GL1201 - Based on Exercise 12-11 LO P2, P3, A1

Use the following financial statements and additional information.

FAIRHAVEN INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	77,000			$	25,500
Accounts receivable, net		83,000				65,000
Inventory		69,000				96,000
Prepaid expenses		6,200				7,700
Total current assets		235,200				194,200
Equipment		199,000				184,000
Accum. depreciationEquipment		(51,000	)			(17,000	)
Total assets	$	383,200			$	361,200
Liabilities and Equity
Accounts payable	$	33,000			$	40,000
Wages payable		7,000				18,000
Income taxes payable		4,700				5,200
Total current liabilities		44,700				63,200
Notes payable (long term)		43,000				85,000
Total liabilities		87,700				148,200
Equity
Common stock, $5 par value		250,000				180,000
Retained earnings		45,500				33,000
Total liabilities and equity	$	383,200			$	361,200

FAIRHAVEN INC. Income Statement For Year Ended June 30, 2019
Sales				$	1,059,000
Cost of goods sold					648,000
Gross profit					411,000
Operating expenses
Depreciation expense	$	89,000
Other expenses		105,000
Total operating expenses					194,000
					217,000
Other gains (losses)
Gain on sale of equipment					7,300
Income before taxes					224,300
Income taxes expense					68,660
Net income				$	155,640

Additional Information

1. A $43,000 note payable is retired at its $43,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $87,000 cash.
4. Received cash for the sale of equipment that had cost $72,000, yielding a $7,300 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Journal entry worksheet Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Account Title Debit Credit Date Jun 30 Record entry Clear entry View general journal Journal entry worksheet Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Record entry Clear entry View general journal Journal entry worksheet Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Record entry Clear entry View general journal Journal entry worksheet Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Record entry Clear entry View general journal Journal entry worksheet Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 8 13 > Reconstruct the entry to record the retirement of the $43,000 note payable at its $43,000 carrying (book) value in exchange for cash. Note: Enter debits before credits. Account Title Debit Credit Date Jun 30 Record entry Clear entry View general iournal Journal entry worksheet Reconstruct the entry for the purchase of new equipment. Note: Enter debits before credits. Account Title Debit Credit Date Jun 30 Record entry Clear entry View general journal Journal entry worksheet Reconstruct the entry for the issuance of common stock. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Record entry Clear entry View general journal Journal entry worksheet Close all expense accounts to income summary. Note: Enter debits before credits. Account Title Debit Credit Date Jun 30 Record entry Clear entry View general journal Journal entry worksheet Close Income Summary to Retained Earnings. Note: Enter debits before credits. Account Title Debit Credit Date Jun 30 Record entry Clear entry View general journal Journal entry worksheet Reconstruct the journal entry for cash dividends paid. Note: Enter debits before credits. Date Account Title Debit Credit Jun 30 Record entry Clear entry View general journal