Q1CP - Horngren'S Financial And Managerial Accounting

Question

The Davis Lamp Company (DLC) is a wholesale company that purchases lamps from the manufacturer and resells them to retail stores. The company has three inventory items: desk lamps, table lamps, and floor lamps. DLC uses a perpetual inventory system, FIFO method. DCL owns land with a building, which is separated into two parts: office space and warehouse space. All expenses associated with the office are categorized as Administrative Expenses. All expenses associated with the warehouse, which is used for the shipping and receiving functions of the company, are categorized as Selling Expenses. In addition to the land and building, DLC also owns office furniture and equipment and warehouse fixtures. The company uses one accumulated depreciation account for all the depreciable assets.

The trial balance for DLC as of September 30, 2018 follows:

DAVIS LAMP COMPANY
Trial Balance
September 30, 2018
	Balance
Account	Debit	Credit
Cash	\( 457,000
Account Receivables	0
Merchandise Inventory	126,000
Office Supplies	275
Warehouse Supplies	350
Land	20,000
Building	780,000
Office Furniture and Equipment	125,000
Warehouse Fixtures	260,000
Accumulated Depreciation		\) 194,00
Accounts Payable		0
Common Stock		100,000
Retained Earnings		298,925
Dividends	0
Sales Revenue		2,654,150
Cost of Goods Sold	1,061,450
Salaries Expense – Selling	270,000
Utilities Expense – Selling	32,000
Supplies Expense – Selling	0
Depreciation Expense – Selling	0
Salaries Expense – Administrative	90,000
Utilities Expense – Administrative	25,000
Supplies Expense – Administrative	0
Depreciation Expense – Administrative	0
Total	\( 3,247,075	\) 3,247,075

 

 

 

Merchandise Inventory as of September 30 consists of the following lamps:

Item                 Quantity           Unit Cost          Total Cost

Desk Lamp       2,500                   \( 8                   \) 20,000

Table Lamp      3,000                    18                      54,000

Floor Lamp      2,000                    26                      52,000

Total                                                                   \( 126,000

 

During the fourth quarter of 2018, DLC completed the following transactions: 

Oct. 1 Purchased lamps on account from Blue Ridge Lights, terms n/30, FOB destination:

5,000 desk lamps at \)9 each

7,500 table lamps at \(19 each

2,500 floor lamps at \)25 each

 

12 Sold lamps on account to Atlas Home Furnishings, terms 2/10, n/30:

4,000 table lamps at \(45 each

 

15 Sold lamps on account to Hiawassee Office Supply, terms 2/10, n/30:

1,000 desk lamps at \)20 each

 

20 Received a check from Atlas Home Furnishings for full amount owed on Oct. 12 sale.

 

23 Received a check from Hiawassee Office Supply for full amount owed on Oct. 15 sale.

 

28 Sold lamps on account to Parkway Home Stores, terms 2/10, n/30:

3,500 table lamps at \(45 each

1,500 floor lamps at \)65 each

 

30 Paid amount due to Blue Ridge Lights from Oct. 1 purchase.

31 Paid salaries, \(40,000 (75% selling, 25% administrative).

 

31 Paid utilities, \)2,500 (60% selling, 40% administrative).

 

Nov. 1 Sold lamps on account to Hiawassee Office Supply, terms 2/10, n/30:

3,000 desk lamps at \(20 each

 

5 Purchased lamps on account from Blue Ridge Lights, terms n/30, FOB destination:

5,000 desk lamps at \)10 each

10,000 table lamps at \(21 each

5,000 floor lamps at \)27 each

 

5 Received a check from Parkway Home Stores for full amount owed on Oct. 28 sale.

 

8 Received a check from Hiawassee Office Supply for full amount owed on Nov. 1 sale.

 

10 Purchased and paid for supplies: \(325 for the office; \)675 for the warehouse.

 

15 Sold lamps on account to Anderson Office Supply, n/30:

2,000 desk lamps at \(20 each

 

18 Sold lamps on account to Go-Mart Discount Stores, terms 1/10, n/30:

2,000 table lamps at \)45 each

2,000 floor lamps at \(65 each

 

28 Received a check from Go-Mart Discount Stores for full amount owed on Nov. 18 sale.

 

30 Paid salaries, \)40,000 (75% selling, 25% administrative).

 

30 Paid utilities, \(2,670 (60% selling, 40% administrative).

 

Dec. 5 Paid amount due to Blue Ridge Lights from Nov. 5 purchase.

