Q4P
Question
The trial balance of Bellemy Fashion Center contained the following accounts at November 30, the end of the company’s fiscal year.
BELLEMY FASHION CENTER TRIAL BALANCE NOVEMBER 30, 2017 | ||
| Debit | Credit |
Cash | \( 28,700 |
|
Accounts Receivable | 33,700 |
|
Inventory | 45,000 |
|
Supplies | 5,500 |
|
Equipment | 133,000 |
|
Accumulated Depreciation—Equipment |
| \) 24,000 |
Notes Payable |
| 51,000 |
Accounts Payable |
| 48,500 |
Common Stock |
| 90,000 |
Retained Earnings |
| 8,000 |
Sales Revenue |
| 757,200 |
Sales Returns and Allowances | 4,200 |
|
Cost of Goods Sold | 495,400 |
|
Salaries and Wages Expense | 140,000 |
|
Advertising Expense | 26,400 |
|
Utilities Expenses | 14,000 |
|
Maintenance and Repairs Expense | 12,100 |
|
Delivery Expense | 16,700 |
|
Rent Expense | 24,000 |
|
| \(978,700 | \)978,700 |
Adjustment data:
1. Supplies on hand total \(1,500.
2. Depreciation is \)15,000 on the equipment.
3. Interest of \(11,000 is accrued on notes payable at November 30.
Other data:
1. Salaries expense is 70% selling and 30% administrative.
2. Rent expense and utilities expenses are 80% selling and 20% administrative.
3. Notes payable worth \)30,000 are due for payment next year.
4. Maintenance and repairs expense is 100% administrative.
Instructions
(a) Journalize the adjusting entries.
(b) Prepare an adjusted trial balance.
(c) Prepare a multiple-step income statement and retained earnings statement for the year and a classified balance sheet as of November 30, 2017.
(d) Journalize the closing entries.
(e) Prepare a post-closing trial balance.
Step-by-Step Solution
Verifieda) Adjusting entries are recorded in Step 2.
b) Adjusted trial balance shows, total debits and credits equals $1,004,700.
c) Income statement, statement of retained earnings and balance sheet are prepared in Step 4.
d) Closing entries are recorded in Step 5.
e) Post-closing trial balance shows total debits and credits equal $241,900.
A worksheet used in bookkeeping is the trial balance. In this, each record’s balance is included to form aggregates for the credit and debit account columns that are always equal.
Date | Particulars | Debit ($) | Credit ($) |
Nov. 30 | Supplies expense | 4,000 |
|
| Supplies |
| 4,000 |
| ($5,500 - $1,500) |
|
|
|
|
|
|
30 | Depreciation expense | 15,000 |
|
| Accumulated depreciation- equipment |
| 15,000 |
|
|
|
|
30 | Interest expense | 11,000 |
|
| Interest payable |
| 11,000 |
|
|
|
|
BELLEMY FASHION CENTER TRIAL BALANCE NOVEMBER 30, 2017 | ||
| Debit | Credit |
Cash | $ 28,700 |
|
Accounts Receivable | 33,700 |
|
Inventory | 45,000 |
|
Supplies ($5,500-$4,000) | 1,500 |
|
Equipment | 133,000 |
|
Accumulated Depreciation—Equipment($24,000+$15,000) |
| $ 39,000 |
Notes Payable |
| 51,000 |
Accounts Payable |
| 48,500 |
Common Stock |
| 90,000 |
Retained Earnings |
| 8,000 |
Interest payable |
| 11,000 |
Sales Revenue |
| 757,200 |
Sales Returns and Allowances | 4,200 |
|
Cost of Goods Sold | 495,400 |
|
Salaries and Wages Expense | 140,000 |
|
Advertising Expense | 26,400 |
|
Utilities Expenses | 14,000 |
|
Maintenance and Repairs Expense | 12,100 |
|
Delivery Expense | 16,700 |
