Question

The Wildhorse Co. is located in midtown Madison. During the past several years, net income has been declining because of suburban shopping centers. At the end of the company's fiscal year on November 30, 2019, the following accounts appeared in two of its trial balances. All account balances are normal Support Accounts Payable Accounts Receivable Accumulated Depr.-Equipment Cash Common Stock Cost of Goods Sold Dividends Freight-Out Equipment Depreciation Expense Insurance Expense Interest Expense Interest Revenue Unadjusted Adjusted $26,000 $26,000 30,200 30,200 34,000 45,000 26,000 26,000 25,800 25,000 514,000 514,000 9.500 9,500 6.400 6,400 146,500 146,500 11,000 7.600 6.500 6,500 9.500 9.500 Inventory Notes payable Prepaid Insurance Property Tax Expense Property Taxes Payable Rent Expense Retained Earnings Salaries and Wages Expense Sales Commissions Expense Sales Commissions Payable Sales Returns and Allowances Sales Revenue Utilities Expense Unadjusted Adjusted $28,500 $28,500 35,000 35.000 10,500 2.900 2.500 2.500 16,600 16,600 61,700 61,700 94,700 94,700 6,500 11,000 4,500 7,800 7,800 720,000 720,000 8.300 8,300 Prepare a multiple-step income statement. (List other revenues before other expenses. If there is a netloss then enter the amount using either a negative sign preceding the number 45 or parentheses (451) Wildhorse Co. Income Statement

Answer 1

Wildhorse co.

income statement

Sales revenue		$720,000
Less: Sales returns and allowances		(7,800)
Net sales		$712,200
Cost of goods sold		($514,000)
Gross profit		$198,200
Operating expenses:
Salaries and wages expense	94,700
Rent expense	16,600
Sales commission expense	11,000
Depreciation expense	11,000
Utilities expense	8,300
Insurance expense	7,600
Freight out	6,400
Property tax expense	2,500
Total operating expenses		(158,100)
Income from operations		$40,100
Other revenue and gains:
Interest revenue	9,500
Other expenses and loss:
Interest expense	(6,500)	3,000
Net income		$43,100

Statement of retained earnings

Opening retained earnings	$61,700
Add: Net income	$43,100
	$104,800
Less: Dividends	(9,500)
Closing balance of retained earnings	$95,300

Balance sheet

Assets
Current assets:
Cash	$26,000
Accounts receivable	$30,200
Inventory	$28,500
Prepaid insurance	$2,900
		$87,600
Property, plant and equipment
Equipment	$146,500
(-) Accumulated depreciation	(45,000)
Equipment		$101,500
Total assets		$189,100
Current liabilities
Accounts payable	$26,000
Sales commission payable	$4,500
Property tax payable	$2,500
Total current liabilities		$33,000
Long term liabilities:
Notes payable		$35,000
Total liabilities		$68,000
Stockholders equity:
Common stock	$25,800
Retained earnings	$95,300
Total stockholders equity		$121,100
Total stockholders equity and liabilities		$189,100

Journal entries

Nov. 30	Depreciation expense	11,000
	Accumulated depreciation- Equipment		11,000
	Insurance expense	7,600
	Prepaid insurance		7,600
	Property tax expense	2,500
	Property tax payable		2,500
	Sales commission expense	4,500
	Sales commission payable		4,500
Nov 30	Sales revenue	720,000
	Interest revenue	9,500
	Income summary		729,500
Nov 30	Income summary	686,400
	Sales returns and allowances		7,800
	Cost of goods sold		514,000
	Salaries and wages expense		94,700
	Depreciation expense		11,000
	Freight out		6,400
	Sales commission expense		11,000
	Insurance expense		7,600
	Rent expense		16,600
	Property tax expense		2,500
	Utilities expense		8,300
	Interest expense		6,500
Nov 30	Income summary	43,100
	Retained earnings		43,100
Nov 30	Retained earnings	9,500
	Dividends		9,500

_____×_____

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