 

15 Received a check from Anderson Office Supply for full amount owed on Nov. 15 sale.

 

15 Paid dividends, \)50,000.

 

27 Sold lamps on account to Atlas Home Furnishings, terms 2/10, n/30:

4,500 desk lamps at \(20 each

5,000 table lamps at \)45 each

 

31 Paid salaries, \(40,000 (75% selling, 25% administrative).

 

31 Paid utilities, \)3,200 (60% selling, 40% administrative).

 Requirements

1. Open general ledger T-accounts and enter opening balances as of September 30, 2018.

2. Open inventory records for the three inventory items and enter opening balances as of September 30, 2018. Complete the inventory records using the following transactions: Oct. 1, 12, 15, 28; Nov. 1, 5, 15, 18, and Dec. 27.

3. Record the transactions in the general journal.

4. Post transactions to the general ledger.

5. Prepare adjusting entries for the year ended December 31, 2018, and post to the ledger:

a. Depreciation, \(48,500 (75% selling, 25% administrative).

b. Supplies on hand: office, \)200; and warehouse, $650.

c. A physical inventory account resulted in the following counts: desk lamps, 1,990; table lamps, 5,995; and floor lamps, 6,000. Update the inventory records.

6. Prepare an adjusted trial balance.

7. Provide a summary for the month, in both units and dollars, of the change in inventory for each item in the following format:

	DESK Lamps		FLOOR Lamps
					FLOOR Lamps
	Number of lamps	Dollar Amount	Number of lamps	Dollar Amount	Number of lamps	Dollar Amount
Beginning Balance
Add: Purchases
Less: COGS
Ending Balance

         

Does the sum of the ending balances in the inventory records match the balance in Merchandise Inventory in the general ledger? If not, review the transactions to find your error.

8. Prepare Davis Lamp Company’s multi-step income statement and statement of retained earnings for the year ended December 31, 2018, and a classified balance sheet as of December 31, 2018. 

9. Calculate the following ratios for DLC as of December 31, 2018: gross profit percentage, inventory turnover, and days’ sales in inventory.

10. Record and post the closing entries.

11. Prepare a post-closing trial balance.

Step-by-Step Solution

Answer

Net Income amounts to $ 1,622,850

Step 1: T Ledger Accounts

Cash
Beg Bal.	$ 457,000

 

Accounts Receivables
Beg Bal.	0
Merchandise Inventory
Beg Bal.	$ 126,000

 

Office Supplies
Beg Bal.	$ 275

 

Warehouse Supplies
Beg Bal.	$ 350

 

Land
Beg Bal.	$ 20,000

 

Building
Beg Bal.	$ 780,000

 

Office Furniture and Equipment
Beg Bal.	$ 125,000

 

Warehouse Fixtures
Beg Bal.	$ 260,000

 

Accumulated Depreciation
Beg Bal.		$ 194,000

 

 

Account Payable
Beg Bal.		$ 0

 

Common Stock
Beg Bal.		$ 100,000

 

Retained earnings
Beg Bal.		$ 298,925
Dividends
Beg Bal.	$ 0

 

Sales Revenue
Beg Bal.		$ 2,654,150

 

Cost of Goods Sold
Beg Bal.	$ 1,061,450

 

Salaries expense - Selling
Beg Bal.	$ 270,000

 

Utilities Expense - Selling
Beg Bal.	$ 32,000

 

Supplies Expense - Selling
Beg Bal.	$ 0

 

Depreciation Expense - Selling
Beg Bal.	$ 0

 

Salaries Expense – Administrative
Beg Bal.	$ 90,000

 

Utilities Expense - Administrative
Beg Bal.	$ 25,000

 

Supplies Expense - Administrative
Beg Bal.	$ 0

 

Depreciation Expense - Administrative
Beg Bal.	$ 0

Step 2: Inventory Records

Desk Lamp
Date	Purchases	Cost of goods sold	Inventory on hand
QTY.	Unit cost	Amount	QTY.	Unit cost
						Amount	QTY.	Unit cost	Amount
Beg.	2,500	$ 8	$ 20,000				2,500	$ 8	$ 20,000
Oct.1	5,000	9	45,000				2,500	8
							5,000	9	65,000
15				1,000	$ 8	8,000	1,500	8
							5,000	9	57,000
Nov.
1				1,500	8
				1,500	9	25,500	3,500	9	31,500
5	5,000	$10	$ 50,000				3,500	9
							5,000	10	81,500
15				2,000	9	18,000	1,500	9
							5,000	10	63,500
Dec.
27				1,500	9
				3,000	10	43,500	2,000	10	20,000

