As a recently hired accountant for a small business, SMC, Inc., you are provided with last...

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As a recently hired accountant for a small business, SMC, Inc., you are provided with last year's balance sheet, income statement, and post-closing trial balance to familiarize yourself with the business. SMC, Inc. Balance Sheet December 31, 2022 Assets Cash Accounts receivable Inventory Supplies Total assets.. Liabilities: Liabilities and Stockholders' Equity $44,500 28,000 15,000 700 $88,200 Accounts payable Salaries payable. $14,000 2,500 Income taxes payable 3,275 Total liabilities. $19,775 Stockholders' equity: Capital stock (10,000 shares outstanding). Retained earnings $35,000 33,425 Total stockholders' equity. Total liabilities and stockholders' equity.... 68.425 $88,200 Sales revenue Rent revenue. Total revenues.. Less cost of goods sold.. Gross profit SMC, Inc. Income Statement For the Year Ended December 31,2022 Less operating expenses: Supplies expense Salaries expense Miscellaneous expense... Income beforetaxes... Less income taxes...... Net Income..... Earnings per share ($20,825/10,000shares) $110,000 1.000 $111,000 60.000 $ 51,000 $ 400 22,000 4.100 26,500 $24,500 3,675 $20.825 $ 2.08 Cash Accounts Receivable.. Inventory Supplies Accounts Payable.. Salaries Payable Income TaxesPayable.. Common Stock.... Retained Earnings Totals..... SMC, Inc. Post-Closing Trial Balance December 31, 2022 Debits Credits $44,500 28,000 15,000 700 $14,000 $88,200 2,500 3,275 35,000 33,425 $88,200 You are also given the following information that summarizes the business activity for the current year, 2023 a. Issued 10,000 additional shares of common stock for $45,000 cash on January 1st. b. Borrowed $25,000 on March 1, 2023, from Downtown Bank as a long-term loan. The interest rate on the loanis 5% and Interest for the year is payable on January 1, 2024. C. Paid $18,000 cash on April1 to lease a building for one year. d. e. f. Received $7,500 on May 1 from a tenant for one year's rent. Paid $4,200 on June 1 for a one-year insurance policy. Purchased $3,500 of supplies for cash on June 15th. 5. Purchased inventory for $125,000 on account on July 1. h. August 1, sold inventory for $185,000 on account; cost of the merchandise sold was $120,000. Collected $130,000 cash from customers' accounts receivable on August 20th. i. j. September 1, Paid $95,000 cash for inventories purchased earlier during the year. k. September 20" paid $34,000 for sales reps' salaries, including $2,500 owed at the beginning of 2023. Dividends for $9,500 were paid on October 20th. I. m. The income taxes payable for the year of 2022 were paid on November 15th. n. For adjustingentries, all prepaid expenses are initially recorded as assets, and all unearned revenues are initially recorded as liabilities (this is just informational). o. At year-end, $1,050 worth of supplies are on hand. p. At year-end, an additional $7,200 of sales salaries are owed, but have not yet been paid. q. Prepare an adjusting entry to recognize the taxes owed for 2023. The corporate tax rate is 21% of the income before income taxes. You are asked to do the following on an excel spreadsheet: 1. Journalize the transactions for the current year, 2023, using the chart of accounts listed on the excel spreadsheet provided for the project. 2. Set up T-accounts and enter the beginning balances from the December 31, 2022, post-closing trial balance for SMC. Post all current year journal entries to the T-accounts. 3. Journalize and post any necessary adjusting entries at the end of 2023. (Hint: Items b, c, d, e, o, p, and q require adjustment.) 