1. 2. 3. 4. BACKGROUND: Sam's Sports was incorporated on January 1, 2013 with 80,000 shares...

 

 

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1. 2. 3. 4. BACKGROUND: Sam's Sports was incorporated on January 1, 2013 with 80,000 shares of SI par value common stock authorized. All 80,000 shares have been issued. The company's accounting period ends on December 31 of each year. ACCOUNTING POLICIES: The company uses the following generally accepted accounting principles in presenting financial information: a. INVENTORY VALUATION -First-in, first-out method on a perpetual basis. Physical counts are conducted at the end of the year to determine the quantity and value of merchandise inventory on hand. b. DEPRECIATION - Straight-line. As of the close of business on December 31, 2021, the company had the following trial balance: Sam's Sports Post-Closing Trial Balance As of December 31, 2021 Acct # 1110 Cash 1120 Accounts Receivable 1130 Merchandise Inventory 1230 Equipment 1231 Accumulated Depreciation - Equipment 2110 2210 3010 3020 3030 Income Summary 3040 Retained Earnings 4010 Sales Revenue 5020 Cost of Goods Sold 6010 Salaries & Wages Expense 6060 Telephone & Utility Expense 6070 Rent Expense 6120 6410 Income Tax Expense Account Title Accounts Payable Income Tax Payable Common Stock ($1 Par) Paid-In Capital in Excess of Par Depreciation Expense - Equipment $ $ $ $ Debit 150,525 134,100 186,000. 375,000 $ $ $ $ S Credit 151,875 75,000 80,000 353,125 185,625 The following transactions occurred during 2022: JE. #. DESCRIPTION 1. 1. 2. 3. 3. 5. AJE # 7. Total $ 845,625 INFORMATION FOR CURRENT PERIOD TRANSACTIONS When applicable, round amounts to the nearest dollar. Merchandise Inventory purchased from vendors on account, terms net 45. Sales to credit customers on account, terms net 30. The cost of the merchandise inventory sold was $1,386,000. Cash collections from credit customers Payments of Accounts Payable Payments in cash for Telephone and Utility Expense Payroll checks written and distributed for salaries and wages Payment in cash for Rent Expense 845,625 AMOUNT $ $ S S $ $ 1,351,350 2,254,200 1,312,500 705,450 Information for Adjusting Journal Entries After creating the journal entries to record the current year transactions, posting those entries to the ledger accounts, balancing each account, and preparing the unadjusted trial balance, an inspection of the balances indicates that the following adjusting entries are required: 20,200 $25,000 70,500 As the result of a physical count, year-end Merchandise Inventory was determined to be $151,100. Adjust the Merchandise Inventory account to reflect the amount of inventory overage or shortage. Record the depreciation expense on Equipment for the year. All depreciable assets were purchased on the date of incorporation and have an estimated useful life of 20 years, with a residual (salvage) value equal of 10% of original costs. Income Tax Expense for the year is estimated to be $94,150. Prepare an adjusted trial balance, statement of retained earning, an income statement and a balance sheet 1. 2. 3. 4. BACKGROUND: Sam's Sports was incorporated on January 1, 2013 with 80,000 shares of SI par value common stock authorized. All 80,000 shares have been issued. The company's accounting period ends on December 31 of each year. ACCOUNTING POLICIES: The company uses the following generally accepted accounting principles in presenting financial information: a. INVENTORY VALUATION -First-in, first-out method on a perpetual basis. Physical counts are conducted at the end of the year to determine the quantity and value of merchandise inventory on hand. b. DEPRECIATION - Straight-line. As of the close of business on December 31, 2021, the company had the following trial balance: Sam's Sports Post-Closing Trial Balance As of December 31, 2021 Acct # 1110 Cash 1120 Accounts Receivable 1130 Merchandise Inventory 1230 Equipment 1231 Accumulated Depreciation - Equipment 2110 2210 3010 3020 3030 Income Summary 3040 Retained Earnings 4010 Sales Revenue 5020 Cost of Goods Sold 6010 Salaries & Wages Expense 6060 Telephone & Utility Expense 6070 Rent Expense 6120 6410 Income Tax Expense Account Title Accounts Payable Income Tax Payable Common Stock ($1 Par) Paid-In Capital in Excess of Par Depreciation Expense - Equipment $ $ $ $ Debit 150,525 134,100 186,000. 375,000 $ $ $ $ S Credit 151,875 75,000 80,000 353,125 185,625 The following transactions occurred during 2022: JE. #. DESCRIPTION 1. 1. 2. 3. 3. 5. AJE # 7. Total $ 845,625 INFORMATION FOR CURRENT PERIOD TRANSACTIONS When applicable, round amounts to the nearest dollar. Merchandise Inventory purchased from vendors on account, terms net 45. Sales to credit customers on account, terms net 30. The cost of the merchandise inventory sold was $1,386,000. Cash collections from credit customers Payments of Accounts Payable Payments in cash for Telephone and Utility Expense Payroll checks written and distributed for salaries and wages Payment in cash for Rent Expense 845,625 AMOUNT $ $ S S $ $ 1,351,350 2,254,200 1,312,500 705,450 Information for Adjusting Journal Entries After creating the journal entries to record the current year transactions, posting those entries to the ledger accounts, balancing each account, and preparing the unadjusted trial balance, an inspection of the balances indicates that the following adjusting entries are required: 20,200 $25,000 70,500 As the result of a physical count, year-end Merchandise Inventory was determined to be $151,100. Adjust the Merchandise Inventory account to reflect the amount of inventory overage or shortage. Record the depreciation expense on Equipment for the year. All depreciable assets were purchased on the date of incorporation and have an estimated useful life of 20 years, with a residual (salvage) value equal of 10% of original costs. Income Tax Expense for the year is estimated to be $94,150. Prepare an adjusted trial balance, statement of retained earning, an income statement and a balance sheet

Answer rating: 100% (QA)

To prepare the adjusted trial balance statement of retained earnings income statement and balance sheet we need to apply the adjusting entries and summarize the financial information Lets go step by s... View the full answer