There are two homework problems this week. The first is below and the second one

Question

There are two homework problems this week. The first is below and the second one is on the second tab at the bottom left of the screen Below you will see an unadjusted trial balance run at year end followed by information needed to make adjusting entries. Baltimore Glass Company Trial Balance December 31, 2015 Acct. No. Account Title Debit Credit 101 Cash           88,450 110 Accounts Receivable        195,613 120 Merchandise Inventory        256,250 125 Supplies on Hand             3,252 130 Prepaid Insurance             3,500 131 Prepaid Rent             7,500 150 Equipment        175,285 160 Accumulated Depreciation           24,260 202 Accounts Payable           72,555 210 Wages Payable                    -   301 Capital Stock        220,000 302 Retained Earnings, January 1        211,144 401 Sales        998,250 405 Sales Returns and Allowances             5,145 410 Interest Income             1,500 500 Purchases        560,880 501 Purchases Discounts             4,080 502 Purchases Returns and Allowances             1,200 505 Freight In             4,580 520 Advertising Expense             1,000 530 Sales Salaries Expense           88,600 532 Supplies Expense                    -   540 Office Salaries Expense        124,500 550 Utilities Expense             8,594 555 Insurance Expense                    -   560 Professional Fees Expense             3,000 570 Depreciation Expense                    -   580 Interest Expense             6,840     1,532,989     1,532,989 Adjusting items: 1. The remaining prepaid insurance at year end is $3,000 2. A physical inventory shows supplies on hand of $2,000 at year end 3. The prepaid rent of $7,500 covers January 2016 rent 4. Depreciation on equipment is $12,000 for the year 5. At year end sales salaries of $3,000 were earned but unpaid 6. At year end office salaries of $4,000 were earned but unpaid 7. Inventory items with a cost of $35,400 were received on the last day of the year but no invoice was received yet. 8. A physical count of inventory shows a value of $219,100. The periodic inventory method is used. Do the following requirements below. Create proper headings for each statement. 1. Record adjusting journal entries from information above. It is possible that an item may not require an entry 2. Prepare an adjusted trial balance including the adjusting entries made 3. Prepare a classified income statement. Supplies is a sales expense. January 1, 2015 merchandise inventory was 256,250. 4. Prepare a statement of retained earnings 5. Prepare a classified balance sheet 6. Prepare closing journal entries Account # Account Title debit credit ` Baltimore Glass Company Trial Balance 42369 Acct. No. Account Title Debit Credit 101 Cash 110 Accounts Receivable 120 Merchandise Inventory 125 Supplies on Hand 130 Prepaid Insurance 131 Prepaid Rent 150 Equipment 160 Accumulated Depreciation 202 Accounts Payable 210 Wages Payable 301 Capital Stock 302 Retained Earnings, January 1 401 Sales 405 Sales Returns and Allowances 410 Interest Income 500 Purchases 501 Purchases Discounts 502 Purchases Returns and Allowances 505 Freight In 520 Advertising Expense 530 Sales Salaries Expense 532 Supplies Expense 540 Office Salaries Expense 550 Utilities Expense 555 Insurance Expense 560 Professional Fees Expense 570 Depreciation Expense 580 Interest Expense 0 0 Baltimore Glass Company Income Statement For the Year Ended 12/31/2015 Note on utilities, insurance, professional fees - I did not indicate where these expenses belonged so you may have put some in selling expense also. Note on depreciation - I did note indicate where this went so some of it could have gone to selling expense or even to cost of goods sold    You would have needed more information to determine that Note on interest - you could have combined as I did or shown them as separate items. Baltimore Glass Company Statement of Retained Earnings For the Year Ended 12/31/2015 You could have skipped the line for dividends and had just three lines on the statement since it was zero. Baltimore Glass Company Balance Sheet As of December 31, 2015 Closing Entries zero out income statement accounts for new year Closing Entries