 

 

 

 

 

 

Table Lamp
Date	Purchases	Cost of goods sold	Inventory on hand
QTY.	Unit cost	Amount	QTY.	Unit cost	Amount	QTY.	Unit cost	Amount
Beg.	3,000	$18	$ 54,000				3,000	$18	$ 54,000
Oct.1	7,500	19	1,42,500				3,000	18
							7,500	19	1,96,500
12				3,000	$18
				1,000	19	$ 73,000	6,500	19	1,23,500
28				3,500	19	66,500	3,000	19	57,000
Nov.
5	10,000	$21	$ 210,000				3,000	19
							10,000	21	2,67,000
18				2,000	19	38,000	1,000	19
							10,000	21	2,29,000
Dec.
27				1,000	19
				4,000	21	103,000	6,000	21	1,26,000

 

 

Floor Lamp
Date	Purchases	Cost of goods sold	Inventory on hand
QTY.	Unit cost	Amount	QTY.	Unit cost	Amount	QTY.	Unit cost	Amount
Beg.	2,000	$26	$ 52,000				2,000	$26
Oct.1	2,500	25	62,500				2,500	25	1,14,500
28				1,500	$26	39,000	500	26
							2,500	25	75,500
Nov.
5	5,000	$27	$ 135,000				500	26
							2,500	25
							5,000	27	210,500
18				500	26		1,000	25
				1,500	25	50,500	5,000	27	1,60,000

Step 3: Recording transaction in general journal

Date	Particular	Debit	Credit
2018,
Oct 1	Merchandise Inventory	$ 250,000
	Accounts Payable – Blue Ridge Lights		$ 250,000
12	Accounts Receivables – Atlas home furnishing	180,000
	Sales revenue		180,000
12	Cost of goods sold	73,000
	Merchandise Inventory		73,000
15	Accounts Receivables – Hiawassee Office Supply	20,000
	Sales revenue		20,000
15	Cost of goods sold	8,000
	Merchandise Inventory		8,000
20	Cash	180,000
	Accounts Receivables – Atlas home furnishing		180,000
23	Cash	20,000
	Accounts Receivables – Hiawassee Office Supply		20,000
28	Accounts Receivables – Parkway Home Stores	255,000
	Sales Revenue		255,000
28	Cost of goods sold	105,500
	Merchandise Inventory		105,500
30	Accounts Payable - Blue Ridge Lights	250,000
	Cash		250,000
31	Salaries Expense – Selling	30,000
	Salaries Expense – Administrative	10,000
	Cash		40,000
31	Utilities Expense – Selling	1,500
	Utilities Expense – Administrative	1,000
	Cash		2,500
Nov. 1	Accounts Receivables – Hiawassee  Office Supply	60,000
	Sales Revenue		60,000
1	Cost of goods sold	25,500
	Merchandise Inventory		25,500
5	Merchandise Inventory	395,000
	Accounts Payable – Blue Ridge Lights		395,000
5	Cash	255,000
	Accounts Receivables – Parkway Home Stores		255,000
8	Cash	60,000
	Accounts Receivables – Hiawassee Office Supply		60,000
10	Supplies Expense – Selling	675
	Supplies Expense – Administrative	325
	Cash		1,000
15	Accounts Receivables – Anderson Office Supplies	40,000
	Service Revenue		40,000
15	Cost of goods sold	18,000
	Merchandise Inventory		18,000
18	Accounts Receivables – Go-Mart Discount Stores	220,000
	Service Revenue		220,000
18	Cost of goods sold	88,500
	Merchandise Inventory		88,500
28	Cash	220,000
	Accounts Receivables – Go-Mart Discount Stores		220,000
30	Salaries Expense – Selling	30,000
	Salaries Expense – Administrative	10,000
	Utilities Expense – Selling	1,602
	Utilities Expense – Administrative	1,068
	Cash		42,670
Dec 5	Accounts Payable – Blue Ridge Lights	395,000
	Cash		395,000
15	Cash	40,000
	Accounts Receivables – Anderson Office Supplies		40,000
15	Dividends	50,000
	Cash		50,000
27	Accounts Receivables – Atlas Home Furnishing	315,000
	Sales Revenue		315,000
27	Cost of goods sold	146,500
	Merchandise Inventory		146,500
31	Salaries Expense – Selling	30,000
	Salaries Expense – Administrative	10,000
	Utilities Expense – Selling	1,920
	Utilities Expense – Administrative	1,280
	Cash		43,200

