The following unadjusted trial balance was extracted from the books of Carol’s Trading Company at December 31, 2017, the end of the company’s fiscal year. The company is owned by Carol Williams who trades in the business of buying and selling household consumables.
Carol’s Trading Company
Trial Balance as at December 31, 2017
|
A/C Name |
DR $ |
CR $ |
|
Cash |
250,000 |
|
|
Accounts Receivable |
340,000 |
|
|
Allowance for Bad Debts |
25,000 |
|
|
Merchandise Inventory |
210,000 |
|
|
Store Supplies |
120,000 |
|
|
Prepaid Insurance |
156,000 |
|
|
Office Furniture |
1,200,000 |
|
|
Accumulated Depreciation –Office Furniture |
360,000 |
|
|
Computer Equipment |
600,000 |
|
|
Accumulated Depreciation –Computer Equipment |
||
|
Accounts Payable |
345,000 |
|
|
Wages Payable |
||
|
Interest Payable |
||
|
Notes Payable, Long Term |
210,000 |
|
|
Unearned Sales Revenue |
265,000 |
|
|
Carol Williams, Capital |
855,200 |
|
|
Carol Williams, Withdrawal |
190,000 |
|
|
Sales Revenue Earned |
2,100,000 |
|
|
Sales Discount |
15,000 |
|
|
Sales Return and Allowances |
27,000 |
|
|
Cost of Goods Sold |
490,000 |
|
|
Wages Expense |
137,000 |
|
|
Insurance Expense |
78,000 |
|
|
Depreciation Expense –Office Furniture |
||
|
Depreciation Expense –Computer Equipment |
||
|
Store Supplies Expense |
||
|
Utilities Expense |
119,000 |
|
|
Bad Debt Expense |
||
|
Rent Expense |
205,000 |
|
|
Interest Expense |
23,200 |
__________ |
|
Total |
4,160,200 |
4,160,200 |
The following additional information was made available at December 31, 2017:
Store supplies on hand at December 31, 2017 amounted to $42,000.
Insurance of $156,000 was paid on June 1, 2017 for the period June 2017 to March 2018.
The office furniture has an estimated life of ten (10) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $0.
The computer equipment was acquired on April 1, 2017 and is being depreciated over five (5) years on the double-declining method of deprecation, down to a residue of $54,432.
Wages earned by the company’s employees and not paid at December 31, 2017 amounted to $33,500.
Accrued interest expense amounted to $2,850 at December 31, 2017.
A physical count of inventory at December 31, 2017, reveals $280,300 worth of inventory on hand.
At December 31, 2017, $195,000 of the previously unearned sales revenue had been earned.
The aging of the accounts receivable schedule at December 31, 2017 indicated that the estimated uncollectible on accounts receivable is $34,000.
Other data:
$110,000 of the notes payable is due for payment on April 31, 2018
Required:
Prepare the necessary adjusting entries on December 31, 2017.
Prepare the company’s multiple-step income statement for the year ended December 31, 2017.
Prepare the company’s statement of owner’s equity for the year ended December 31, 2017.
Prepare the company’s classified balance sheet at December 31, 2017.
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