Account balances taken from the ledger of Royal Distributing Co. on December 31, 2008, follow: Cash .
Question:
Account balances taken from the ledger of Royal Distributing Co. on December 31, 2008, follow:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,000
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,000
Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,000
Long-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,500
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,400
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,500
Accumulated Depreciation—Buildings . . . . . . . . . . . . . . . . . . 26,780
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,300
Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,500
Capital Stock, $5 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,000
Retained Earnings, December 31, 2007 . . . . . . . . . . . . . . . . . . 14,840
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,670
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,000
Sales Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,890
Sales Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,540
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,520
Selling Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,350
Office Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,900
Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
Supplies Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800
Taxes—Real Estate and Payroll . . . . . . . . . . . . . . . . . . . . . . . . $ 9,500
Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Information relating to adjustments on December 31, 2008, follows:
(a) Allowance for Bad Debts is to be increased by $2,000.
(b) Buildings have a salvage value of $7,500. They are being depreciated at the rate of 10% per year.
(c) Accrued selling expenses are $8,600.
(d) There are supplies of $1,250 on hand.
(e) Prepaid insurance relating to 2009 totals $4,000.
(f) Total interest revenue earned in 2008 is $1,400.
(g) Accrued real estate and payroll taxes are $2,340.
(h) Accrued interest on the mortgage is $1,780.
(i) Income tax is estimated to be 40% of income.
Instructions:
Prepare a work sheet showing the net income and balance sheet totals for the year ending December 31, 2008.
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Account Cash Accounts Receivable Allowance for Bad Debts Inventory LongTerm Investments Land Buildin...View the full answer
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
