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	$	98,400
Petty Cash Fund		600
Notes Receivable, due 2020		12,000
Accounts Receivable		139,600
Allowance for Doubtful Accounts				$	3,200
Interest Receivable		120
Merchandise Inventory		127,900
Warehouse Supplies		2,700
Office Supplies		640
Prepaid Insurance		4,040
Land		15,400
Building		104,000
Accumulated Depreciation—Building					16,400
Warehouse Equipment		19,200
Accumulated Depreciation—Warehouse Equipment					9,200
Office Equipment		8,800
Accumulated Depreciation—Office Equipment					3,600
Notes Payable, due 2020					14,400
Accounts Payable					56,300
Interest Payable					340
Loans Payable—Long-Term					14,000
Mortgage Payable					17,000
Colin O’Brien, Capital (Jan. 1)					321,020
Colin O’Brien, Drawing		70,050
Income Summary		130,800			127,900
Sales					1,098,300
Sales Returns and Allowances		7,800
Interest Income					520
Purchases		457,000
Freight In		9,200
Purchases Returns and Allowances					13,050
Purchases Discounts					8,640
Warehouse Wages Expense		108,000
Warehouse Supplies Expense		5,200
Depreciation Expense—Warehouse Equipment		2,800
Salaries Expense—Sales		151,100
Travel Expense		23,400
Delivery Expense		36,825
Salaries Expense—Office		84,400
Office Supplies Expense		1,160
Insurance Expense		9,275
Utilities Expense		7,400
Telephone Expense		3,220
Payroll Taxes Expense		31,000
Building Repairs Expense		3,100
Property Taxes Expense		15,800
Uncollectible Accounts Expense		2,980
Depreciation Expense—Building		5,000
Depreciation Expense—Office Equipment		1,560
Interest Expense		3,400
Totals	$	1,703,870		$	1,703,870

Required:

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.

Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period.

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

1.

Income Statement

		$
	Revenue from Operation	1,090,500
Less	Cost of Sales	444,510
=	Gross Profit	645,990
	Warehouse Expenses	116,000
Less	Selling Expenses	211,325
	General and Administrative expenses	118,095
=	Income From Operation	200,570
	Interest Income	520
	Interest Expenses	3,400
	Net Income Before Tax	197,690
	Tax Expenses	46,800
	Net Income After Tax	150,890

Statement of Changes inequity

		$
	Collin O’Brien Capital 1st January	321,020
Add	Net Income	150,890
Less	Income Summery Balance	2900
Less	Collin O’Brien withdrawals	70,050
=	Collin O’Brien on December 31st 2017	398,960

The balance sheet as on 31^st December 219

	$
Current Asset
Cash	99,000
Note receivables	12,000
Prepaid Insurance	4,040
Inventory	127,900
Office Supplies	640
Warehouse supplies	2,700
Interest Receivable	120
Accounts Receivables (Net)	136,400
Total Current Asset	382,800
Non Current Asset
Land	15,400
Building	87,600
Net Warehouse equipments	10,000
Office equipments	5,200
Total Non Current asset	118,200
Total Asset	501,000
Liability
Current Liability
Accounts Payable	56,300
Interest Payable	340
Notes Payable	14,400
Total current liability	71,040
Long Term liability
Loan Payable	14,000
Mortgage Payable	17,000
Total long Term liability	31,000
Total liability	102,040
Equity	398,960
Total liability and Equity	501,000

Note

All Asset are Net of Accumulate Depreciation.

Inventory is not adjusted against Cost of Goods Sold

2. percentage of warehousing expense to total operating expense =

(Warehousing expense/Total operating expense) *100

= (116,000 /445,420*)100 =26%

Total operating Expense = Warehouse expenses Selling Expense +General expenses.