Question

Completion of a Work Sheet Showing a Net Loss 1. Complete the Adjustments columns. 2. Complete the work sheet. 3. Enter the adjustments in a general journal. If an amount box does not require an entry, leave it blank. The trial balance for Cascade Bicycle Shop, a business owned by David Lamond, is shown below. Cascade Bicycle Shop Trial Balance December 31, 20 -- ACCOUNT TITLE DEBIT BALANCE CREDIT BALANCE Cash 23,385 Accounts Receivable 14,985 Merchandise Inventory 31,390 Supplies 7,375 Prepaid Insurance 4,695 Land 28,045 Building 51,180 Accumulated Depr.—Building 16,440 Store Equipment 27,690 Accumulated Depr.—Store Equip. 9,230 Accounts Payable 3,915 Wages Payable Sales Tax Payable 2,890 Unearned Storage Revenue 5,605 Mortgage Payable 44,600 D. Lamond, Capital 162,650 D. Lamond, Drawing 32,680 Income Summary Sales 50,960 Sales Returns and Allowances 2,410 Storage Revenue Purchases 20,795 Purchases Returns and Allow. 1,295 Purchases Discounts 1,935 Freight-In 1,750 Wages Expense 35,240 Advertising Expense 5,715 Supplies Expense Phone Expense 2,135 Utilities Expense 9,160 Insurance Expense Depreciation Expense—Building Depreciation Exp.—Store Equipment Miscellaneous Expense 890 299,520 299,520 Year-end adjustment information is as follows: (a and b) Merchandise inventory costing $22,165 is on hand as of December 31, 20--. (The periodic inventory system is used.) (c) Supplies remaining at the end of the year, $2,410. (d) Unexpired insurance on December 31, $1,775. (e) Depreciation expense on the building for 20--, $3,860. (f) Depreciation expense on the store equipment for 20--, $3,692. (g) Unearned storage revenue as of December 31, $1,950. (h) Wages earned but not paid as of December 31, $790.

Answer 1

• All working forms part of the answer
• Adjustment column and completion of Worksheet:

Accounts title	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Summary		Balance Sheet
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$           23,385.00				$           23,385.00				$              23,385.00
Accounts receivables	$           14,985.00				$           14,985.00				$              14,985.00
Merchandise Inventory	$           31,390.00		$         22,165.00	$         31,390.00	$           22,165.00				$              22,165.00
Supplies	$             7,375.00			$           4,965.00	$             2,410.00				$                2,410.00
Prepaid Insurance	$             4,695.00			$           2,920.00	$             1,775.00				$                1,775.00
Land	$           28,045.00				$           28,045.00				$              28,045.00
Building	$           51,180.00				$           51,180.00				$              51,180.00
Accumulated Depreciation - Building		$        16,440.00		$           3,860.00		$        20,300.00				$     20,300.00
Store Equipment	$           27,690.00				$           27,690.00				$              27,690.00
Accumulated Depreciation - Store Equipment		$          9,230.00		$           3,692.00		$        12,922.00				$     12,922.00
Accounts Payable		$          3,915.00				$          3,915.00				$       3,915.00
Wages Payable				$               790.00		$              790.00				$           790.00
Sales Tax Payable		$          2,890.00				$          2,890.00				$       2,890.00
Uneanred Storage revenue		$          5,605.00	$            3,655.00			$          1,950.00				$       1,950.00
Mortgage Payable		$        44,600.00				$        44,600.00				$     44,600.00
D Lamond Capital		$      162,650.00				$      162,650.00				$   162,650.00
D Lamond Drawings	$           32,680.00				$           32,680.00				$              32,680.00
Income Summary			$         31,390.00	$         22,165.00	$             9,225.00		$                 9,225.00
Sales		$        50,960.00				$        50,960.00		$    50,960.00
Sales return & Allowances	$             2,410.00				$             2,410.00		$                 2,410.00
Storage Revenue				$           3,655.00		$          3,655.00		$      3,655.00
Purchases	$           20,795.00				$           20,795.00		$              20,795.00
Purchases Return & Allowances		$          1,295.00				$          1,295.00		$      1,295.00
Purchase Discounts		$          1,935.00				$          1,935.00		$      1,935.00
Freight In	$             1,750.00				$             1,750.00		$                 1,750.00
Wages Expenses	$           35,240.00		$               790.00		$           36,030.00		$              36,030.00
Advertising Expenses	$             5,715.00				$             5,715.00		$                 5,715.00
Supplies Expense			$            4,965.00		$             4,965.00		$                 4,965.00
Phone Expenses	$             2,135.00				$             2,135.00		$                 2,135.00
Utilities Expenses	$             9,160.00				$             9,160.00		$                 9,160.00
Insurance Expenses			$            2,920.00		$             2,920.00		$                 2,920.00
Depreciation Expense - Building			$            3,860.00		$             3,860.00		$                 3,860.00
Depreciation Expense - Store Equipment			$            3,692.00		$             3,692.00		$                 3,692.00
Miscellaneous Expenses	$                 890.00				$                 890.00		$                    890.00
TOTALs	$        299,520.00	$      299,520.00	$         73,437.00	$         73,437.00	$        307,862.00	$      307,862.00	$            103,547.00	$    57,845.00	$           204,315.00	$   250,017.00
Net Loss								$    45,702.00	$              45,702.00
TOTAL	$        299,520.00	$      299,520.00	$         73,437.00	$         73,437.00	$        307,862.00	$      307,862.00	$            103,547.00	$ 103,547.00	$           250,017.00	$   250,017.00

• Adjustment entries

Adjustment no.	Accounts title	Debit	Credit
a.	Income Summary	$           31,390.00
	Merchandising Inventory		$        31,390.00
	(Beginning inventory balance cancelled)
b.	Merchandising Inventory	$           22,165.00
	Income Summary		$        22,165.00
	(Ending inventory balance recorded)
c.	Supplies Expenses	$             4,965.00
	Supplies		$          4,965.00
	(Supplies consumed)
d.	Insurance Expenses	$             2,920.00
	Prepaid Insurance		$          2,920.00
	(Insurance expired)
e.	Depreciation Expense - Building	$             3,860.00
	Accumulated Depreciation - Building		$          3,860.00
f.	Depreciation Expense - Store Equipment	$             3,692.00
	Accumulated Depreciation - Store Equipment		$          3,692.00
g.	Uneanred Storage revenue	$             3,655.00
	Storage Revenue		$          3,655.00
	(Unearned Revenue now earned)
h.	Wages Expenses	$                 790.00
	Wages Payable		$              790.00
	(Wages accrued to be paid)