31 depreciation expense 9300 accumulated depreciation

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Unformatted text preview: Download free eBooks at bookboon.com 35 Problem 6: Solution Accounting Cycle Exercises IV Solution 6 (c) McCORMICK CORPORATION Income Statement For the Year Ending December 31, 20X8 Revenues $ 981,900 Services to customers Expenses $ 678,900 Wages Utilities 39,600 Selling 124,830 Depreciation 63,900 Supplies 36,000 Interest 22,500 965,730 $ Net income 16,170 your chance Please click the advert to change the world Here at Ericsson we have a deep rooted belief that the innovations we make on a daily basis can have a profound effect on making the world a better place for people, business and society. Join us. In Germany we are especially looking for graduates as Integration Engineers for • Radio Access and IP Networks • IMS and IPTV We are looking forward to getting your application! To apply and for all current job openings please visit our web page: www.ericsson.com/careers Download free eBooks at bookboon.com 36 Problem 6: Solution Accounting Cycle Exercises IV McCORMICK CORPORATION Statement of Retained Earnings For the Year Ending December 31, 20X8 $ 189,600 Beginning retained earnings Plus: Net income 16,170 $ 205,770 Less: Dividends 36,000 $ 169,770 Ending retained earnings McCORMICK CORPORATION Balance Sheet December 31, 20X8 Assets Current assets $ Cash 91,620 Accounts receivable 135,000 Supplies (15,000) $ 211,620 Property, plant & equipment $ 733,500 Equipment Less: Accumulated depreciation (167,400) 566,100 $ 777,720 Total assets Liabilities Current liabilities $ Accounts payable 38,100 Utilities payable 13,500 Wages payable 35,100 Unearned revenue (18,750) $ 67,950 Long-term liabilities Notes payable 240,000 $ 307,950 Total liabilities Stockholders’ equity $ 300,000 Capital stock Retained earnings 169,770 Total stockholders’ equity 469,770 $ 777,720 Total liabilities and equity d) It is true that the adjustments produce no change in net income. The increase in revenues of $37,500 is exactly offset by the increase in expenses ($12,000 + $4,500 + $11,700 + $9,300 = $37,500). However, the individual accounts would not be correct if the adjustments were not made. It is important that all information be correct, and the adjustments should be recorded. Download free eBooks at bookboon.com 37 Problem 7 Accounting Cycle Exercises IV Problem 7 Examine the following trial balances, before and after adjustment: YORKSHIRE CONSULTING CORPORATION Trial Balance and Adjusted Trial Balance As of December 31, 20X9 Debits Cash Accounts Receivable $ Debits 667,560 $ 350,616 Debits - $ Debits 667,560 $ - - 430,616 - Supplies 35,968 - 18,000 - Prepaid Rent 24,000 - 8,000 - 582,800 - 582,800 - Accumulated Deprec. - 150,640 - 178,640 Accounts Payable - 54,360 - 54,360 Wages Payable - - - 18,000 Interest Payable - - - 6,000 Unearned Revenue - 72,000 - 48,000 Notes Payable - 200,000 - 200,000 Capital Stock - 900,000 - 900,000 Retained Earnings, Jan. 1 - 356,476 - 356,476 Equipment Dividends 160,000 - 160,000 - Revenues - 1,337,960 - 1,441,960 1,104,492 - 1,122,492 - Wages Expense Re...
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This document was uploaded on 09/24/2013.

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