zero out income statement accounts for new year There are two homework problems this week. The first is below and the second one is on the second tab at the bottom left of the screen Below you will see an unadjusted trial balance run at year end followed by information needed to make adjusting entries. Baltimore Glass Company Trial Balance December 31, 2015 Acct. No. Account Title Debit Credit 101 Cash           88,450 110 Accounts Receivable        195,613 120 Merchandise Inventory        256,250 125 Supplies on Hand             3,252 130 Prepaid Insurance             3,500 131 Prepaid Rent             7,500 150 Equipment        175,285 160 Accumulated Depreciation           24,260 202 Accounts Payable           72,555 210 Wages Payable                    -   301 Capital Stock        220,000 302 Retained Earnings, January 1        211,144 401 Sales        998,250 405 Sales Returns and Allowances             5,145 410 Interest Income             1,500 500 Purchases        560,880 501 Purchases Discounts             4,080 502 Purchases Returns and Allowances             1,200 505 Freight In             4,580 520 Advertising Expense             1,000 530 Sales Salaries Expense           88,600 532 Supplies Expense                    -   540 Office Salaries Expense        124,500 550 Utilities Expense             8,594 555 Insurance Expense                    -   560 Professional Fees Expense             3,000 570 Depreciation Expense                    -   580 Interest Expense             6,840     1,532,989     1,532,989 Adjusting items: 1. The remaining prepaid insurance at year end is $3,000 2. A physical inventory shows supplies on hand of $2,000 at year end 3. The prepaid rent of $7,500 covers January 2016 rent 4. Depreciation on equipment is $12,000 for the year 5. At year end sales salaries of $3,000 were earned but unpaid 6. At year end office salaries of $4,000 were earned but unpaid 7. Inventory items with a cost of $35,400 were received on the last day of the year but no invoice was received yet. 8. A physical count of inventory shows a value of $219,100. The periodic inventory method is used. Do the following requirements below. Create proper headings for each statement. 1. Record adjusting journal entries from information above. It is possible that an item may not require an entry 2. Prepare an adjusted trial balance including the adjusting entries made 3. Prepare a classified income statement. Supplies is a sales expense. January 1, 2015 merchandise inventory was 256,250. 4. Prepare a statement of retained earnings 5. Prepare a classified balance sheet 6. Prepare closing journal entries Account # Account Title debit credit ` Baltimore Glass Company Trial Balance 42369 Acct. No. Account Title Debit Credit 101 Cash 110 Accounts Receivable 120 Merchandise Inventory 125 Supplies on Hand 130 Prepaid Insurance 131 Prepaid Rent 150 Equipment 160 Accumulated Depreciation 202 Accounts Payable 210 Wages Payable 301 Capital Stock 302 Retained Earnings, January 1 401 Sales 405 Sales Returns and Allowances 410 Interest Income 500 Purchases 501 Purchases Discounts 502 Purchases Returns and Allowances 505 Freight In 520 Advertising Expense 530 Sales Salaries Expense 532 Supplies Expense 540 Office Salaries Expense 550 Utilities Expense 555 Insurance Expense 560 Professional Fees Expense 570 Depreciation Expense 580 Interest Expense 0 0 Baltimore Glass Company Income Statement For the Year Ended 12/31/2015 Note on utilities, insurance, professional fees - I did not indicate where these expenses belonged so you may have put some in selling expense also. Note on depreciation - I did note indicate where this went so some of it could have gone to selling expense or even to cost of goods sold    You would have needed more information to determine that Note on interest - you could have combined as I did or shown them as separate items. Baltimore Glass Company Statement of Retained Earnings For the Year Ended 12/31/2015 You could have skipped the line for dividends and had just three lines on the statement since it was zero. Baltimore Glass Company Balance Sheet As of December 31, 2015 Closing Entries zero out income statement accounts for new year Closing Entries zero out income statement accounts for new year