Step 4: Posting transaction to general ledger

Cash
Beg Bal.	$ 457,000	$ 250,000	Oct 30
Oct   20	180,000	42,500	31
23	20,000	1,000	Nov 10
Nov    5	255,000	42,670	30
8	60,000	395,000	Dec 5
28	220,000	50,000	Dec 15
Dec 15	40,000	43,200	Dec 31
Balance	$ 407,630

 

 

Accounts Receivables
Beg Bal.	0	$ 180,000	Oct 20
Oct 12	$ 180,000	20,000	23
15	20,000	255,000	Nov. 5
28	255,000	60,000	8
Nov 01	60,000	220,000	28
15	40,000	40,000	Dec 15
18	220,000
Dec 27	315,000
Balance	$ 315,000

 

Merchandise Inventory
Beg Bal.	$ 126,000	$ 73,000	Oct 12
Oct 1	250,000	8,000	15
Nov 5	395,000	105,500	28
		25,500	Nov. 1
		18,000	15
		88,500	18
		146,500	Dec 27
Balance	$ 306,000

 

 

Office Supplies
Beg Bal.	$ 275
Nov 10	325
Balance	600

 

 

Warehouse Supplies
Beg Bal.	$ 350
Nov 10	675
Balance	1,025

 

 

Account Payable
Beg Bal.		$ 0
Oct 30	$ 250,000	$ 250,000	Oct 1
Dec 5	395,000	395,000	Nov 5
Dividends
Beg Bal.	$ 0
Dec 15	50,000

 

Sales Revenue
Beg Bal.		$ 2,654,150
		180,000	Oct   12
		20,000	15
		255,000	28
		60,000	Nov    1
		40,000	15
		220,000	18
		315,000	Dec  27
Balance		$ 3,744,150

 

Cost of Goods Sold
Beg Bal.	$ 1,061,450
Oct 12	73,000
15	8,000
28	105,500
Nov 1	25,500
15	18,000
18	88,500
Dec 27	146,500
Balance	$ 1,526,450

 

Salaries expense - Selling
Beg Bal.	$ 270,000
Oct 31	30,000
Nov 30	30,000
Dec 31	30,000
Balance	$ 360,000

 

 

Utilities Expense - Selling
Beg Bal.	$ 32,000
Oct  31	1,500
Nov 30	1,602
Dec 31	1,920
Balance	$ 37,022

 

Warehouse supplies
Beg Bal.	$    350
Nov 10	675
Balance	$ 1,025

 

Salaries Expense – Administrative
Beg Bal.	$ 90,000
Oct 31	10,000
Nov 30	10,000
Dec 31	10,000
Balance	$ 120,000

 

Utilities Expense - Administrative
Beg Bal.	$ 25,000
Oct 31	1,000
Nov 30	1,068
Dec 31	1,280
Balance	$ 28,348

 

Office Supplies
Beg Bal.	$ 275
Nov 10	325
Balance	$ 600

Step 5: Adjusting Entries

Date	Particular	Debit	Credit
2018,
Dec 31	Depreciation Expense – Selling	$ 36,375
	Depreciation Expense – Administrative	12,125
	Accumulative Depreciation		$  48,500
Dec 31	Supplies Expense – Selling	375
	Warehouse Supplies		375
	Supplies Expense – Office	400
	Office Supplies		400
Dec 31	Cost of goods sold	205
	Merchandise Inventory		205

 

 

Accumulated Depreciation
Beg Bal.		$ 194,000
		48,500	Dec 31
Balance		$  242,500

 

 

Supplies Expense - Selling
Beg Bal.	$     0
Dec 31	375

 

 

Depreciation Expense - Selling
Beg Bal.	$        0
Dec 31	36,375

 

 

 

Supplies Expense - Administrative
Beg Bal.	$     0
Dec 31	400

 

 

Depreciation Expense - Administrative
Beg Bal.	$        0
Dec 31	12,125

 

 

Warehouse supplies
Beg Bal.	$    350
Nov 10	675
Balance	$ 1,025
		375	Adj.
Balance	$ 650

 

 