4. After the adjusting entries are posted, prepare an adjusted trial balance, an income statement, statement of retained earnings and a balance sheet for 2023. The format of your statements should mirror those prepared by the company in 2022. 5. Journalize and post-closing entries for 2023 and prepare a post-closing trial balance. 6. Compute the Current Ratio and Debt to Total Equity Ratio for 2022 and 2023 7. Interpretive Question: What is your overall assessment of the financial health of SMC, Inc.? A B C D E G H K L M 1 Post 2 Date Description Ref. Debit Credit 3 2023 4 1/1 5 6 7 3/1 9 10 4/1 11 12 13 521 14 15 16 6/1 17 18 19 6/15 20 21 22 7/1 23 24 25 $11 26 27 28 29 30 $120 31 32 33 5/1 34 35 36 5/20 37 38 39 40 10/20 41 42 43 44 11/15 45 46 CASH ACCTS REC INVENTORY SUPPLIES PREPAID INSURANCE PREPAID RENT NOTES PAYABLE ACCTS PAYABLE UNEARNED RENT SALARIES PAYABLE INC TAXES PAYABLE INTEREST PAYABLE You should use the first 24 t-accounts after recording your adjusting entries The Income Summary T Account should only be used during the closing entry process COMMON STOCK RETAINED EARNINGS DIVIDENDS SALES REVENUE RENT REVENUE INTEREST EXPENSE SALARIES EXPENSE SUPPLIES EXPENSE COSTOFGOODS SOLD RENT EXPENSE INSURANCE EXP INCOME TAX EXP INCOME SUMMARY Post Date Description Ref. Debit Credit 12/31/23 ADJUSTING ENTRIES B D E Q ACCOUNT NAME SMC, INC ADJUSTED TRIAL BALANCE 12/31/2023 DEBIT CREDIT TOTALS 0 0 SMC, INC INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2023 SMC, INC STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2023 SMC, INC BALANCE SHEET DECEMBER 31,2023 Post Date Description Ref. Debit Credit CLOSING ENTRIES ACCOUNT NAME SMC, INC POST CLOSING TRIAL BALANCE 12/31/2023 DEBIT CREDIT TOTALS 0 0 CURRENT RATIO DEBT TO TOTAL ASSET RATIO 2022 2023 As a recently hired accountant for a small business, SMC, Inc., you are provided with last year's balance sheet, income statement, and post-closing trial balance to familiarize yourself with the business. SMC, Inc. Balance Sheet December 31, 2022 Assets Cash Accounts receivable Inventory Supplies Total assets.. Liabilities: Liabilities and Stockholders' Equity $44,500 28,000 15,000 700 $88,200 Accounts payable Salaries payable. $14,000 2,500 Income taxes payable 3,275 Total liabilities. $19,775 Stockholders' equity: Capital stock (10,000 shares outstanding). Retained earnings $35,000 33,425 Total stockholders' equity. Total liabilities and stockholders' equity.... 68.425 $88,200 Sales revenue Rent revenue. Total revenues.. Less cost of goods sold.. Gross profit SMC, Inc. Income Statement For the Year Ended December 31,2022 Less operating expenses: Supplies expense Salaries expense Miscellaneous expense... Income beforetaxes... Less income taxes...... Net Income..... Earnings per share ($20,825/10,000shares) $110,000 1.000 $111,000 60.000 $ 51,000 $ 400 22,000 4.100 26,500 $24,500 3,675 $20.825 $ 2.08 Cash Accounts Receivable.. Inventory Supplies Accounts Payable.. Salaries Payable Income TaxesPayable.. Common Stock.... Retained Earnings Totals..... SMC, Inc. Post-Closing Trial Balance December 31, 2022 Debits Credits $44,500 28,000 15,000 700 $14,000 $88,200 2,500 3,275 35,000 33,425 $88,200 You are also given the following information that summarizes the business activity for the current year, 2023 a. Issued 10,000 additional shares of common stock for $45,000 cash on January 1st. b. Borrowed $25,000 on March 1, 2023, from Downtown Bank as a long-term loan. The interest rate on the loanis 5% and Interest for the year is payable on