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Debit Credit $ 1,000 12,500 5, 800 2,400 42,900 Cash Merchandise inventory store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense 15,250 10,000 5,000 27,000 2,200 111,950 2,000 2,200 38,400 35,600 Insurance expense Rent expense Store supplies expense Advertising expense Totals 15,000 0 9,800 $169,200 $169, 200
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Answer #1
1) adjusting journal entries:
Accounts Debit $ Credit $ Calculation
a Supplies expenses 4050 (5800 - 1750)
Supplies   4050
(being the supplies expenses booked)
b Insurance Expense 1400
Prepaid Insurance 1400
(being expired insurance expense booked)
c Depreciation expense 1525
Acc Dep - Store equipment 1525
(being depreciation on store equipment, a selling expense, booked)
d COGS 1600 (12500-10900)
Merchandise Inventory 1600
(being normal shrinkage closed to COGS)
2) Multiple-step Income Statement for 2017:
Amount $
Sales 111950
Less: Sales discounts 2000
Less:Sales returns and all 2200 4200
Net Sales 107750
Less: COGS 40000
Gross Profit 67750
Less: Administive expenses:
Salaries 17500 (35000/2)
Insurance 1400
Rent 7500 (15000/2)
Store supplies 4050 30450
Income before Selling expenses: 37300
Less: Selling expenses:
Depreciation 1525
Salaries 17500
Rent 7500
Advertising 9800 36325
Income before taxes 975
3) Single step Income Statement for 2017:
Amount $
Sales 111950
Less: Sales discounts 2000
Less:Sales returns and all 2200 4200
Net Sales 107750
Less: COGS 40000
Gross Profit 67750
Less: Expenses:
Salaries 35000
Insurance 1400
Rent 15000
Store supplies 4050
Depreciation 1525
Advertising 9800
Total expenses 66775
Income before Taxes 975
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