Question

In: Accounting

Mike Right is the owner and operator of Right’ s Merchandizing Company and the company has...

Mike Right is the owner and operator of Right’ s Merchandizing Company and the company has presented the following unadjusted trial balance at the end of their financial year ending December 31, 2016.

Right’s Merchandizing Company

Trial Balance as at December 31, 2016

A/C Name

DR $

CR $

Cash

     1,500,000

Accounts Receivable

     4,580,000

Interest Receivable

Merchandise Inventory

     5,400,054

Prepaid Insurance

     1,200,000

Furniture and Equipment

     6,000,000

Accumulated Depreciation –Furniture/Equipment

    1,770,000

Accounts Payable

    1,450,000

Sales Commission Payable

Salaries Payable

Unearned Sales Revenue

    6,400,054

Mike Right, Capital

    8,000,000

Mike Right, Withdrawal

     1,000,000

Sales Revenue Earned

21,668,000

Interest Revenue

Sales Discount

         115,000

Sales Returns and Allowances

         248,000

Cost of Goods Sold

     9,210,000

Travelling Expense

         225,000

Sales Commission Expense

     2,150,000

Salaries Expense

     4,500,000

Rent Expense

     1,800,000

Utilities Expense

         849,000

Depreciation Expense-Furniture/Equipment

Insurance Expense

Advertising Expense

         345,000

General Expense

     166,000

__________

Total

39,288,054

   39,288,054

The following additional information was made available at December 31, 2016

Interest revenue earned at December 31, 2016 but not yet recorded $250,000.

Insurance prepaid includes an expired amount of $1,000,000 relating to the period January to December 31, 2016.

Furniture and Equipment has an estimated life of ten (10) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $100,000.

Unearned sales revenue still unearned as at December 31, 2016 amounts to $2,400,054.

Salaries expense owing as December 31, 2016 amounts to $450,000

Accrued sales commission expense as at December 31, 2016 amounts to $450,000.

Inventory on hand was $5,500,000 as at December 31, 2016.

Required:

Prepare the necessary adjusting journal entries on December 31, 2016

Prepare Right’s Merchandizing Company multiple-step income statement for the year ended December 31, 2016.

Prepare the company’s statement of owner’s equity for the year ended December 31, 2016

Prepare the company’s classified balance sheet at December 31, 2016

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