Chapter_6_B_Problem_Solutions

Chapter_6_B_Problem_Solutions - Prob. 61B 1. HOBBS CO....

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Prob. 6–1B 1. HOBBS’ CO. Income Statement For the Year Ended June 30, 2008 Revenue from sales: Sales. ............................................................ $1,351,800 Less: Sales returns and allowances. ........ $ 18,900 Sales discounts. ............................... 9,900 28,800 Net sales. ................................................ $1,323,000 Cost of merchandise sold. .............................. 963,000 Gross profit. ...................................................... $ 360,000 Expenses: Selling expenses: Sales salaries expense. ........................ $189,000 Advertising expense. ............................ 25,470 Depreciation expense—store equipment. ........................................ 4,140 Miscellaneous selling expense. ........... 990 Total selling expenses. .................... $ 219,600 Administrative expenses: Office salaries expense. ........................ $ 36,900 Rent expense. ........................................ 19,935 Insurance expense. ............................... 11,475 Depreciation expense—office equipment. ........................................ 8,100 Office supplies expense. ...................... 810 Miscellaneous administrative expense 1,080 Total administrative expenses. ....... 78,300 Total expenses. ........................................... 297,900 Income from operations. ................................. $ 62,100 Other expense: Interest expense. ......................................... 900 Net income. ....................................................... $ 61,200
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Prob. 6–1B Continued 2. HOBBS’ CO. Statement of Owner’s Equity For the Year Ended June 30, 2008 Jeremiah Hobbs, capital, July 1, 2007. .............................. $241,200 Net income for the year. ...................................................... $61,200 Less withdrawals. ................................................................ 22,500 Increase in owner’s equity. ................................................ 38,700 Jeremiah Hobbs, capital, June 30, 2008. .......................... $279,900
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Prob. 6–1B Continued 3. HOBBS’ CO. Balance Sheet June 30, 2008 Assets Current assets: Cash. ............................................................. $ 68,850 Accounts receivable. .................................. 55,800 Merchandise inventory. .............................. 90,000 Office supplies. ........................................... 2,340 Prepaid insurance. ...................................... 6,120 Total current assets. ................................ $223,110 Property, plant, and equipment: Office equipment. ........................................ $ 57,600 Less accumulated depreciation. ............. 9,720 $ 47,880 Store equipment. ......................................... $105,750 Less accumulated depreciation. ............. 43,740 62,010 Total property, plant, and equipment. ......................................... 109,890 Total assets. ...................................................... $333,000 Liabilities Current liabilities:
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Chapter_6_B_Problem_Solutions - Prob. 61B 1. HOBBS CO....

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