In: Accounting
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