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