|
Rent Expense | 24,000 |
|
Supplies expense | 4,000 |
|
Depreciation expense | $15,000 |
|
Interest expense | $11,000 |
|
Total | $1,004,700 | $1,004,700 |
BELLEMY FASHION CENTERE Income Statement NOVEMBER 30, 2017 | |
Sales revenue |
|
Sales | $757,200 |
Less: Sales return and allowances | 4,200 |
Net sales | 753,000 |
Cost of goods sold | 495,400 |
Gross profit | 257,600 |
Operating expense |
|
Selling expenses |
|
Salaries and wages expense ($140,000 x 70%) $98,000 |
|
Advertising expense 26,400 |
|
Rent expense ($24,000 x 80%)19,200 |
|
Delivery expense 16,700 |
|
Utilities expense ($14,000 x 80%)11,200 |
|
Depreciation expense 15,000 |
|
Supplies expense 4,000 |
|
$190,500 |
|
Administrative expenses |
|
Salaries and wages expense ($140,000 x30%) $42,000 |
|
Maintenance and repairs expense 12,100 |
|
Rent expense ($24,000 x 80%)4,800 |
|
Utilities expenses ($14,000 x 80 2,800 |
|
Total administrative expenses 61,700 |
|
Total operating expense | 252,200 |
Income from operations | $5,400 |
Other expenses and losses: |
|
Interest expense | 11,000 |
Net loss | ($5,600) |
BELLEMY FASHION CENTERE Retained Earnings NOVEMBER 30, 2017 | |
Retained earnings, December 1, 2016 | $8,000 |
Less: Net loss | 5,600 |
Retained earnings, November 30, 2017 | $2,400 |
BELLEMY FASHION CENTERE Balance sheet NOVEMBER 30, 2017 | |
Assets |
|
Current asset |
|
Cash $28,700 |
|
Account receivable 33,700 |
|
Inventory 45,000 |
|
Supplies 1,500 |
|
Total current assets | $108,900 |
Property, plant, and equipment |
|
Equipment 133,000 |
|
Accumulated depreciation-equipment 39,000 | 94,000 |
Total assets | $202,900 |
Liabilities and Stockholder’s equity |
|
Current liabilities |
|
Notes payable due next year $30,000 |
|
Accounts payable 48,500 |
|
Interest payable 11,000 |
|
Total current liabilities | $89,500 |
Long-term liabilities |
|
Notes payable ($51,000 - $30,000) | 21,000 |
Toral liabilities | 110,500 |
Stockholder’s equity |
|
Common stock 90,000 |
|
Retained earnings2,400 | 92,400 |
Total liabilities and stockholders’ equity | $202,900 |
|
|
Date | Particulars | Debit ($) | Credit ($) |
Nov. 30 | Sales revenue | 757,200 |
|
| Income Summary |
| 757,200 |
|
|
|
|
30 | Income Summary | 762,800 |
|
| Sales returns and allowance |
| 4,200 |
| Cost of goods sold |
| 495,400 |
| Salaries and wages expense |
| 140,000 |
| Advertising expense |
| 26,400 |
| Utility expense |
| 14,000 |
| Maintenance and repair expense |
| 12,100 |
| Delivery expense |
| 16,700 |
| Rent expense |
| 24,000 |
| Supplies expense |
| 4,000 |
| Depreciation expense |
| 15,000 |
| Interest expense |
| 11,000 |
|
|
|
|
30 | Retained earnings | 5,600 |
|
| Income Summary ($757,200-$762,800) |
| 5,600 |
BELLEMY FASHION CENTER Post-Closing TRIAL BALANCE NOVEMBER 30, 2017 | ||
| Debit | Credit |
Cash | $ 28,700 |
|
Accounts Receivable | 33,700 |
|
Inventory | 45,000 |
|
Supplies ($5,500-$4,000) | 1,500 |
|
Equipment | 133,000 |
|
Accumulated Depreciation—Equipment |
| $ 39,000 |
Notes Payable |
| 51,000 |
Accounts Payable |
| 48,500 |
Interest payable |
| 11,000 |
Common Stock |
| 90,000 |
Retained Earnings |
| 2,400 |
| $241,900 | $241,900 |