Explanation / Answer

This is the value of closing stock-for information which is not to be reflected in the trial balance

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1 Journal Entries: Amount in $ Amount in $ 1 Prepaid Insurance A/C Dr. 3000                         To Cash A/C 3000 Narration: As the prepaid Insurance which has been paid is not adjusted in the Trial Balance 2 Supplies Expense A/C Dr. 3252-2000=1252                        To Supplies A/C 1252 Narration: Being the difference in the Balance of the Supplies A/C before physical verification and the amount of actual balance as per physical verification adjusted in the Trial Balance as an adjustment entry on the physical verification 3 No Entry As the rent is anyhow to be reflected in Prepaid rent itself as the Trial balance is for the year ended 31st December 2015 4 Depreciation Expense A/C Dr. 12000                        To Accumulated Depreciation A/C 12000 5&6 Sales Salary Expense A/C Dr. 3000 Office Salary Expense A/C Dr. 4000                        To Wages Payable A/C 7000 Narration: Being Salaries payable not credited to the Trial Balance previously so now credited. 7 No Entry Let us Assume that the Merchandise inventory includes the stock received on last date then entry is not required as the stock has to be recorded anyhow even if the invoice is not yet received Extra Info: In case it is assumed that such inventory doesnot include the said inventory then the following entry is required: Merchandise Inventory A/C Dr. 35400                       To Accounts Payable A/C 35400 Generally the receipt of invoice and goods happens at the same time or with marginal difference.In case of purchase of goods on credit, purchase is generally said to occur when the seller transfers the risks and rewards pertaining to the asset sold to the buyer. This generally happens when buyer has received the asset. 8 No Entry

This is the value of closing stock-for information which is not to be reflected in the trial balance

2 Adjusted Trial Balance No. Account Title Debit Credit 101 Cash 85,450 110 Accounts Receivable 1,95,613 120 Merchandise Inventory 2,56,250 This already includes 35400$ inventory items received on the last day of the balance sheet 125 Supplies on Hand 2,000 130 Prepaid Insurance 6,500 131 Prepaid Rent 7,500 150 Equipment 1,75,285 160 Accumulated Depreciation 36,260 Increase in Accumulated depreciation balance being dep on equipment 202 Accounts Payable 72,555 This already includes 35400$ inventory items received on the last day of the balance sheet 210 Wages Payable 7000 Sales and office Salaries Payable included in this 301 Capital Stock 2,20,000 302 Retained Earnings, January 1 2,11,144 401 Sales 9,98,250 405 Sales Returns and Allowances 5,145 410 Interest Income 1,500 500 Purchases 5,60,880 501 Purchases Discounts 4,080 502 Purchases Returns and Allowances 1,200 505 Freight In 4,580 520 Advertising Expense 1,000 530 Sales Salaries Expense 91,600 Increase in Sales salary expense with amount of salary earned but not yet paid. 532 Supplies Expense 1252 540 Office Salaries Expense 1,28,500 Increase in Office salary expense with amount of salary earned but not yet paid. 550 Utilities Expense 8,594 555 Insurance Expense                    -   560 Professional Fees Expense 3,000 570 Depreciation Expense 12000 580 Interest Expense 6,840 15,51,989 15,51,989

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3 Classified Income Statement Particulars Adjustments Amount Particulars Adjustments Amount Opening Stock 2,56,250 Sales 998250 Purchases 5,60,880 Less: Sales Returns and Allowances -5145 993105 Less:Purchases Discounts -4,080 Interest Income 1500 Less:Purchases Returns and Allowances -1,200 5,55,600 Closing Stock 219100 Freight In 4,580 Sales Salaries Expense 91,600 Supplies Expense 1,252 Profit from operations 3,04,423        12,13,705        12,13,705 Advertising Expense 1,000 Profit from operations 3,04,423 Office Salaries Expense 1,28,500 Utilities Expense 8,594 Professional Fees Expense 3,000 Depreciation Expense 12,000 Interest Expense 6,840 Net Profit 1,44,489 3,04,423 3,04,423 4 Statement of Retained Earnings Retained Earnings as on Jan 1st 2,11,144 Addition of profit during the year 1,44,489 Total retained earnings 3,55,633

5 Balance sheet as on 31st December 2015 Equity and Liabilities Amount Assets Adjustments Amount Equity Capital Stock        2,20,000          1,75,285 Retained Earnings        3,55,633 Less: Accumulated Depreciation            -36,260 Equipment 1,39,025 Liabilities Accounts Payable            72,555 Merchandise Inventory 2,19,100 Wages Payable              7,000 Supplies on Hand         2,000 Accounts Receivable 1,95,613 Cash      85,450 Prepaid Insurance         6,500 Prepaid Rent         7,500        6,55,188 6,55,188

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