Question

Comprehensive Accounting Cycle Review 5-1 (Part Level Submission) On December 1, 2017, Devine Distributing Company had the following account balances. Debit Credit Cash $7,400 Accumulated Depreciation—Equipment $2,250 Accounts Receivable 5,600 Accounts Payable 4,500 Inventory 11,500 Salaries and Wages Payable 1,000 Supplies 1,200 Common Stock 15,100 Equipment 22,500 Retained Earnings 25,350 $48,200 $48,200 During December, the company completed the following summary transactions. Dec. 6 Paid $1,900 for salaries due employees, of which $900 is for December and $1,000 is for November salaries payable. 8 Received $1,800 cash from customers in payment of account (no discount allowed). 10 Sold merchandise for cash $6,500. The cost of the merchandise sold was $4,200. 13 Purchased merchandise on account from Hecht Co. $9,200, terms 2/10, n/30. 15 Purchased supplies for cash $1,700. 18 Sold merchandise on account $12,600, terms 3/10, n/30. The cost of the merchandise sold was $8,200. 20 Paid salaries $1,800. 23 Paid Hecht Co. in full, less discount. 27 Received collections in full, less discounts, from customers billed on December 18.

(e) Prepare an adjusted trial balance. e1) Prepare an income statement. e2) Prepare a retained earnings statement for December (e3) Prepare a classified balance sheet at December 31. (List current assets in order of liquidity.)

Answer 1

Adjustment Entries Dec.6 Salaries and wages payable $ 1,000 Salaries expense $ 900 Cash $ 1,900 Dec. 8 $ 1.800 Cash Accounts receivable $ 1,800 Dec. 10 $ 6,500 Cash Sales revenue $ 6,500 $ 4,200 Cost of goods sold Merchandise inventory $ 4.200 Dec.13 $ 9,200 Merchandise Inventory Accounts payable $ 9,200 $ 1.700 Dec.15 Supplies Cash $ 1,700 Dec. 18 Accounts receivable $12,600 Sales revenue $12,600 $ 8.200 Cost of goods sold Merchandise inventory $ 8,200 Dec. 20 $ 1,800 Salaries expense Cash $ 1,800 Dec.23 $ 9.200 Accounts payable Discount income Cash $ 184 (9200*2%) $ 9,016 Dec.27 Cash Discount expense Accounts receivable $ 12.222 $ 378 (12600*3% $12,600

(e) Devine Distributing Company Adjusted Trail Balance Cash $ 13,506 (7400-1900+1800+6500-1700-1800-9016+12222) Accounts receivable $ 3,800 (5600-1800+12600-12600) Inventory $ 8,300 (11500-4200+9200-8200) Supplies $ 2,900 (1200+1700) Equipment $ 22,500 Accumulated Depreciation - equipment $ 2,250 Accounts payable $ 4,500 (4500+9200-9200) Salaries and wages payable $ (1000-1000) Common stock $ 15,100 Retained earnings $ 25,350 Salaries expense $ 2,700 (900+1800) Sales revenue $ 19,100 (6500+12600) Discount income $ 184 Discount expense $ 378 Cost of goods sold $ 12,400 (4200+8200) Totals $ 66,484 $66,484

(1) Devine Distributing Company Income Statement Sales Revenue Discount Income Cost of goods sold Gross Profit Salaries expense Discount expense Net Income $ 19,100 $ 184 $(12,400) $ 6,884 $ (2,700 $ (378) $ 3,806 (e2) Devine Distributing Company Retained earnings Statement Beginning ratined earnings Add : Net Income less: Dividends paid Ending Retained earnings $ 25,350 $ 3,806 $ $ 29,156 (e3) Devine Distributing Company Balance sheet As on December 31 Cash Accounts receivable Inventory Supplies Total Current Assets $ 13,506 $ 3,800 $ 8,300 $ 2,900 $ 28,506 Property plant and equipment Equipment $ 22,500 less: Accumulated Depreciation equipment $ (2,250) Net Equipment $ 20,250 Total Assets $ 48,756 Liabilities and stock holders equity Accounts payable Total liabilities $ 4,500 $ 4,500 Stock holders equity Common stock Retained earnings Total stock holders equity $ 15,100 $ 29,156 $ 44,256 Total liability and stock holders equity $ 48,756