Second-Hand Almost New Department Store Inc., a private company following ASPE, is located near a shopping mall. At the end of the company?s fiscal year on December 31, 2020, the following accounts appeared in two of its trial balances:

Analysis reveals the following additional information:

1. Insurance expense and utilities expense are 60% selling and 40% administrative.

2. In the next year, $20,000 of the mortgage payable will be due for payment.

3. Property tax expense and depreciation on the building are administrative expenses; depreciation on the equipment is a selling expense; and $32,000 of the salaries and wages expense related to office salaries and the remainder related to sales salaries. Depreciation expense includes $10,400 relating to the building and $13,300 relating to equipment.

Instructions

a. Prepare a multiple-step income statement, statement of retained earnings, and classified statement of financial position. (Hint: Use Example C.14 as a model or look to Chapter 4 to see what a multiplestep income statement is.)

b. Journalize the adjusting entries that were made.

c. Journalize the closing entries that are necessary.

Transcribed Image Text:

Unadjusted $ 79,300 Adjusted S$ 79,300 Accounts payable Accounts receivable Accumulated depreciation-buildings Accumulated depreciation-equipment Buildings Cash 95,300 42,100 29,600 190,000 68,000 160,000 412,700 -0- 95,300 52,500 42,900 190,000 68,000 Common shares Cost of goods sold Depreciation expense Dividends 160,000 412,700 23,700 28,000 110,000 28,000 Equipment Insurance expense Interest expense 110,000 -0- 7,200 3,000 11,000 Interest income $ 4,000 $ 4,000 Interest payable Inventory Mortgage payable Prepaid insurance -0- 8,000 75,000 80,000 2,400 4,800 4,800 16,600 108,000 14,500 3,500 8,000 718,000 11,000 75,000 80,000 9,600 Property tax expense Property tax payable Retained earnings Salaries and wages expense Sales commission expense Sales commission payable -0- -0- 16,600 108,000 11,000 -0- Sales returns and allowances 8,000 Sales revenue 718,000 11,000 Utilities expense