January 1, 2024. C. Paid $18,000 cash on April1 to lease a building for one year. d. e. f. Received $7,500 on May 1 from a tenant for one year's rent. Paid $4,200 on June 1 for a one-year insurance policy. Purchased $3,500 of supplies for cash on June 15th. 5. Purchased inventory for $125,000 on account on July 1. h. August 1, sold inventory for $185,000 on account; cost of the merchandise sold was $120,000. Collected $130,000 cash from customers' accounts receivable on August 20th. i. j. September 1, Paid $95,000 cash for inventories purchased earlier during the year. k. September 20" paid $34,000 for sales reps' salaries, including $2,500 owed at the beginning of 2023. Dividends for $9,500 were paid on October 20th. I. m. The income taxes payable for the year of 2022 were paid on November 15th. n. For adjustingentries, all prepaid expenses are initially recorded as assets, and all unearned revenues are initially recorded as liabilities (this is just informational). o. At year-end, $1,050 worth of supplies are on hand. p. At year-end, an additional $7,200 of sales salaries are owed, but have not yet been paid. q. Prepare an adjusting entry to recognize the taxes owed for 2023. The corporate tax rate is 21% of the income before income taxes. You are asked to do the following on an excel spreadsheet: 1. Journalize the transactions for the current year, 2023, using the chart of accounts listed on the excel spreadsheet provided for the project. 2. Set up T-accounts and enter the beginning balances from the December 31, 2022, post-closing trial balance for SMC. Post all current year journal entries to the T-accounts. 3. Journalize and post any necessary adjusting entries at the end of 2023. (Hint: Items b, c, d, e, o, p, and q require adjustment.) 4. After the adjusting entries are posted, prepare an adjusted trial balance, an income statement, statement of retained earnings and a balance sheet for 2023. The format of your statements should mirror those prepared by the company in 2022. 5. Journalize and post-closing entries for 2023 and prepare a post-closing trial balance. 6. Compute the Current Ratio and Debt to Total Equity Ratio for 2022 and 2023 7. Interpretive Question: What is your overall assessment of the financial health of SMC, Inc.? A B C D E G H K L M 1 Post 2 Date Description Ref. Debit Credit 3 2023 4 1/1 5 6 7 3/1 9 10 4/1 11 12 13 521 14 15 16 6/1 17 18 19 6/15 20 21 22 7/1 23 24 25 $11 26 27 28 29 30 $120 31 32 33 5/1 34 35 36 5/20 37 38 39 40 10/20 41 42 43 44 11/15 45 46 CASH ACCTS REC INVENTORY SUPPLIES PREPAID INSURANCE PREPAID RENT NOTES PAYABLE ACCTS PAYABLE UNEARNED RENT SALARIES PAYABLE INC TAXES PAYABLE INTEREST PAYABLE You should use the first 24 t-accounts after recording your adjusting entries The Income Summary T Account should only be used during the closing entry process COMMON STOCK RETAINED EARNINGS DIVIDENDS SALES REVENUE RENT REVENUE INTEREST EXPENSE SALARIES EXPENSE SUPPLIES EXPENSE COSTOFGOODS SOLD RENT EXPENSE INSURANCE EXP INCOME TAX EXP INCOME SUMMARY Post Date Description Ref. Debit Credit 12/31/23 ADJUSTING ENTRIES B D E Q ACCOUNT NAME SMC, INC ADJUSTED TRIAL BALANCE 12/31/2023 DEBIT CREDIT TOTALS 0 0 SMC, INC INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2023 SMC, INC STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2023 SMC, INC BALANCE SHEET DECEMBER 31,2023 Post Date Description Ref. Debit Credit CLOSING ENTRIES ACCOUNT NAME SMC, INC POST CLOSING TRIAL BALANCE 12/31/2023 DEBIT CREDIT TOTALS 0 0 CURRENT RATIO DEBT TO TOTAL ASSET RATIO 2022 2023

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