Question

The December 31, 2021, unadjusted trial balance for the Wolkstein Drug Company is presented below. December 31 is the company's year-end reporting date Credits Debits 75,370 21,500 2,400 32, see 58, eee 17,480 22,000 2 Account Title Cash Accounts receivable Prepaid rent Inventory Equipment Accumulated depreciation Accounts payable Salaries payable Common stock Retained earnings Sales revenue Cost of goods sold Salaries expense Rent expense Depreciation expense Utilities expense Advertising expense Totals 100,000 13,000 353,000 211,800 70,600 14,400 14,120 4.710 505, 480 ences 505, 400 The following year-end adjusting entries are required: a. Depreciation expense for the year on the equipment is $5,800. b. Salaries at year end should be accrued in the amount of 54640. Exercise 2-20 (Algo) Part 2 2. Prepare an income statement for 2021 and a balance sheet as of December 31, 2021

Answer 1

a $ $ $ 353,000 211,800 141,200 b C= a - b WOLKSTEIN DRUG COMPANY Income Statement Year Ended December 31, 2021 Sales revenue Cost of goods sold Gross profit Operating expenses: Salaries expense $ 75,240 Rent expense $ 14,400 Depreciation expense $ 5,800 Utilities expense $ 14,120 Advertising expense $ 4,710 Total operating expenses Net income $ $ $ 114,270 26,930 d C-d

WOLKSTEIN DRUG COMPANY Statement of Retained Earnings Year Ended December 31, 2021 13,000 26,930 Beginning Balance Add: Net Income Less: Dividends Ending Balance $ $ $ $ 39,930

WOLKSTEIN DRUG COMPANY Balance Sheet As on December 31, 2021 ASSETS Current assets Cash $ 75,370 Accounts receivable $ 21,500 Prepaid rent $ 2,400 Inventory $ 32,500 $ 131,770 Non-current assets Equipment Less: Accumulated depreciation $ $ 58,000 (23,200) $ 34,800 Total assets $ 166,570 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Current liabilities Accounts payable Salaries payable $ $ $ $ 22,000 4,640$ 26,640 Stockholders' equity Common stock Retained earnings $ $ 100,000 39,930$ 139,930 Total liabilities and stockholders' equity $ 166,570

• Accumulated depreciation ending balance = Beginning balance + depreciation for the year = $17,400 + $5,800 = $23,200

Adjusting entries:

Credit Debit 5,800 $ $ 5,800 Date Particulars 31-Dec Depreciation expense Accumulated depreciation (depreciation for the year) 31-Dec Salaries expense Salaries payable (salaries accrued) $ 4,640 $ 4,640