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P1. The following trial balance was taken from the books of Coyote Company as of December...

P1. The following trial balance was taken from the books of Coyote Company as of December 31, 2019.

            Account                                                 Debit            Credit

Cash $60,000

Accounts receivable                                             50,000

Allowance for doubtful accounts                                               $ 1,000

Short-Term notes receivable                                 20,000

Inventory, January 1, 2019                                   70,000

Furniture and equipment                                      210,000

Accumulated depreciation of F & E                                           40,000

Patents                                                                100,000

Accounts payable                                                                        22,000

Bonds payable                                                                         20,000

L-T notes payable                                                                    15,000

Common stock                                                                          290,000

Retained earnings                                                                        87,000

Dividends                                                           20,000

Prior period adjustments                                     10,000

Sales                                                                                          700,000

Sales returns & allowance                                    40,000

Sales discount                                                      10,000

Rent revenues                                                                             60,000

Interest revenues                                                                        10,000

Purchase                                                           420,000

Purchase returns & allowance                                                     20,000

Selling expenses                                                 60,000

Advertising expense                                           30,000

Supplies expense                                                  6,000

Insurance expense                                              24,000

Wage and Salary expense                                    90,000

Rent expense                                                         60,000

Loss on sale of PS store before tax                     10,000

Operating income from PS store before tax                             25,000

Totals                                                               1,290,000        1,290,000

At the year end, the following items have not been recorded.

  1. Insurance premium expired during the year, $14,000.
  2. Estimated bad debts expense, 1.0% of net sales.
  3. Inventory as of 12/31/2019 turned out to be $50,000.
  4. Office supplies were purchased for $6,000 and charged to supplies expenses then. There are $2,000 of supplies remaining as of 12/31/2019
  5. Six months’ rent of $60,000 was paid in advance on September 1, 2019 and charged to rent expense then.
  6. Furniture and equipment have an average useful life of 5 years and salvage value of

$10,000. Coyote Company uses the straight-line method of depreciation.

  1. Patents have been amortized by $10,000/year.
  2. Utility bill of $2,000 for the month of December 2019 will be paid on its due date, January 10, 2020.
  3. Salaries earned but not yet paid by December 31, 2019, $8,000.
  4. Tax rate = 30%.

Instructions: prepare

  1. Any necessary adjusting entries at the end of 2019.
  2. Income Statement and statement of retained earnings, and balance sheet of the company for the year 2019 in good forms (i.e. multiple-steps statements)
  3. Any necessary closing entries at the end of 2019.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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