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Question: The following items should be considered in adjusting the accounts for financial statement prepar...

The following items should be considered in adjusting the accounts for financial statement preparation:
1.	Franklin Products acquired a 8.4% bank loan for $65,550 on August 1, 2017, due in 1 year.
2.	Prepaid insurance is the cost of a 18-month insurance policy, effective February 1.
3.	Franklin Products rents warehouse storage for its seasonal heavy equipment. On November 1, 2017, Franklin Products paid $4,140 for a 6-month lease.
4.	The physical inventory count of Merchandise Inventory indicated an amount $64,686.
5.	Supplies on hand at December 31, 2017 total $3,918.
6.	Equipment is depreciated on a straight-line basis; residual value is estimated to be $7,500 with an estimated service life of 7 years. The assets were held the entire year.
7.	On October 1, Franklin Products issued Evergreen Industries a 6-month note receivable at a 6.4% annual interest rate.
8.	The aging schedule of accounts receivable indicates total estimated bad debt will be $8,166.
9.	Salaries & Wages of $1,498 are accrued and unpaid at December 31, 2017.
10.	December utilities totaled $1,143 and remain unrecorded at December 31, 2017. End of Period Worksheet For the Year Ended December 31, 2017 Unadjusted   Adjusted   Account Title Trial Balance   Adjustments   Trial Balance   Income Statement Balance Sheet DR   CR   DR   CR   DR   CR   DR CR DR CR Cash 23,414 Accounts Receivable 92,552 Allowance for Doubtful Accounts 451 Interest Receivable Note Receivable 5,290 Merchandise Inventory 66,516 Prepaid Insurance 2,484 Prepaid Rent 4,140 Supplies 10,488 Equipment 94,392 Accumulated Depreciation - Equipment 10,212 Accounts Payable 9,669 Salaries & Wages Payable Interest Payable Utilities Payable Note Payable (final payment due 2020) 65,550 Common Stock 27,600 Retained Earnings 78,200 Dividends 22,540 Sales 989,690 Sales Returns and Allowances 5,520 Sales Discounts 11,868 Cost of Goods Sold 681,214 Salaries & Wages Expense 149,868 Depreciation Expense - Equipment Bad Debt Expense Insurance Expense Rent Expense Supplies Expense Utilities Expense 11,086 Interest Revenue Interest Expense 1,181,372 1,181,372 Net Income 2- PREPARE ADJUSTING ENTRIES 3- PREPARE INCOME STATEMENT 4- PREPARE STATEMENT OF RETAINED EARNING 5- CLOSING ENTRIES 6- PREPARE BALANCE SHEET 7 - RATIOS - working capital - current ratio

