•One client had indicated that they were interested in purchasing $45,500 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase.
navingolyanOne client had indicated that they were interested in purchasing $45,500 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase.
The bookkeeper already corrected the sales account. However, the bookkeeper may have made a mistake when computing cost of goods sold. She included total production costs for 2012 and did not adjust ending inventory for the $45,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.
Smith Company | ||
31-Dec-12 | ||
Trial Balance (accounts in alphabetical order) | ||
Debit | Credit | |
Accounts payable | 67,000 | |
Accounts receivable | 24,500 | |
Cash | 30,000 | |
Common stock | 10,000 | |
Depreciation expense | 24,350 | |
Cost of goods sold | 234,000 | |
Equipment (net of depreciation) | 316,000 | |
Insurance | 1,400 | |
Inventory | 25,000 | |
Long-term debt | 145,000 | |
Marketing | 4,500 | |
Paid-in capital | 90,000 | |
Property taxes | 8,900 | |
Rent | 18,000 | |
Retained earnings | ??? | |
Revenues | 406,000 | |
Salaries | 67,500 | |
Utilities | 6,700 | |
Total | 760,850 | 718,000 |
Required
Prepare an income statement for the company in good format. Also, explain the adjustments separately. Always include the name of the company and the period covered in the title. Don't forget dollar signs where appropriate. You do not need to include the balance sheet. Consequently, you will not need all the accounts listed above. How does the income or loss compare to the original income statement? Explain the importance of the matching concept
13 years ago
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smith_company.xlsx