Office Supplies
Beg Bal.	$ 275
Nov 10	325
Balance	$ 600
		400	Adj.
Ba;ance	$ 200

 

 

Cost of Goods Sold
Beg Bal.	$ 1,061,450
Oct 12	73,000
15	8,000
28	105,500
Nov 1	25,500
15	18,000
18	88,500
Dec 27	146,500
Balance	$ 1,526,450
Adj	205
Balance	$ 1,526,655

 

 

 

 

Merchandise Inventory
Beg Bal.	$ 126,000	$ 73,000	Oct 12
Oct 1	250,000	8,000	15
Nov 5	395,000	105,500	28
		25,500	Nov. 1
		18,000	15
		88,500	18
		146,500	Dec 27
Balance	$ 306,000
		205	Adj.
Balance	$ 305,795

Step 6: Adjusting Trial Balance

Account Name	Debit	Credit
Cash	$ 407,630
Accounts Receivables	315,000
Merchandise Inventory	305,795
Office Supplies	200
Warehouse Supplies	650
Land	20,000
Building	780,000
Office Furniture & Fixtures	125,000
Warehouse Fixtures	260,000
Accumulated Depreciation		$ 242,500
Accounts Payable		0
Common Stock		100,000
Retained earnings		298,925
Dividends	50,000
Sales revenue		3,744,150
Cost of goods sold	1,526,655
Salaries Expense – Selling	360,000
Utilities Expense – Selling	37,022
Supplies Expense – Selling	375
Depreciation Expense – Selling	36,375
Salaries Expense – Administrative	120,000
Utilities Expense – Administrative	28,348
Supplies Expense – Administrative	400
Depreciation Expense – Administrative	12,125
Total	$ 4,385,575	$ 4,385,575

Step 7: Summery for Inventory

	DESK Lamps	TABLE Lamps	FLOOR Lamps
	Number of lamps	Dollar Amount	Number of lamps	Dollar Amount	Number of lamps	Dollar Amount
Beginning Balance	2,500	$ 20,000	3,000	$ 54,000	2,000	$ 52,000
Add: Purchases	10,000	$ 95,000	17,500	$ 352,500	7,500	$ 197,500
Less: COGS	10,510	95,100	14,505	$ 280,605	3,500	$ 89,500
Ending Balance	1,990	$ 19,900	5,995	$ 125,895	6,000	$ 160,000

Step 8: Income Statement and Balance sheet

Income Statement
Particular		Amount
Sales revenue		$ 3,744,150
Less: Cost of goods sold		1,526,655
Gross profit		2,217,495
Less: Operating Expenses
Salaries Expense – Selling	360,000
Utilities Expense – Selling	37,022
Supplies Expense – Selling	375
Depreciation Expense – Selling	36,375
Salaries Expense – Administrative	120,000
Utilities Expense – Administrative	28,348
Supplies Expense – Administrative	400
Depreciation Expense – Administrative	12,125	594,645
Net Income		$ 1,622,850

 

 

Retained Earnings Statement
Particular		Amount
Opening Balance		$ 298,925
Less: Dividend	$      50,000
Add: Net Income	1,622,850	1,572,850
Ending Balance		$ 1,871,775

 

 

 

 

Liabilities and capital	Amount	Assets	Amount
Liabilities:		Current Assets:
Accounts Payable	$ 0	Cash	$    407,630
Accumulated Depreciation	242,500	Accounts Receivables	315,000
Total Liabilities	$ 242,500	Merchandise Inventory	305,795
		Office Supplies	200
Capital:		Warehouse Supplies	650
Common Stock	100,000	Total Current Assets	$ 1,029,275
Retained earnings	1,871,775
Total Capital	$ 1,971,775	Fixed Assets:
		Land	20,000
		Building	780,000
		Office Furniture and equipment	125,000
		Warehouse Fixtures	260,000
		Total Fixed Assets	$ 1,185,000
Total Liabilities and capital	$ 2,214,275	Total Assets	$ 2,214,275

