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ACC 211 Chapter 10 Assignment – Review Problem Complete Solution

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ACC 211 Chapter 10 Assignment – Review Problem Complete Solution

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

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ACC 211 Chapter 10 Assignment – Review Problem Complete Solution

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