 31 ST DECEMBER 2022
PARTICULARS			AMOUNT
Equity And Liabilities
1.Equity
Common stock	1,60,000.00
Retained earning	1,38,300.00		2,98,300.00
2. Non current liabilities			-
3.Current Liabilities
Notes payable	54700
Interest unpaid on notes payable	4500
Income tax liability	24000
Accounts Payable	17500		1,00,700.00
Total			3,99,000.00
Assets
1. Non current asset
Fixed asset
Tangible asset:
Land		92000
Building	200000
Less: Accumulated depreciation	-68000	1,32,000.00
Equipment	83500
Less: Accumulated depreciation	-47500	36,000.00	2,60,000.00
2. Current asset
Cash	31400
Accounts Receivable	37600
Inventory	70000		1,39,000.00
Total			3,99,000.00

Note: The format of financial statements will be different with different countries. So please compare this answer with the required format.

The values are correctly stated