Step 9: Computation of ratios

$\begin{array}{rcl}\mathit{G}\mathit{r}\mathit{o}\mathit{s}\mathit{s}\mathbf{ }\mathit{P}\mathit{r}\mathit{o}\mathit{f}\mathit{i}\mathit{t}& \mathbf{=}& \frac{\mathbf{G}\mathbf{r}\mathbf{o}\mathbf{s}\mathbf{s}\mathbf{ }\mathbf{P}\mathbf{r}\mathbf{o}\mathbf{f}\mathbf{i}\mathbf{t}}{\mathbf{N}\mathbf{e}\mathbf{t}\mathbf{ }\mathbf{S}\mathbf{a}\mathbf{l}\mathbf{e}\mathbf{s}}\mathbf{\times }\mathbf{100}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{2217495}}{\mathbf{\$}\mathbf{3744150}}\mathbf{\times }\mathbf{100}\\ & \mathbf{=}& \mathbf{59}\mathbf{.}\mathbf{23}\mathbf{\%}\\ \mathit{I}\mathit{n}\mathit{v}\mathit{e}\mathit{n}\mathit{t}\mathit{o}\mathit{r}\mathit{y}\mathbf{ }\mathit{T}\mathit{u}\mathit{r}\mathit{n}\mathit{o}\mathit{v}\mathit{e}\mathit{r}& \mathbf{=}& \frac{\mathbf{C}\mathbf{o}\mathbf{s}\mathbf{t}\mathbf{ }\mathbf{o}\mathbf{f}\mathbf{ }\mathbf{g}\mathbf{o}\mathbf{o}\mathbf{d}\mathbf{s}\mathbf{ }\mathbf{s}\mathbf{o}\mathbf{l}\mathbf{d}}{\mathbf{A}\mathbf{v}\mathbf{e}\mathbf{r}\mathbf{a}\mathbf{g}\mathbf{e}\mathbf{ }\mathbf{I}\mathbf{n}\mathbf{v}\mathbf{e}\mathbf{n}\mathbf{t}\mathbf{o}\mathbf{r}\mathbf{y}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{1526655}}{{\displaystyle \frac{\mathbf{\$}\mathbf{126000}\mathbf{+}\mathbf{\$}\mathbf{305795}}{\mathbf{2}}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{1526655}}{\mathbf{\$}\mathbf{215898}}\\ & \mathbf{=}& \mathbf{7}\mathbf{.}\mathbf{07}\\ \mathit{D}\mathit{a}\mathit{y}\mathbf{\text{'}}\mathit{s}\mathbf{ }\mathit{s}\mathit{a}\mathit{l}\mathit{e}\mathit{s}\mathbf{ }\mathit{i}\mathit{n}\mathbf{ }\mathit{I}\mathit{n}\mathit{v}\mathit{e}\mathit{n}\mathit{t}\mathit{o}\mathit{r}\mathit{y}& \mathbf{=}& \frac{\mathbf{365}}{\mathbf{I}\mathbf{n}\mathbf{v}\mathbf{e}\mathbf{n}\mathbf{t}\mathbf{o}\mathbf{r}\mathbf{y}\mathbf{ }\mathbf{T}\mathbf{u}\mathbf{r}\mathbf{n}\mathbf{o}\mathbf{v}\mathbf{e}\mathbf{r}}\\ & \mathbf{=}& \frac{\mathbf{365}}{\mathbf{7}\mathbf{.}\mathbf{07}}\\ & \mathbf{=}& \mathbf{51}\mathbf{.}\mathbf{63}\mathbf{ }\mathit{d}\mathit{a}\mathit{y}\mathit{s}\end{array}$

Step 10: Post Closing Entries

Date	Particular	Debit	Credit
2018,
Dec 31	Sales revenue	$ 3,744,150
	Income Summary		$ 3,744,150
Dec 31	Income Summary	2,120,925
	Cost of goods sold		1,526,655
	Salaries Expense – Selling		360,000
	Utilities Expense – Selling		37,022
	Supplies Expense – Selling		375
	Depreciation Expense – Selling		36,375
	Salaries Expense – Administrative		120,000
	Utilities Expense – Administrative		28,348
	Supplies Expense – Administrative		400
	Depreciation Expense – Administrative		12,125
Dec 31	Net Income	$ 1,622,850
	Retained Earnings		$ 1,622,80
Dec 31	Retained Earnings	50,000
	Dividend		50,000

 

Post Closing Trial Balance
Account Name	Debit	Credit
Cash	$ 407,630
Accounts Receivables	315,000
Merchandise Inventory	305,795
Office Supplies	200
Warehouse Supplies	650
Land	20,000
Building	780,000
Office Furniture & Fixtures	125,000
Warehouse Fixtures	260,000
Accumulated Depreciation		$ 242,500
Accounts Payable		0
Common Stock		100,000
Retained earnings		1,871,775
Total	$ 2,214,275	$ 2,214,275