Problem 13.1A Preparing classified financial statements. LO 13-1, 13-2, 13-3 Sup
ID: 2571574 • Letter: P
Question
Problem 13.1A Preparing classified financial statements. LO 13-1, 13-2, 13-3
Superior Hardwood Company distributes hardwood products to small furniture manufacturers. The adjusted trial balance data given below is from the firm’s worksheet for the year ended December 31, 2019.
Required:
Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expenses.
Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period.
Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than a year.
Analyze:
What is the current ratio for this business?
Explanation / Answer
Superior Hardwood Company Income Statement For the Month Ended Dec 31, 2019 Sales Revenue Sales 1,685,000.00 Less: Sales Return & Allowances 18,200.00 Net Sales 1,666,800.00 Less: Cost of Goods Sold Merchandise Inventory, Beginning 244,000.00 Purchases 767,000.00 Less: Purchases Discount 11,160.00 Less: Purchases Returns & Allowances 8,440.00 Net Purchases 747,400.00 Goods Available for Sale 991,400.00 Add: Freight In 13,800.00 Net Cost of Goods Purchased 1,005,200.00 Less: Merchandise Inventory, Ending 234,000.00 Cost of Goods Sold 771,200.00 Gross Margin 895,600.00 Warehouse Expenses Warehouse Wages Expenses 199,600.00 Warehouse Supplies Expenses 7,100.00 Depreciation Exp. - Warehouse Equipment 5,800.00 212,500.00 Selling Expenses Salaries Expenses - Sales 269,200.00 Travel & Entertainment Exp. 21,500.00 Delivery Wages Expenses 60,330.00 Depreciation Exp. - Delivery Equipment 9,800.00 360,830.00 General & Administrative Expenses Salaries Expenses - Office 70,600.00 Office Supplies Expenses 4,000.00 Insurance Expenses 6,200.00 Utilities Expenses 9,290.00 Telephone Expenses 6,520.00 Payroll Taxes Expenses 59,000.00 Property Taxes Expenses 5,600.00 Uncollectible Account Expenses 5,800.00 Depreciation Expense - Building 9,000.00 Depreciation Expense - Office Equipment 4,000.00 180,010.00 Net Operating Income 142,260.00 Other Income & Losses Interest Expense 8,200.00 Interest Revenue 1,580.00 6,620.00 Net Income (Loss) 135,640.00 Owners' Equity Statement As of Dec 31, 2019 Charles Ronie, Capital - Jan 1, 2019 452,460.00 Net Income (Loss) 135,640.00 Sub-total 588,100.00 Less: Chales Ronie, Drawings (127,000.00) Ending Balance 461,100.00 Answer e. Superior Hardwood Company Balance Sheet As of Dec 31, 2019 Assets Current Assets Cash 34,100.00 Petty Cash Fund 500.00 Notes Receivable due 2020 11,800.00 Accounts Receivable 86,000.00 Allowance for Doubtful Accounts (6,000.00) 80,000.00 Merchandise Inventory 234,000.00 Warehouse Supplies 2,860.00 Office Supplies 1,420.00 Prepaid Insurance 10,200.00 Total Current Assets 374,880.00 Property, Plant & Equipment Land 46,000.00 Building 178,000.00 Accumulated Depreciation - Building (54,000.00) 124,000.00 Warehouse Equipment 37,000.00 Accumulated Depreciation - Warehouse Equip. (17,400.00) 19,600.00 Delivery Equipment 51,000.00 Accumulated Depreciation - Delivery Equip. (19,600.00) 31,400.00 Office Equipment 25,000.00 Accumulated Depreciation - Office Equip. (12,000.00) 13,000.00 Total Property, Plant & Equipment 234,000.00 Total Assets 608,880.00 Liabilities & Owners' Equity Liabilities Current Liabilities Notes Payable due 2020 20,200.00 Accounts Payable 49,000.00 Interest Payable 580.00 Total Current Liabilities 69,780.00 Long Term Liabilities Mortgage Payable 61,000.00 Loans Payable - Long Term 17,000.00 Total Long Term Liabilities 78,000.00 Total Liabilities 147,780.00 Owners' Equity 461,100.00 Total Laibilities & Owners' Equity 608,880.00 Current ratio = Current Assets / Current Liabilities Current ratio = $374,880 / $69,780 Current ratio = 5.37 : 1