Problem

The Green Thumb Gallery is a retail store that sells plants, soil, and decorative pots. On...

The Green Thumb Gallery is a retail store that sells plants, soil, and decorative pots. On December 31, 2013, the firm’s general ledger contained the accounts and balances that appear below.

INSTRUCTIONS

1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2013.

2. Enter the adjustments below in the Adjustments section of the worksheet. Identify each adjustment with the appropriate letter.

3. Complete the worksheet.

ACCOUNTS AND BALANCES

Cash

$ 5,700 Dr.

Accounts Receivable

2,600 Dr.

Allowance for Doubtful Accounts

52 Cr.

Merchandise Inventory

11,300 Dr.

Supplies

1,200 Dr.

Prepaid Advertising

960 Dr.

Store Equipment

8,100 Dr.

Accumulated Depreciation—Store Equipment

1,500 Cr.

Office Equipment

1,600 Dr.

Accumulated Depreciation—Office Equipment

280 Cr.

Accounts Payable

2,625 Cr.

Social Security Tax Payable

430 Cr.

Medicare Tax Payable

98 Cr.

Federal Unemployment Tax Payable

 

State Unemployment Tax Payable

 

Salaries Payable

 

Beth Argo, Capital

25,457 Cr.

Beth Argo, Drawing

20,000 Dr.

Sales

90,048 Cr.

Sales Returns and Allowances

1,100 Dr.

Purchases

46,400 Dr.

Purchases Returns and Allowances

430 Cr.

Rent Expense

6,000 Dr.

Telephone Expense

590 Dr.

Salaries Expense

14,100 Dr.

Payroll Taxes Expense

1,270 Dr.

Income Summary

 

Supplies Expense

 

Advertising Expense

 

Depreciation Expense—Store Equipment

 

Depreciation Expense—Office Equipment

 

Uncollectible Accounts Expense

 

ADJUSTMENTS

a.–b. Merchandise inventory on December 31, 2013, is $12,321.

c. During 2013, the firm had net credit sales of $35,000; the firm estimates that 0.6 percent of these sales will result in uncollectible accounts.

d. On December 31, 2013, an inventory of the supplies showed that items costing $275 were on hand.

e. On October 1, 2013, the firm signed a six-month advertising contract for $960 with a local newspaper and paid the full amount in advance.

f. On January 2, 2012, the firm purchased store equipment for $8,100. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $600.

g. On January 2, 2012, the firm purchased office equipment for $1,600. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $200.

h. On December 31, 2013, the firm owed salaries of $1,830 that will not be paid until 2014.

i. On December 31, 2013, the firm owed the employer’s social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $1,830 of accrued wages.

j. On December 31, 2013, the firm owed federal unemployment tax (assume 0.8 percent) and state unemployment tax (assume 5.4 percent) on the entire $1,830 of accrued wages.

Analyze: By what total amount were the net assets of the business affected by adjustments?

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search