Question

In: Accounting

The adjusted trial balance for China Tea Company at December 31, 2018, is presented below: Debit...

The adjusted trial balance for China Tea Company at December 31, 2018, is presented below:

Debit Credit
Cash 12,400
Accounts receivable 169,000
Prepaid rent 6,900
Inventory 44,000
Equipment 490,000
Accumulated depreciation - equipment 144,000
Accounts payable 49,000
Notes payable - due in three months 49,000
Salaries payable 5,900
Interest payable 2,900
Common stock 295,000
Retained earnings 91,800
Sales revenue 590,000
Costs of goods sold 275,000
Salaries expense 139,000
Rent expense 34,000
Depreciation expense 49,000
Interest expense 3,900
Advertising expense 4,400
Totals 1,227,600 1,227,600


Required:
Prepare a classified balance sheet for China Tea Company as of December 31, 2018.

Solutions

Expert Solution

Solution:

China Tea Company

BALANCE SHEET

As Of December 31, 2018

ASSETS

AMOUNT ($)

LIABILITIES & STOCKHOLDERS’ EQUITY

AMOUNT ($)

Current Assets

Current liabilities

Cash

12,400

Accounts payable

49,000

Accounts receivable

169,000

Notes payable - due in three months

49,000

Prepaid rent

6,900

Salaries payable

5,900

Inventory

44,000

Interest payable

2,900

Total Current Assets

232,300

Total current liabilities

106,800

Total liabilities

106,800

Property, plant, and equipment

Stockholders’ equity

Equipment                         :$ 490,000

Common stock

295,000

Less: Accumulated depreciation – equipment                        : $144,000

346,000

Retained earnings: $

91,800

*Add: Net Income:$84,700

176,500

Total Stockholders’ equity

471,500

TOTAL ASSETS

578,300

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

578,300

*Net Income

=Gross profit – Operating expenses

= (Sales revenue - Costs of goods sold) – (Salaries expense + Rent expense + Depreciation expense + Interest expense + Advertising expense)

= ($ 590,000 - $ 275,000) – ($ 139,000 + $ 34,000 + $ 49,000 + $ 3,900 + $ 4,400)

= $ 315,000 - $ 230,300

= $ 84,700


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