ACC211 Chapter 10 Assignment – Review Problem Complete Solution

Question: #6373

ACC 211 Chapter 10 Assignment – Review Problem

Name ______________________________________________ Date _________________

There is one problem with multiple parts that deal with preparation of financial statements that we covered either in chapter 4 (multi-step income statement) or chapters 2 & 3 (statement of retained earnings and classified balance sheet). Total assignment is worth 35 points.

P1.

Charlotte Company’s adjusted trial balance on December 31, 2013, follows.

Debit Credit

Cash $20,000

Accounts Receivable 35,000

Prepaid expenses 10,000

Supplies 8,000

Merchandise inventory . . . . . . . . . . . 43,000

Equipment . . . . . . . 184,000

Patent 20,000

Accumulated Depreciation - Equip 70,000

Accounts payable 20,000

Salaries payable 8,000

Taxes payable 4,000

Interest payable 1,000

Note Payable (long term) . . . . . . . . . . . . . . 75,000

Common stock . . . . . . . . . . . . . . . . 100,000

Retained earnings 20,000

Dividends paid . . . . . . . . . . . . 8,000

Sales . . . . . . . . . . . . . . . . . . . . . . . . . 300,000

Sales discounts . . . . . . . . . . . . . . . . . 4,000

Sales returns and allowances . . . . . . . 10,000

Cost of goods sold . . . . . . . . . . . . . . 120,000

Sales salaries expense . . . . . . . . . . . . 45,000

Rent expense— Selling space . . . . . . . 15,000

Store supplies expense . . . . . . . . . . . . 3,000

Advertising expense . . . . . . . . . . . . . . 25,000

Office salaries expense . . . . . . . . . . . . 40,000

Rent expense— Office space . . . . . . . 6,000

Office supplies expense . . . . . . . . . . . 2,000

Totals . . . . . . . . . . . . . . . . . . . . . . . . $ 598,000 $ 598,000

Required.

Part 1. Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses. Check figure: Net income should be $30,000. (15 points total).

CHARLOTTE COMPANY

Income Statement

For Year Ended Dec 31, 2013

Part 2. Prepare a statement of retained earnings for the same year ended Dec 31, 2013. Retained earnings at the beginning of the year was $20,000. Check figure: Ending retained earnings as of Dec 31, 2013 should be $42,000. (5 points)

CHARLOTTE COMPANY, inc

Statement of Retained Earnings

For Month Ended Dec 31, 2013

Part 3. Prepare a classified balance sheet as of December 31, 2013 for the same company. Check figures: Total current assets should be $116,000 and total assets should be $250,000. (15 points)

CHARLOTTE COMPANY

Balance Sheet

December 31, 2013

Solution: #6382

ACC211 Chapter 10 Assignment – Review Problem Complete Solution

Opening balance of Retained Earnings...