ACCT 212 Lecture Notes - Lecture 19: Deferral, Retained Earnings, Net Income
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Adjusted Trial Balance | ||||||||
Account Name | Debit | Credit | Debit | Credit | ||||
cash | $ 35,000.00 | $ 35,000.00 | ||||||
accounts receivable | $ 5,600.00 | $ 6,689.00 | ||||||
food inventory | $ 21,000.00 | $ 21,000.00 | ||||||
merchandise inventory | $ 62,500.00 | $ 62,500.00 | ||||||
prepaids | $ 3,400.00 | $ 7,500.00 | ||||||
computers | $ 30,000.00 | $ 30,000.00 | ||||||
accumulated amort-computers | $ 12,000.00 | $ 18,000.00 | ||||||
bakery equipment | $ 90,000.00 | $ 90,000.00 | ||||||
accumulated amort-bakery eqpmt | $ 18,000.00 | $ 27,000.00 | ||||||
furniture & fixtures | $ 150,000.00 | $ 150,000.00 | ||||||
accumulated amort-furniture | $ 15,000.00 | $ 22,500.00 | ||||||
accounts payable | $ 18,000.00 | $ 18,000.00 | ||||||
accrued liabilities | $ 1,700.00 | |||||||
interest payable | $ 17,600.00 | |||||||
dividend payable | $ 5,000.00 | |||||||
long term loan | $ 220,000.00 | $ 220,000.00 | ||||||
common shares | $ 50,000.00 | $ 50,000.00 | ||||||
retained earnings | $ 22,000.00 | $ 22,000.00 | ||||||
food revenue | $ 468,500.00 | $ 469,589.00 | ||||||
internet revenue | $ 127,000.00 | $ 127,000.00 | ||||||
merchandise revenue | $ 103,000.00 | $ 103,000.00 | ||||||
food expense | $ 240,000.00 | $ 240,000.00 | ||||||
internet expense | $ 54,000.00 | $ 54,000.00 | ||||||
electricity expense | $ 65,000.00 | $ 65,400.00 | ||||||
telephone expense | $ 20,000.00 | $ 20,400.00 | ||||||
interest expense | $ 17,600.00 | |||||||
salary expense | $ 200,000.00 | $ 200,900.00 | ||||||
insurance expense | $ 9,000.00 | $ 4,900.00 | ||||||
supplies expense | $ 8,000.00 | $ 8,000.00 | ||||||
depreciation expense | $ 22,500.00 | |||||||
rent expense | $ 60,000.00 | $ 60,000.00 | ||||||
dividend expense | $ 5,000.00 | |||||||
$ 1,053,500.00 | $1,053,500.00 | $1,101,389.00 | $1,101,389.00 | |||||
INCOME STATEMENT | ||||||||
Income: | ||||||||
food revenue | $ 469,589.00 | |||||||
internet revenue | $ 127,000.00 | |||||||
merchandise revenue | $ 103,000.00 | $699,589.00 | ||||||
Expenses: | ||||||||
food expense | $ 240,000.00 | |||||||
internet expense | $ 54,000.00 | |||||||
electricity expense | $ 65,400.00 | |||||||
telephone expense | $ 20,400.00 | |||||||
salary expense | $ 200,900.00 | |||||||
insurance expense | $ 4,900.00 | |||||||
supplies expense | $ 8,000.00 | |||||||
depreciation expense | $ 22,500.00 | |||||||
rent expense | $ 60,000.00 | $676,100.00 | ||||||
Operating Income | $ 23,489.00 | |||||||
Interest expense | $ 17,600.00 | |||||||
Net Income | $ 5,889.00 | |||||||
BALANCE SHEET | ||||||
ASSETS | LIABILITIES | |||||
Current Assets: | Current liabilities: | |||||
Cash | $ 35,000.00 | Accounts payable | $18,000.00 | |||
Accounts receivable | $ 6,689.00 | accrued liabilities | $ 1,700.00 | |||
Food inventory | $ 21,000.00 | interest payable | $17,600.00 | |||
Merchandise inventory | $ 62,500.00 | dividend payable | $ 5,000.00 | $ 42,300.00 | ||
Prepaids | $ 7,500.00 | $132,689.00 | Long term liabilities: | |||
Fixed Assets: | Long term loan | $220,000.00 | ||||
Computers | $ 30,000.00 | Equity: | ||||
Less accumulated depn | $ 18,000.00 | $ 12,000.00 | Common Shares | $50,000.00 | ||
Bakery equipment | $ 90,000.00 | Retained earnings | $22,889.00 | $ 72,889.00 | ||
Less accumulated depn | $ 27,000.00 | $ 63,000.00 | ||||
Furniture and fixtures | $150,000.00 | |||||
Less accumulated depn | $ 22,500.00 | $127,500.00 | ||||
$335,189.00 | $335,189.00 |
o assess the financial reporting landscape,considering the user needs, constraints, and businessenvironment;
o identify the issues;
o analyze the issues (qualitatively andquantitatively); and
o provide a recommendation for each issueidentified in the case.
The adjusted trial balance for China Tea Company at December 31,2013, is presented below:
Debit | Credit | |
Cash | 10,500 | |
Accounts receivable | 150,000 | |
Prepaid rent | 5,000 | |
Inventory | 25,000 | |
Equipment | 300,000 | |
Accumulated depreciation-equipment | 125,000 | |
Accounts payable | 30,000 | |
Notes payable-due in three months | 30,000 | |
Salaries payable | 4,000 | |
Interest payable | 1,000 | |
Capital stock | 200,000 | |
Retained earnings | 50,000 | |
Sales Revenue | 400,000 | |
Cost of goods sold | 180,000 | |
Salaries expense | 120,000 | |
Rent expense | 15,000 | |
Depreciation expense | 30,000 | |
Interest expense | 2,000 | |
Advertising expense | 2,500 | |
Totals | 840,000 | 840,000 |
Prepare the closing entries for China Tea Company for the yearended December 31, 2013. |