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Warren SM_AppC_Vol.2_final - APPENDIX C END-OF-PERIOD...

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APPENDIX C END-OF-PERIOD SPREADSHEET (WORK SHEET) FOR A MERCHANDISING BUSINESS Prob. C–1 1. [The solution to part (1) can be found on the following pages.] 2. RACK SAVER CO. Income Statement For the Year Ended December 31, 2010 Revenue from sales: Sales ............................................................. $800,000 Less: Sales returns and allowances ........ $11,900 Sales discounts ................................ 7,100 19,000 Net sales ................................................. $781,000 Cost of merchandise sold ............................... 507,500 Gross profit ....................................................... $273,500 Expenses: Selling expenses: Sales salaries expense ......................... $98,200 Advertising expense ............................. 25,000 Depreciation expense—store equipment ......................................... 6,000 Store supplies expense ........................ 3,150 Miscellaneous selling expense ............ 1,600 Total selling expenses .................... $133,950 Administrative expenses: Office salaries expense ........................ $65,200 Rent expense ......................................... 16,000 Insurance expense ................................ 3,600 Depreciation expense—office equipment ......................................... 3,000 Office supplies expense ....................... 1,500 Miscellaneous administrative expense 1,650 Total administrative expenses ....... 90,950 Total expenses ............................................ 224,900 Income from operations .................................. $ 48,600 Other income and expense: Rent revenue ............................................... $ 1,000 Interest expense ......................................... (10,800 ) (9,800 ) Net income ........................................................ $ 38,800 205 205
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Prob. C–1 Continued 1. A B C D E F G H I J K 1 RACK SAVER CO. 2 End-of-Period Spreadsheet (Work Sheet) 3 For the Year Ended December 31, 2010 4 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet 5 Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. 6 Cash 12,000 12,000 12,000 7 Accounts Receivable 72,500 72,500 72,500 8 Merchandise Inventory 170,000 (a) 7,500 162,500 162,500 9 Prepaid Insurance 9,700 (b) 3,600 6,100 6,100 10 Store Supplies 4,200 (c) 3,150 1,050 1,050 11 Office Supplies 2,100 (d) 1,500 600 600 12 Store Equipment 360,000 360,000 360,000 13 Acc. Depr.—Store Equip. 60,300 (e) 6,000 66,300 66,300 14 Office Equipment 70,000 70,000 70,000 15 Acc. Depr.—Office Equip. 17,200 (f) 3,000 20,200 20,200 16 Accounts Payable 46,700 46,700 46,700 17 Salaries Payable (g) 3,000 3,000 3,000 18 Unearned Rent 3,000 (h) 1,000 2,000 2,000 19 Note Payable (final payment due 2018) 180,000 180,000 180,000 20 Evan Hoffman, Capital 352,750 352,750 352,750 21 Evan Hoffman, Drawing 25,000 25,000 25,000 22 Sales 800,000 800,000 800,000 23 Sales Returns and Allow. 11,900 11,900 11,900 24 Sales Discounts 7,100 7,100 7,100 25 Cost of Merchandise Sold 500,000 (a) 7,500 507,500 507,500 26 Sales Salaries Expense 96,400 (g) 1,800 98,200 98,200 27 Advertising Expense 25,000 25,000 25,000 28 Depr. Exp.—Store Equip. (e) 6,000 6,000 6,000 29 Store Supplies Expense (c) 3,150 3,150 3,150 30 Misc. Selling Expense 1,600 1,600 1,600 206 206
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31 Office Salaries Expense 64,000 (g) 1,200 65,200 65,200 32 Rent Expense 16,000 16,000 16,000 33 Insurance Expense (b) 3,600 3,600 3,600 34 Depr. Exp.—Office Equip. (f) 3,000 3,000 3,000 35 Office Supplies Expense (d) 1,500 1,500 1,500 36 Misc. Admin. Expense
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