Title: Financial Analysis and Adjusting Entries for The Boston Trading Company
Classified Balance Sheet Example Definition Template
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c. Debt-to-total-assets ratio
2. Comment on changes to Nafooz Company's profitability, liquidity, and solvency
P4-10A. 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:
Accounts receivable
Inventory
Prepaid insurance
Furniture and fixtures
Accumulated depreciation - furniture and fixtures
Delivery equipment
Accumulated depreciation - delivery equipment
Long-term notes payable
Common stock
Retained earnings
$15,000
Sales revenue
$56,600
Cost of goods sold
$74,000
Utilities expense
$3,000
Sales salaries expense
$4,200
Delivery expense
$21,000
Advertising expense
Rent expense
$7,000
Office salaries expense
$86,000
Income tax expense
$12,000
$43,000
$28,000
$70,000
$56,400
During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year-end procedures are as follows:
1. Prepaid insurance, December 31, was $1,500
2. Depreciation expense on furniture and fixtures for the year was $2,000
3. Depreciation expense on delivery equipment for the year was $11,000
4. Salaries payable, December 31, ($1,800 sales and $1,200 office) was $3,000
5. Unused office supplies on December 31 were $1,200
Required:
1. Record the necessary adjusting entries at December 31
2. Prepare a multi-step income statement for the year
3. Combine all the operating expenses into one line on the income statement for selling, general, and administrative expenses.
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