Question

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The December 31, 2016, unadjusted trial balance for the Wolkstein Drug Company is presented below. December 31 is the company’s fiscal year-end.

   

Account Title	Debits	Credits
Cash	37,410
Accounts receivable	34,250
Prepaid rent	5,800
Inventory	53,750
Equipment	126,000
Accumulated depreciation—equipment		37,800
Accounts payable		39,000
Salaries and wages payable		0
Common stock		100,000
Retained earnings		38,500
Sales revenue		523,000
Cost of goods sold	313,800
Salaries and wages expense	104,600
Rent expense	34,800
Depreciation expense	0
Utility expense	20,920
Advertising expense	6,970
Totals	738,300	738,300

   

The following year-end adjusting entries are required:
a.	Depreciation expense for the year on the equipment is $12,600.
b.	Accrued salaries and wages payable at year-end should be $6,680.

1. .

value:
30.00 points

Required information

Exercise 2-20 Part 1

Required:
1.	Prepare and complete a worksheet.

     

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Hint #1

Check my work

2.

value:
20.00 points

Required information

Exercise 2-20 Part 2

2.1	Prepare an income statement for 2016.

      

2.2	Prepare a balance sheet as of December 31, 2016. (Amounts to be deducted should be indicated with a minus sign)

  

Answer 1

31-Dec-16
Account Names			Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
			Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash			37,410				37,410				37,410
Accounts Receivable			34,250				34,250				34,250
Prepaid rent			5,800				5800				5800
Inventory			53,750				53,750				53,750
Equipment			126,000				126,000				126,000
Accumulated Depreciation-Furniture				37,800		12600		50,400				50,400
Accounts payable				39000				39,000				39,000
Salaries Payable				0		6,680		6,680				6,680
Common Stockk				100,000				100,000				100,000
Retained earnings				38,500				38,500				38,500
Sales revenue				523000				523000		523000
Cost of Goods sold			313800				313800		313800
Salaries and wages expense			104,600		6,680		111,280		111,280
Rent Expense			34,800				34,800		34,800
Depreciation-Furniture			0		12600		12,600		12600
Utility expenses			20,920				20,920		20,920
Advertising			6,970				6,970		6,970
Total			738,300	738300	19,280	19,280	757,580	757,580	500,370	523,000	257,210	234,580
Net Income									22,630			22,630
									523,000	523,000	257,210	257,210
Income Statement:
Sales revenue					523000
Less: Cost of goods sold					313800
Gross margin					209200
Less: Operating expenses
Salaries and wages expense				111280
Rent Expense				34800
Depreciation-Furniture				12600
Utility expenses				20920
Advertising				6970
Total expenses					186570
Net income					22630
Balance Sheet:
Assets
Cash				37410
Accounts Receivable				34250
Prepaid rent				5800
Inventory				53750
Total current assets					131210
Equipmentt				126000
Less: Accum. Dep				50400	75600
Total Assets					206810
Liabilities and Stockholder's equity:
Liabilities:
Accounts payable				39000
Salaries and wages payable				6680
Total Liabilities					45680
Stockholder's equity
Common Stock				100000
Retained earnings				61130
Total Stockholder's equity					161130
Total Liabilities and Equity					206810