Question

Good to Go Auto Products distributes automobile parts to service stations and repair shops. The adjusted trial balance data that follows is from the firm’s worksheet for the year ended December 31, 2019.

Accounts	Debit			Credit
Cash	$	97,600
Petty Cash Fund		400
Notes Receivable, due 2020		17,000
Accounts Receivable		138,800
Allowance for Doubtful Accounts				$	2,400
Interest Receivable		170
Merchandise Inventory		127,100
Warehouse Supplies		1,900
Office Supplies		560
Prepaid Insurance		3,240
Land		14,600
Building		100,000
Accumulated Depreciation—Building					16,000
Warehouse Equipment		18,400
Accumulated Depreciation—Warehouse Equipment					8,800
Office Equipment		8,000
Accumulated Depreciation—Office Equipment					3,200
Notes Payable, due 2020					13,600
Accounts Payable					55,500
Interest Payable					260
Loans Payable—Long-Term					10,000
Mortgage Payable					13,000
Colin O’Brien, Capital (Jan. 1)					322,110
Colin O’Brien, Drawing		69,250
Income Summary		130,000			127,100
Sales					1,082,300
Sales Returns and Allowances		7,000
Interest Income					440
Purchases		449,000
Freight In		8,400
Purchases Returns and Allowances					12,250
Purchases Discounts					7,840
Warehouse Wages Expense		107,200
Warehouse Supplies Expense		4,400
Depreciation Expense—Warehouse Equipment		2,000
Salaries Expense—Sales		150,300
Travel Expense		22,600
Delivery Expense		36,025
Salaries Expense—Office		83,600
Office Supplies Expense		1,080
Insurance Expense		8,475
Utilities Expense		6,600
Telephone Expense		3,140
Payroll Taxes Expense		30,200
Building Repairs Expense		2,300
Property Taxes Expense		15,000
Uncollectible Accounts Expense		2,180
Depreciation Expense—Building		4,200
Depreciation Expense—Office Equipment		1,480
Interest Expense		2,600
Totals	$	1,674,800		$	1,674,800

Required:

1. Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expenses.
2. Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period.
3. Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than one year.

Analyze:
What percentage of total operating expenses is attributable to warehouse expenses?

Answer 1

The below shows under which head the accounts are considered in the financials

Accounts	Debit	Credit	Considered under
Cash	97,600		BS - Cash
Petty Cash Fund	400		BS - Cash
Notes Receivable, due 2020	17,000		BS - Trade receivables
Accounts Receivable	138,800		BS - Trade receivables
Allowance for Doubtful Accounts		2,400	BS - Trade receivables
Interest Receivable	170		BS - Other current assets
Merchandise Inventory	127,100		BS - Inventory
Warehouse Supplies	1,900		BS - Inventory
Office Supplies	560		BS - Inventory
Prepaid Insurance	3,240		BS - Other current assets
Land	14,600		BS - Tangible fixed asset
Building	100,000		BS - Tangible fixed asset
Accumulated Depreciation—Building		16,000	BS - Tangible fixed asset
Warehouse Equipment	18,400		BS - Tangible fixed asset
Accumulated Depreciation—Warehouse Equipment		8,800	BS - Tangible fixed asset
Office Equipment	8,000		BS - Tangible fixed asset
Accumulated Depreciation—Office Equipment		3,200	BS - Tangible fixed asset
Notes Payable, due 2020		13,600	BS - Trade payables
Accounts Payable		55,500	BS - Trade payables
Interest Payable		260	BS - Other current liabilities
Loans Payable—Long-Term		10,000	BS - Long term borrowings
Mortgage Payable		13,000	BS - Long term borrowings
Colin O’Brien, Capital (Jan. 1)		322,110	BS - Capital
Colin O’Brien, Drawing	69,250		BS - Capital
Income Summary	130,000	127,100	P&L - Other income
Sales		1,082,300	P&L - Revenue
Sales Returns and Allowances	7,000		P&L - Revenue
Interest Income		440	P&L - Other income
Purchases	449,000		P&L - Purchases
Freight In	8,400		Cost of materials consumed
Purchases Returns and Allowances		12,250	P&L - Purchases
Purchases Discounts		7,840	P&L - Purchases
Warehouse Wages Expense	107,200		Warehouse exp
Warehouse Supplies Expense	4,400		Warehouse exp
Depreciation Expense—Warehouse Equipment	2,000		Warehouse exp
Salaries Expense—Sales	150,300		Selling exp
Travel Expense	22,600		General exp
Delivery Expense	36,025		General exp
Salaries Expense—Office	83,600		General exp
Office Supplies Expense	1,080		General exp
Insurance Expense	8,475		General exp
Utilities Expense	6,600		General exp
Telephone Expense	3,140		General exp
Payroll Taxes Expense	30,200		General exp
Building Repairs Expense	2,300		General exp
Property Taxes Expense	15,000		General exp
Uncollectible Accounts Expense	2,180		General exp
Depreciation Expense—Building	4,200		General exp
Depreciation Expense—Office Equipment	1,480		General exp
Interest Expense	2,600		General exp
Totals	1,674,800	1,674,800