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In: Accounting

Thanos Merchandising Company Unadjusted Trial Balance December 13, 2019 Account Balance Bank 187.200 Interest Payable 180.000...

Thanos Merchandising Company
Unadjusted Trial Balance
December 13, 2019

Account

Balance

Bank

187.200

Interest Payable

180.000

Bank Loan (5 years)

552.000

Notes Receivable

336.000

Service Revenue

1.080.000

Cost of Service

576.000

Office Supplies

21.600

Accumulated Depreciation(Building)

336.000

Equipment

264.000

Marketing Expense

????

Building

480.000

Depreciation Expense (Building)

72.000

Interest receivable

90.000

Note payable (3 years)

300.000

Cash

33.600

Profit from sale of equipment

7.200

Account Receivable

136.800

Capital

924.000

Utilities Expense

230.400

Accounts Payable

168.000

Bank Loan (1 year)

60.000

Rent Expense

126.000

Prepaid Rent

60.000

Interest Expense

57.600

Accumulated Depreciation(Equipment)

216.000

Service discount

30.000

Land

960.000

Depreciation Expense (Equipment)

192.000

Interest Revenue

60.000

Insurance Expense

42.000

Unearned Service Revenue

84.000

Thanos Merchandising Company was established on January 1, 2019. As of December 31, 2019, the following additional information is available:

1. $5.000 of Office Supplies has been used.

2. Accrued interest revenue is $10.000.

3. $15.000 of prepaid rent has expired as of December 31, 2019.

4. As of December 31, 2017, $20.000 of the Unearned Service Revenue is earned.

Required:

a. Find the Marketing Expense for the year of 2019 (Hint: Write all the accounts to debit or credit sides while considering their nature. The total of debit and credit sides should be equal.) (10 points)

b. Prepare and journalize the adjusting entries. (20 points)

c. Prepare the adjusted trial balance. (20 points)

d. Journalize the closing entries. (20 points)

e. Prepare Income Statement and Statement of Financial Position (Balance Sheet) of Thanos Service Company in proper form. (30 points

Solutions

Expert Solution

Answer:

Thanos Merchandising Company
Income Statement
December.31, 2019
Revenue:
Service revenue $      1,100,000
Less: Service discount               30,000
Net service revenue $   1,070,000
Less: Cost of service           576,000
Gross profit           494,000
Profit from sale of equipment               7,200
Interest revenue             70,000
Total revenue           571,200
Expenses:
Marketing expense (Note-1)               72,000
Depreciation expense-building               72,000
Utilities expense             230,400
Rent expense             126,000
Interest expense               57,600
Depreciation expense-equipment             192,000
Insurance expense               57,000
Office supplies expense                  5,000
Total expenses           812,000
Net Profit/(loss)         (240,800)

Note-1:

Calculation of marketing expense:

Debit Credit
Bank      187,200
Interest payable       180,000
Bank Loan(5 year)       552,000
Notes receivable      336,000
Service revenue    1,080,000
Cost of service      576,000
Office supplies         21,600
Accumulated depreciation(Building)       336,000
Equipment      264,000
Marketing expense (Bal. Fig.)        72,000
Building      480,000
Depreciation expense(Building)         72,000
Interest receivable         90,000
Notes payable (3 years)       300,000
Cash         33,600
Profit from sale of equipment            7,200
Account receivable      136,800
Capital       924,000
Utilities expense      230,400
Account payable       168,000
Bank loan(1 year)          60,000
Rent expense      126,000
Prepaid rent         60,000
Interest expense         57,600
Accumulated Depreciation(Equipment)       216,000
Service discount         30,000
Land      960,000
Depreciation Expense (Equipment)      192,000
Interest revenue          60,000
Insurance expense         42,000
Unearned Service Revenue          84,000
Total 3,967,200    3,967,200
Thanos Merchandising Company
Balance Sheet
For the Year Ended December.31, 2019
Assets $ Liabilities & Stock holder’s Equity $
Current Assets: Current Liabilities:
Cash             33,600 Account payable      168,000
Bank           187,200 Bank loan (1 year)        60,000
Notes receivable           336,000 Unearned service revenue        64,000
Account receivable           136,800 Interest payable      180,000
Office supplies             16,600
Prepaid rent             45,000
Interest receivable           100,000
Total Current Assets 855,200 Total Current Liabilities 472,000
Non-current Assets: Non-current liabilities:
Land       960,000 Bank loan (5 year) 552,000
Equipment           264,000 Notes payable(3 years) 300,000
Less: Accumulated depreciation           216,000         48,000
Building 480,000 Owner's Equity
Less: Accumulated depreciation           336,000 144,000 Capital      924,000
Less: Net Loss      240,800
ekkarill92 answered 1 year ago
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