Information from the March 31, 2020, year-end unadjusted trial balance of The Online Store is as follows:

Additional information:

a. Supplies inventory at year-end, $920.

b. The balance in the Prepaid Rent account represents a six-month contract effective November 1, 2019.

c. Depreciation on the store equipment, $1,600.

d. The useful life and trade-in value of the office equipment were originally estimated to be 7 years and $250, respectively.

e. Ending merchandise inventory, $19,200.

Required

Analyze and determine the impact of the adjustments from (a) to (e) on the unadjusted trial balance numbers. Prepare a classified multiple-step income statement (like Exhibit 5A.2) using your adjusted trial balance numbers.

Exhibit 5A-2

Transcribed Image Text:

Debit Credit $ 7,000 Cash Merchandise inventory 39,500 Supplies. 1,600 19,200 Prepaid rent. Store equipment. Accumulated depreciation, store equipment. 60,000 $ 14,000 Office equipment. 23,000 Accumulated depreciation, office equipment Accounts payable. 6,500 16,000 134,600 Lucy Baker, capital. Lucy Baker, withdrawals 34,000 506,750 Sales Sales returns and allowances. 13,800 Sales discounts. 6,000 Purchases. 346,000 Purchase returns and allowances. 4,600 Purchase discounts. 7,150 Transportation-in 16,000 Salaries expense (60% selling, 40% office).. Rent expense (80% selling space; 20% office space). 58,000 49,000 7,000 Advertising expense. Supplies expense (30% selling supplies; 70% office supplies). Depreciation expense, store equipment. 9,500 -0- Depreciation expense, office equipment -0- $689,600 $689,600 Totals.. Lifetime Equipment Co-op Income Statement For Year Ended December 31, 2020 Sales. $321,000 $ 4,300 Less: Sales discounts. Sales returns and allowances. Net sales. Cost of goods sol.. Merchandise inventory, Dec. 31, 2019. 2,000 6,300 $314,700 $ 19,000 Purchases. $235,800 $1,500 4,200 Less: Purchase returns and allowances. Purchase discounts.. Net purchases. Add: Transportation-in. Cost of goods purchased. 5,700 $230,100 2,300 232,400 $251,400 21,000 Goods available for sale. Less: Merchandise inventory, Dec. 31, 2020. Cost of goods sold. Gross profit from sales. Operating expenses: Selling expenses: Sales salaries expense Advertising expense. Rent expense, selling space. Depreciation expense, store equipment. Store supplies expense. Total selling expenses. General and administrative expenses Office salaries expense Office supplies expense. Rent expense, office space Depreciation expense, office equipment. 230,400 $ 84,300 $ 18,500 11,300 8,100 3,000 1,200 $ 42,100 $ 25,300 1,800 900 700 Insurance expense. Total general and administrative expense.. Total operating expenses. Profit from Operations Other revenues and expenses: 600 29,300 71,400 $ 12,900 Rent revenue $ 2,800 Interest expense Profit. 360 2,440 $ 15,340