Question

Goodfish Lake Sewing and Garment Company services and supplies garments for Syncrude and Suncorp in Northern Alberta. The person preparing the adjusting entries at year-end was unable to complete the adjustments due to illness. You have been given the following unadjusted trial balance along with some additional information for the December 31, 2014, year-end.
Account.........Unadjusted Balance
Accounts receivable.......... $ 71,400
Accum. deprec., building........... 116,000
Accum. deprec., equipment........... 332,000
Advance sales.............. 16, 000
Allowance for doubtful accounts....... 500
Building.................. 415, 000
Cash.................. 87, 100
Equipment............... 619, 000
Estimated warranty liability......... 3, 200
Income tax expense............ $ 33,660
Land................... 121, 000
Merchandise inventory.......... 69, 800
Mortgage payable............ 217, 997
Moses Goodfish, capital.......... 204, 863
Note payable .......................................................... 150,000
Other operating expenses ..................................... 1,161,000
Sales ..................................... ....... 1,345,000
Sales returns and allowances....... 7, 600

Other information:
1. Assume all accounts have a normal balance.
2. 75% of the balance in the Advance Sales account is for garments to be made and delivered by
Goodfish during 2015; the remaining 25% is from sales earned during 2014.
3. Goodfish Lake Sewing and Garment Company warranties its garments against defects and estimates its warranty liability to be 2.5% of adjusted net sales.
4. The 3.5%, 5-year note payable was issued on October 1, 2014; interest is payable annually each September 30.
5. A partial amortization schedule for the mortgage follows:


6. Uncollectible accounts are estimated to be 1% of outstanding receivables.
7. A physical count of the inventory showed a balance actually on hand of $61,600.
8. The balance in Income Tax Expense represents taxes accrued and paid for the 2014 year at the rate of $3,060 per month. Assume the income tax rate is 20%.

Required
1. Based on the information provided, journalize the adjusting entries at December 31, 2014.
2. Prepare a classified balance sheet (round all values on the balance sheet to wholenumbers).


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  • CreatedJanuary 08, 2015
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