Answer 1

End of Period Worksheet
For the Year Ended December 31, 2017
	Unadjusted				Adjusted
Account Title	Trial Balance		Adjustments		Trial Balance		Income Statement		Balance Sheet
	DR	CR	DR	CR	DR	CR	DR	CR	DR	CR
Cash	23,414				23,414	-			23,414	-
Accounts Receivable	92,552				92,552	-			92,552	-
Allowance for Doubtful Accounts		451		8166		8,617			-	8,617
Interest Receivable			84.64		85				85	-
Note Receivable	5,290				5,290	-			5,290	-
Merchandise Inventory	66,516			1830	64,686				64,686	-
Prepaid Insurance	2,484			1518	966				966	-
Prepaid Rent	4,140			1380	2,760				2,760	-
Supplies	10,488			6570	3,918				3,918	-
Equipment	94,392				94,392	-			94,392	-
Accumulated Depreciation - Equipment		10,212		10954.28		21,166			-	21,166
Accounts Payable		9,669				9,669			-	9,669
Salaries & Wages Payable				1498		1,498			-	1,498
Interest Payable				2294.25		2,294			-	2,294
Utilities Payable						-			-	-
Note Payable (final payment due 2020)		65,550				65,550			-	65,550
Common Stock		27,600				27,600			-	27,600
Retained Earnings		78,200				78,200			-	174,208
Dividends	22,540				22,540				22,540	-
Sales		989,690			-	989,690	-	989,690
Sales Returns and Allowances	5,520				5,520	-	5,520	-
Sales Discounts	11,868				11,868	-	11,868	-
Cost of Goods Sold	681,214		1830		683,044	-	683,044	-
Salaries & Wages Expense	149,868		1498		151,366	-	151,366	-
Depreciation Expense - Equipment			10954.28		10,954	-	10,954	-
Bad Debt Expense			8166		8,166	-	8,166	-
Insurance Expense			1518		1,518	-	1,518	-
Rent Expense			1380		1,380	-	1,380	-
Supplies Expense			6570		6,570	-	6,570	-
Utilities Expense	11,086				11,086	-	11,086	-
Interest Revenue				84.64	-	85	-	85
Interest Expense			2294.25		2,294	-	2,294	-
	1,181,372	1,181,372	34,295	34,295	1,204,369	1,204,369	893,767	989,775	310,603	310,603
Net Income							96,008
1	bank loan interest from august to december 5 months
		65550*8.4%*5/12		2294.25
		Interest Expenses Dr		2294.25
		To Interest Payable			2294.25
	Interest is accrued at the period end shown as interest payable and expenes in revenue statement
2	Prepaid insurance is to be booked as expenses from Feb to december 11 months
		2484*11/18		1518
		Insurance Expenses Dr.			1518
		To Prepaid Insurances				1518
	prepaid insurance for 11 months booked as insurance expenses for the period and debited as less from balance in balance sheet
3	Warehouse rent is booked for 2months in expenses till period ending december
		4140*2/6		1380
		Rent Dr.		1380
		To Prepaid Rent			1380
4&5	Difference of opening and closing stock of supplies and Merchandise inventory booked into cost of goods sold
6	Depriciation calculated as follows
	Book value as on Jan-17		Book value - depriciation accumulated
			94392-10212
			84180
	Depriciation formula in streight line method
			(Asset Value- Salvage value)/ estimated usful life
	Depriciation		(84180-7500)/7
			10954.42
			Depriciation Dr.			10954.42
			To Accumulated Depriciation				10954.42
7	6 month note receivable interest booked as income and interest recevable from Oct to Dec 3 months.
	5290*6.4%*3/12
	84.64
			Interest Receivable Dr.			84.64
			To Interest Income				84.64
8	Bed debts booked as expenses as well as provisions for 8166
			Bed Debts				8166
			To Allowance for Doubtful accounts					8166
9	Salaries & wages accrued booked as period expenses and added to liablities as unpaid /accrued expenses
			Salary & wages Dr.			1498
			To Salary & wages Payable				1498
3	Income Statement as per table above , Balancing Fugure from Dr to Cr will be profit for the year
4--5	Retained Earnings & closing Entry
		Opening Balance		78200
		Period Profit		96008
				174208
		Profit & loss A/c Dr.		96008
		To Retained Earnings			96008
	Being Profit for the year transffered to retained earnings
6	Balance sheet as per Table
7	Ratios
A	Working Capital Formula
		Current Assets-Current Liablities
	in this case
	Cash				23414
	Accounts Receivable				92552
	Allowance for Doubtful Accounts				-8617
	Interest Receivable				84.64
	Note Receivable				5290
	Merchandise Inventory				64686
	Prepaid Insurance				966
	Prepaid Rent				2760
	Total Current Assets				181135.6
	Accounts Payable				9669
	Salaries & Wages Payable				1498
	Interest Payable				2294.25
	Note Payable (final payment due 2020)				65550	Assumed as bank loan payable in 1 year
	Total Current Liabilities				79011.25
	Working Capital		102124.4
B	current Ratio
		Current Assets/Current Liabilities
			181135.6/79011.25
			2.292