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 41,870 32,750 5,400 51,250 118,000 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 35,400 37,000 0 100,000 35,500 503,000 301,800 100,600 32,400 20,120 6710 710,900 710,900 The following year-end adjusting entries are required: a. Depreciation expense for the year on the equipment is $11.800. b. Salaries at year-end should be accrued in the amount of $6,440.

Answer 1

WOLKSTEIN DRUG STORE
Balance Sheet
At December 31, 2021
Assets
Current assets:
Cash		41870
Accounts receivable		32750
Inventory		51250
Prepaid rent		5400
Total current assets		131270
Property and equipment
Equipment	118000
Accumulated depreciation ($35400 + $11800)	-47200	70800
Total assets		202070
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable		37000
Salaries payable		6440
Total current liabilities		43440
Shareholders' equity:
Common stock	100000
Retained earnings*	58630
Total shareholders' equity		158630
Total liabilities and shareholders' equity		202070

*Retained earnings:

Sales revenue		503000
Less: Expenses
Cost of goods sold	301800
Salaries expense ($100600 + $6440)	107040
Rent expense	32400
Depreciation expense	11800
Utilities expense	20120
Advertising expense	6710	479870
Net income		23130
Add: Beginning retained earnings		35500
Ending Retained earnings		58630