Question

219 H D Auto Zoom : P4-10A. Multi-step Income Statement and Adjusting Entries The New England Trading Company, whose LO2 accounting year ends on December 31, had the following normal balances in its general ledger at De cember 31: $17,000 56,600 74.000 3,000 4,200 21,000 Cash. Accounts receivable Inventory.......... Prepaid insurance... Office supplies Furniture and fixtures... Accumulated depreciation furniture and fixtures....... Delivery equipment............ Accumulated depreciation delivery equipment ... Accounts payable.... Long-term notes payable ......... Common stock..... Retained earnings ................. Sales revenue..... Cost of goods sold ... Utilities expense......... Sales salaries expense.. Delivery expense. Advertising expense... Rent expense... . Office salaries expense ........ Income tax expenso $620,000 394.000 4,800 77,000 10,800 5,600 9,400 56,000 9,000 7,000 86.000 12,000 37,000 28.000 70,000 56,400 During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year-end procedures are as follows: 1. Prepaid insurance, December 31, was $1,800. 2. Depreciation expense on furniture and fixtures for the year was $2.200. 3. Depreciation expense on delivery equipment for the year was $11,000. 4. Salaries payable, December 31 (51,900 sales and $1,200 office), was $3,100. 5. Unused office supplies on December 31 were $1,400.

Answer 1

Below is the table showing required results: -

a.

Journal Entries
DATE	ACCOUNTS & EXPLANATION	DEBIT	CREDIT
	Insurance expenses(3000-1800)	1,200
	Prepaid insurance		1,200
(To record prepaid insurance adjusted)
	Depreciation expenses- furniture	2,200
	Accumlated depreciation-furniture		2,200
(To record depreciation expenses)
	Depreciation expenses-delivery equipment	11,000
	Accumlated depreciation-delivery equipment		11,000
(To record depreciation expenses)
	Salaes salaries expenses	1,900
	office salaries expenses	1,200
	Salary payable		3,100
(To record salary payable)
	office supplies expenses(4200-1400)	2,800
	Office supplies		2,800
(To record supplies expenses)

b.

Income Statement
Sales revenue		620,000
Cost of goods sold		(394,000)
Gross profit		226,000
Less: selling and administrative expenses
Administrative expenses
Office salaries(56000+1200)	57,200
Depreciation expenses(2200+11000)	13,200
Utilities expenses	4,800
rent expenses	9,400
office supplies expenses	2,800
insurance expneses	1,200
Selling expenses
Sales salaries(77000+1900)	78,900
Delivery expenses	10,800
Advertising expenses	5,600	(183,900)
Income before taxes		42,100
Less: Income tax expenses		(9,000)
Net income		33,100