Question

The unadjusted trial balance of Shamrock, Inc., a private company following ASPE, contained the following accounts at November 30, the company’s fiscal year end:

Shamrock, Inc. Trial Balance November 30, 2020
		Debit		Credit
Cash		$31,540
Accounts receivable		88,560
Inventory		113,400
Supplies		9,290
Equipment		243,000
Accumulated depreciation—equipment				$92,880
Vehicles		138,240
Accumulated depreciation—vehicles				42,120
Notes payable				91,800
Accounts payable				84,780
Common shares				324,000
Retained earnings				41,050
Sales revenue				1,026,220
Sales returns and allowances		26,140
Cost of goods sold		660,420
Salaries and wages expense		162,000
Advertising expense		50,110
Utilities expense		25,920
Repairs and maintenance expense		34,670
Travel expense		50,440
Rent expense		69,120
		$1,702,850		$1,702,850

Adjustment data:

1.		Supplies on hand totalled $3,350.
2.		Depreciation is $43,200 on the store equipment and $32,400 on the delivery trucks.
3.		Interest of $9,720 is accrued on notes payable at November 30.

Additional information:

1.		Salaries and wages expense is 70% selling and 30% administrative.
2.		Rent expense and utilities expense are 80% selling and 20% administrative.
3.		Of the notes payable, $37,800 is due for payment next year.
4.		Repairs and maintenance expense is 100% administrative.
5.		Expenses pertaining to travel, advertising and supplies are 100% selling.
6.		The income tax rate for the company is 20%. No taxes have been accrued or paid during the year.

Enter the trial balance on a work sheet and complete the work sheet.

Answer 1

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Shamrock, Inc.
Workings for adjustments	Amount $
Supplies- Opening	9,290.00
Less: Supplies- Closing	3,350.00
Supplies expense	5,940.00
Salaries and wages expense	162,000.00
Selling portion- 70%	113,400.00
Administrative portion- 30%	48,600.00
Rent expense	69,120.00
Selling portion- 80%	55,296.00
Administrative portion- 20%	13,824.00
Utilities expense	25,920.00
Selling portion- 80%	20,736.00
Administrative portion- 20%	5,184.00

Adjusted Trial Balance	Unadjusted	Adjustments	Adjusted
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit
Cash	31,540.00				31,540.00
Accounts receivable	88,560.00				88,560.00
Inventory	113,400.00				113,400.00
Supplies	9,290.00			5,940.00	3,350.00
Equipment	243,000.00				243,000.00
Accumulated Depreciation		92,880.00		43,200.00		136,080.00
Vehicles	138,240.00				138,240.00
Accumulated Depreciation- Vehicles		42,120.00		32,400.00		74,520.00
Notes Payable		91,800.00				91,800.00
Accounts Payable		84,780.00				84,780.00
Interest Payable				9,720.00		9,720.00
Common Stock		324,000.00				324,000.00
Retained Earnings		41,050.00				41,050.00
Sales revenue		1,026,220.00				1,026,220.00
Sales returns and allowances	26,140.00				26,140.00
Cost of goods sold	660,420.00				660,420.00
Salaries & Wages Expense	162,000.00				162,000.00
Advertising Expense	50,110.00				50,110.00
Utilities Expense	25,920.00				25,920.00
Repairs and maintenance expense	34,670.00				34,670.00
Travel expense	50,440.00				50,440.00
Rent expense	69,120.00				69,120.00
Supplies Expense			5,940.00		5,940.00
Depreciation Expense- Equipment			43,200.00		43,200.00
Depreciation Expense- Vehicles			32,400.00		32,400.00
Interest Expense			9,720.00		9,720.00
Total	1,702,850.00	1,702,850.00	91,260.00	91,260.00	1,788,170.00	1,788,170.00

Income Statement	Amount $	Amount $
Sales	1,026,220.00
Less: Sales returns and allowances	26,140.00
Net sales		1,000,080.00
Cost of goods sold:		660,420.00
Gross profit		339,660.00
Operating expenses:
Selling expenses:
Sales salary expense	113,400.00
Rent expense	55,296.00
Utilities expense	20,736.00
Advertising Expense	50,110.00
Travel expense	50,440.00
Total selling expenses	289,982.00
General expenses:
Administrative salary expense	48,600.00
Rent expense	13,824.00
Utilities expense	5,184.00
Repairs and maintenance expense	34,670.00
Supplies Expense	5,940.00
Depreciation Expense- Equipment	43,200.00
Depreciation Expense- Vehicles	32,400.00
Total general expenses	183,818.00
Total operating expenses		473,800.00
Operating income		(134,140.00)
Less: Interest Expense		9,720.00
Income before tax		(143,860.00)

Statement of retained earnings	Amount $
Opening Balance	41,050.00
Add: Net Income	(143,860.00)
Less: Dividend declared	-
Retained earnings on Nov 30	(102,810.00)