Task: Preparation of Work Sheet and Adjusting and Closing Entries
The following account balances are taken from the general ledger of Whitni Corporation on December 31, 20013, the end of its fiscal year. The corporation was organized January 2005.
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 40,250
Notes Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16,500
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63,000
Allowance for Bad Debts (credit balance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650 I
nventory, December 31,2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,700
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 247,600
Accumulated Depreciation Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18,000
Furniture and Fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15,000
Accumulated Depreciation Furniture and Fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,700
Common Stock,$100 par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129,125
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .760,000
Sales Returns and Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17,000
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .465,800
Utilities Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16,700
Property Tax Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,200
Salaries and Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,000
Sales Commissions Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73,925
Insurance Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,600
Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400
Data for adjustments at December 31, 2013, are as follows:
(a) Depreciation (to nearest month for additions): furniture and fixtures, 10%; buildings, 4%.
(b) Additions to the buildings costing $150,000 were completed June 30, 2013.
(c) Allowance for Bad Debts is to be increased to a balance of $2,500.
(d) Accrued expenses: sales commissions, $700; interest on notes payable, $45; property taxes, $6,000.
(e) Prepaid expenses: insurance, $3,200.
(f) Accrued revenue: interest on notes receivable, $750.
(g) The following information is also to be recorded:
(1) On December 30, the board of directors declared a quarterly dividend of $1.50 per share on common stock, payable January 25, 2014, to stockholders of record January 15,2014.
(2) Income taxes for 2008 are estimated at $15,000.
(3) The only charges to Retained Earnings during the year resulted from the declaration of the regular quarterly dividends.
Instructions:
Problem 1. Prepare an 8-column spreadsheet. There should be a pair of columns each for trial balance, adjustments, income statement, and balance sheet.
Problem 2. Prepare all the journal entries necessary to record the effects of the foregoing information and to adjust and close the books of the corporation.