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5-37PGA

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Horngren'S Financial And Managerial Accounting
Found in: Page 309

Short Answer

The unadjusted trial balance for Trudel Electronics Company at March 31, 2018, follows:

TRUDEL ELECTRONICS COMPANY

Unadjusted Trial Balance

March 31, 2018

Balance

Account Title Debit Credit

Cash $4,000

Accounts Receivable 38,800

Merchandise Inventory 45,500

Office Supplies 6,500

Equipment 130,000

Accumulated Depreciation-Equipment $36,800

Accounts Payable 17,400

Unearned revenue 13,200

Notes Payable, long-term 48,000

Common Stock 60,000

Retained Earnings 100

Dividends 20,000

Sales Revenue 282,500

Cost of Goods Sold 160,600

Salaries Expense (Selling) 20,000

Rent Expense (Selling) 15,800

Salaries Expenses (Administrative) 5,700

Utilities Expenses (Administrative) 11,100

Total $458,000 $458,000

Requirements

1. Journalize the adjusting entries using the following data:

a. Interest revenue accrued, $200.

b. Salaries (Selling) accrued, $2,300.

c. Depreciation Expense—Equipment (Administrative), $1,300.

d. Interest expense accrued, $1,500.

e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of $45,200.

f. Trudel estimates that approximately $6,000 of merchandise sold will be returned with a cost of $1,200.

2. Prepare Trudel Electronics’s adjusted trial balance as of March 31, 2018.

3. Prepare Trudel Electronics’s multi-step income statement for year ended March 31, 2018.

The net income of the company is $59,900.

See the step by step solution

Step by Step Solution

Meaning of Financial Statements

Financial statements refer to the summarized reports of transactions of a business entity in one economic year. It facilitates business concerns and associated users to draft effective decisions for their future activities and strategies

Preparation of adjusting entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Interest receivable

200

Interest revenue

200

(To accrue the interest revenue)

Date

Accounts and Explanation

Debit ($)

Credit ($)

Salaries expense

2,300

Salary payable

2,300

(To record salary payable)

Date

Accounts and Explanation

Debit ($)

Credit ($)

Depreciation expense

1,300

Accumulated depreciation

1,300

(To record depreciation expenses)

Date

Accounts and Explanation

Debit ($)

Credit ($)

Interest expense

1,500

Interest payable

1,500

(To record interest expense)

Date

Accounts and Explanation

Debit ($)

Credit ($)

Cost of goods sold

300

Merchandise inventory

300

(To adjust the inventory)

Date

Accounts and Explanation

Debit ($)

Credit ($)

Sales returns

1,200

Cash

1,200

(To record the sales returns)

Preparation of adjusted trial balance

TRUDEL ELECTRONICS COMPANY

Unadjusted Trial Balance

For the year ended Mar 31, 2018

Account Title

Debit ($)

Credit ($)

Cash

2,800

Accounts receivables

38,800

Interest receivables

200

Merchandise inventory

45,200

Office supplies

6,500

Equipment

130,000

Accumulated depreciation-Equipment

38,100

Accounts payable

17,400

Salary payable

2,300

Interest payable

1,500

Unearned revenue

13,200

Notes payable, long-term

48,000

Common stock

60,000

Retained earnings

100

Dividends

20,000

Sales revenue

282,500

Interest revenue

200

Sales return

1,200

Cost of goods sold

160,900

Salary expense (Selling)

22,300

Rent expense (Selling)

15,800

Salary expense (Administrative)

5,700

Utilities expense (Administrative)

11,100

Depreciation expense

1,300

Interest expense

1,500

Total

$463,300

$463,300

Preparation of multi-step income statement

TRUDEL ELECTRONICS COMPANY

Multi-step Income Statement

For the year ended Mar 31, 2018

Particulars

Amounts ($)

Sales revenue

282,500

Less: Sales return

(1,200)

Net Sales

281,300

Less: Cost of goods sold

(160,900)

Gross Profit

120,400

Less: Operating expenses

Selling Expenses

Salary expense

(22,300)

Rent expense

(15,800)

Administrative Expenses

Depreciation expense

(1,300)

Salary expense

(5,700)

Utilities expense

(11,100)

Income from operations

61,200

Add: Other revenues and gains

Interest revenue

200

Less: Other expenses and losses

Interest expense

(1,500)

Net Income

$59,900

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