Multi step income statement and adjusting entries
Multi step income statement and adjusting entries – the Boston trading company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31:
Cash $13,000
Accounts Receivable $56,600
Inventory $73,000
prepaid insurance $6000
office supplies $4200
furniture and fixtures $21,000
accumulated depreciation –
furniture and fixtures $5000
delivery equipment $84,000
accumulated depreciation –
delivery equipment $12,000
Accounts Payable $41,000
long-term notes payable $30,000
common stock $75,000
retained earnings $51,400
sales revenue $630,000
cost of goods sold $404,000
utilities expense $4800
sales salaries expense $82,000
delivery expense $10,800
advertising expense $5500
rent expense $14,400
office salaries expense $56,000
income tax expense $9000
During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year and procedures are as follows:
1. prepaid insurance, December 31, was $1200
2. depreciation expense on furniture and fixtures for the year was $1800
3. depreciation expense on delivery equipment for the year was $13,000
4. salaries payable, December 31 ($1800 sales and $1200 office) was $3000
5. unused office supplies on December 31 were $1000
Required
a. record the necessary adjusting entries at December 31
b. prepare a multi step income statement for the year. Combine all operating expenses into one line on the income statement for selling, general and administrative expenses.
