Question

Prepare financial statements and adjusting and closing entries. (SO 4,5) P5-4B Maine Department Store is located near the Village Shopping Mall. At the end of the company's fiscal year on December 31, 2008, the following accounts appeared in two of its trial balances Unadjusted $ 79,300 50,300 42,100 29,600 190,000 23,800 116,600 412,700 Unadjusted $ 4,000 75,000 80,000 32,000 9,600 Accounts Payable Accounts Receivable Accumulated Depr.-Building Accumulated Depr.--Equipment Building Cash Common Stock Cost of Goods Sold Depr. Expense-Building Depr. Expense-Equipment Dividends Equipment Insurance Expense Interest Expense Interest Payable Adjusted $ 79,300 50,300 52,500 42,900 190,000 23,800 116,600 412,700 10,400 13,300 28,000 110,000 7,200 11,000 8,000 Interest Revenue Merchandise Inventory Mortgage Payable Office Salaries Expense Prepaid Insurance Property Tax Expense Property Taxes Payable Retained Earnings Sales Salaries Expense Sales Sales Commissions Expense Sales Commissions Payable Sales Returns and Allowances Utilities Expense Utilities Expense Payable Adjusted $ 4,000 75,000 80,000 32,000 2,400 4.800 4,800 60,000 76,000 628,000 14,500 4,300 8,000 12,000 1,000 60,000 76,000 628,000 10,200 28,000 110,000 3,000 8,000 11,000 Analysis reveals the following additional data. 1. Insurance expense and utilities expense are 60% selling and 40% administrative. 2. $20,000 of the mortgage payable is due for payment next year. 3. Depreciation on the building and property tax expense are administrative expenses; depreche ation on the equipment is a selling expense.

The second Image contains the requirements of the problem. I already completed part A, but other students might need this in the future. I can format the entries, just looking to make sure they're right.

Answer 1

Income Statement for the year ended 31st December 2008
	Amount	31-Dec-08
A. Income
Revenue from operations
Sales	$                                      628,000
Less-: Sales return	$                                         -8,000	$                                   620,000
Other Income
Interest revenue	$                                          4,000	$                                       4,000
Total revenue from operation		$                                   624,000
B. Expenses
Cost of Goods sold		$                                   412,700
Finance cost
Interest expense		$                                     11,000
General Admin Expenses
Office Salaries Expense	$                                        32,000
Property tax expense	$                                          4,800
Utilities Expense (@40%)	$                                          4,800
Insurance expense (@40%)	$                                          2,880
Depreciation - building	$                                        10,400	$                                     54,880
Selling Expenses
Sales Salaries Expense	$                                        76,000
Sales Commission Expense	$                                        14,500
Utilities Expense (@60%)	$                                          7,200
Insurance expense (@60%)	$                                          4,320
Depreciation - equipment	$                                        13,300	$                                   115,320
Profit before tax		$                                     30,100
Less-: Dividend paid		$                                     28,000
Profit transfer to balance sheet		$                                       2,100

Statement of Retained Earnings
Opening balance	$     60,000
Less-: Profit for the year	$       2,100
Closing balance	$     62,100

Statement of affairs as at 31 December 2008
Liabilities and Stockholder's Equity	31-Dec-08
Non-Current Financial liability
(i) Mortgage payable	$        60,000
Total non-current liabilities	$        60,000
Current liability
Current maturities of Mortgage payable	$        20,000
Financial liability
(i) Property tax payable	$          4,800
(ii) Sales Commission payable	$          4,300
(iii) Utilities Expense payable	$          1,000
(iv) Interest payable	$          8,000
(v) Accounts payable Total current liabilities	$        79,300
	$      117,400
Stockholder's equity:
Common stock $1 par value, 116600 authorised,issued and outstanding shares at December 31, 2008	$      116,600
Retained earnings	$        62,100
Stockholder's Equity	$      178,700
Total Liabilities and Stockholder's Equity	$      356,100
Assets
Building (net)	$      137,500
(190000-52500)
Equipment (net)	$        67,100
(110000-42900)
Total non-current assets	$      204,600
Inventory	$        75,000
Financial Assets
(i) Cash and cash equivalents	$        23,800
(ii) Accounts receivable	$        50,300
Other current asset
Prepaid expenses	$          2,400
Total current assets	$      151,500
Total assets	$      356,100

Journal Entries for adjusting entries

(I) Mortgage payable $20,000

   To current maturities of mortgage payable $20,000

(being $20,000 of the mortgage payable is due for payment in next year)

Balance are the reclass entries of depreciation, Insurance and Utilities Expense.