Question

The Green Thumb Gardener is a retail store that sells plants, soil, and decorative pots. On December 31, 2019, the firm's general ledger contained the accounts and balances that appear below. ACCOUNTS AND BALANCES Cash $ 6,200 Dr. Accounts Receivable 3,100 Dr. Allowance for Doubtful Accounts 57 Cr. Merchandise Inventory 11,800 Dr. Supplies 1,250 Dr. Prepaid Advertising 900 Dr. Store Equipment 8,400 Dr. Accumulated Depreciation—Store Equipment 1,550 Cr. Office Equipment 1,900 Dr. Accumulated Depreciation—Office Equipment 330 Cr. Accounts Payable 2,675 Cr. Social Security Tax Payable 480 Cr. Medicare Tax Payable 93 Cr. Federal Unemployment Tax Payable State Unemployment Tax Payable Salaries Payable Beth Argo, Capital 27,947 Cr. Beth Argo, Drawing 20,500 Dr. Sales 92,548 Cr. Sales Returns and Allowances 1,150 Dr. Purchases 47,900 Dr. Purchases Returns and Allowances 480 Cr. Rent Expense 6,500 Dr. Telephone Expense 640 Dr. Salaries Expense 14,600 Dr. Payroll Taxes Expense 1,320 Dr. Income Summary Supplies Expense Advertising Expense Depreciation Expense—Store Equipment Depreciation Expense—Office Equipment Uncollectible Accounts Expense ADJUSTMENTS a.–b. Merchandise inventory on December 31, 2019, is $12,821. During 2019, the firm had net credit sales of $40,000; the firm estimates that 0.7 percent of these sales will result in uncollectible accounts. On December 31, 2019, an inventory of the supplies showed that items costing $300 were on hand. On October 1, 2019, the firm signed a six-month advertising contract for $900 with a local newspaper and paid the full amount in advance. On January 2, 2018, the firm purchased store equipment for $8,400. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $650. On January 2, 2018, the firm purchased office equipment for $1,900. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $250. On December 31, 2019, the firm owed salaries of $1,880 that will not be paid until 2020. On December 31, 2019, the firm owed the employer’s social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $1,880 of accrued wages. On December 31, 2019, the firm owed federal unemployment tax (assume 0.6 percent) and state unemployment tax (assume 5.4 percent) on the entire $1,880 of accrued wages. Required: Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2019. Enter the adjustments above in the Adjustments section of the worksheet. Complete the worksheet. Analyze: By what amount were the assets of the business affected by adjustments?

Answer 1

			Adjusting entries			Adjusted Trial Balance		Income statement		Balance Sheet
Unadjusted Trial Balance	Dr	Cr	Dr	Cr		Dr	Cr	Dr	Cr	Dr	Cr
Cash	$6,200					$6,200				$6,200
Accounts Receivable	3,100					$3,100				$3,100
Allowance for Doubtful Accounts		57		280	b)		337				337
Merchandise Inventory	11,800		12,821	11800		$12,821				$12,821
Supplies	1,250			950		$300				$300
Prepaid Advertising	900			450	d	$450				$450
Store Equipment	8,400					$8,400				$8,400
Accumulated Depreciation—Store Equipment		1,550		1550	e		3100				3100
Office Equipment	1,900					$1,900				$1,900
Accumulated Depreciation—Office Equipment		330		330	f		660				660
Accounts Payable		2,675					2675				2675
Social Security Tax Payable		480		116.56	h		596.56				596.56
Medicare Tax Payable		93		27.26	h		120.26				120.26
Federal Unemployment Tax Payable				11.28	h		11.28				11.28
State Unemployment Tax Payable				101.52	h		101.52				101.52
Salaries Payable				1880	g		1880				1880
Beth Argo, Capital		27,947					27947				$23,689
Beth Argo, Drawing	20,500					$20,500					(27947-20500+16242)
Sales		92,548					92548		92548
Sales Returns and Allowances	1,150					$1,150		$1,150
Purchases	47,900			47900	A	$0
Purchases Returns and Allowances		480	480		A		0
Rent Expense	6,500					$6,500		$6,500
Telephone Expense	640					$640		$640
Salaries Expense	14,600		1880		g	$16,480		$16,480
Payroll Taxes Expense	1,320		256.62		h	$1,577		$1,577
Income Summary			46,399		a	$46,399	0	$46,399
Supplies Expense			950		c)	$950		$950
			(1250-300)
Advertising Expense			450		d	$450		$450
			(900/6*3)
Depreciation Expense—Store Equipment			1550		e	$1,550		$1,550
			(8400-650)/5
Depreciation Expense—Office Equipment			330		f	$330		$330
			(1900-250)/5
Uncollectible Accounts Expense			280		b)	$280		$280
			(40000*.7%)
Total	$126,160	$126,160	$65,397	$65,397		$129,977	$129,977	$76,306	$92,548	$33,171	$33,171
Net income								$16,242
								$92,548
working
a)
Cost of good sold=11800+47900-480-12821	46399
g)
	Salaries	Rate	Amt
Social Security Tax Payable	1880	6.20%	116.56
Medicare Tax Payable	1880	1.45%	27.26
Federal Unemployment Tax Payable	1880	0.60%	11.28
State Unemployment Tax Payable	1880	5.40%	101.52
ANS 2
Total assets will increase by (129977-126160)	$3,817

If any doubt please comment