5-37PGA - Horngren'S Financial And Managerial Accounting

Question

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.        

Step-by-Step Solution

Answer

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

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)

 

1.  

Date	Accounts and Explanation	Debit ($)	Credit ($)
	Salaries expense	2,300
	Salary payable		2,300
	(To record salary payable)

 

1.  

Date	Accounts and Explanation	Debit ($)	Credit ($)
	Depreciation expense	1,300
	Accumulated depreciation		1,300
	(To record depreciation expenses)

 

1.  

Date	Accounts and Explanation	Debit ($)	Credit ($)
	Interest expense	1,500
	Interest payable		1,500
	(To record interest expense)

 

1.  

Date	Accounts and Explanation	Debit ($)	Credit ($)
	Cost of goods sold	300
	Merchandise inventory		300
	(To adjust the inventory)

 

1.  

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