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Question 1
Question 1
The following are the unadjusted balances in the accounts of (Name of Student) Trading Ltd. for the fiscal year ended 9/30/2011
Cash                                                                                       28,750             Accounts receivable                    32,900
Prepaid insurance                                                              4,800             Stores supplies                               12,400
Inventory                                                                             36,000             Stores equipment                          32,300
Acc. Depreciation – Stores equipment                           9,300             Manufacturing equipment              98,500
Acc. Depreciation – Manufacturing equipment            23,850             Accounts payable                            15,430
Notes payable                                                                    50,000             Unearned revenue                          33,000
Common stock                                                                   90,000             Dividends paid                                15,000
Retained earnings                                                                    ?                 Sales                                              185,700           
Dividend received on investment                                    6,450             Sales discounts                               10,100
Sales returns and allowances                                          2,095             Purchases                                        98,000
Purchases returns and allowances                                 9,250             Transportation-in                            3,250
Transportation-out                                                           1,820             Salaries expense                             30,425
Rent expense                                                                     18,000             Advertising expense                      7,600
Utilities expense                                                                 5,900
(The company uses a periodic inventory system).

1. Prepare the adjusting entries to reflect the items below, using a work sheet.
    a) Stores supplies still available at the year end is $3,800
    b) Expired insurance for the year is $3,600
    c) Depreciation expense on store equipment is $2,550 for the year.
    d) Depreciation expense for manufacturing equipment is 12.5% of the book balance.
    e) A physical check reveal that $21,000 of inventory is in warehouse at fiscal year end.
    f) $20,000 of the balance in unearned income was earned in the fiscal year.
   g) Interest on notes payable is 12% per annum. The $50,000 note was a bank loan taken on 2/15/2011 to be repaid  in full in twelve months.
(You may need to add some more accounts).
2. Prepare closing entries, a multi-step income statement and a statement of retained earnings for the company.
3. Prepare a balance sheet, in classical form, as at 9/30/2011


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