Quality Hardwoods Company distributes hardwood products to small furniture manuf
ID: 2592270 • Letter: Q
Question
Quality Hardwoods Company distributes hardwood products to small furniture manufacturers. ACCOUNTS Credt $ 24,100 Petty Cash Fund Notes Receivable Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Warehouse Supplies Office Supplies Prepaid Insurance 11,800 $6,000 234,000 2,860 1,420 46,000 178,000 Warehouse Equipment Accumulated Depreciation- Warehouse Equipment Delivery Equipment 37,000 51,000 25,000 17,400 Office Equipment 12.000 20,200 Notes Payable Accounts Payable Interest Payable Mortgage Payable Loans Payable, Long-term Chuck Kirby. Capital (Jan. 1) Chuck Kirby. Drawing Income Summary 61,000 17,000 462.460 127,000 234,000 1,685,000 Sales Returns and Allowances Interest Income 1,580 767,000 Freight In Purchases Retums and Allowances Purchases Discounts Warehouse Wages Expense Warehouse Supplies Expense Depreciation Expense-Warehouse Equipment 8,440 11,160 199,600 7,100 5,800 269,200 Travel and Entertainment Expense Delivery Wages Expense Depreciation E Salaries Expense -Office Office Supplies Expense Insurance Expense Utilities Expense Telephone Expense Payroll Taxes Expense Property Taxes Expense Uncollectible Accounts Expense 60,330 9,800 70,600 4,000 Equipment 6,520 59,000 5,600 5,800 9,000 4,000 Interest Expense $2.649,420 $2.649,420 1. Prepare a classified income statement for the year ended December 31, 2016. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expensesExplanation / Answer
Answer:
1
Classified Income statement
QUALITY HARDWOODS COMPANY
Income Statement
For the year ended December 31, 2016
Operating revenue
Sales
$1,685,000
Less: Sales returns and allowances
18,200
Net sales
$1,666,800
Cost of goods sold
Merchandise inventory, January 1, 2016
$244,000
Purchases
$767,000
Freight in
13,800
Delivered cost of purchases
$780,800
Purchases returns and allowances
$8,440
Purchases discounts
11,160
19,600
Net delivered cost of purchases
761,200
Total merchandise available for sale
$1,005,200
Less: Merchandise inventory, December 31, 2016
234,000
Cost of goods sold
771,200
Gross profit on sales
$895,600
Operating expenses
Warehouse expenses
Warehouse wages expense
$199,600
Warehouse supplies expense
7,100
Depreciation expense—Warehouse equipment
5,800
Total warehouse expenses
$212,500
Selling expenses
Salaries expense—Sales
$269,200
Travel and entertainment expense
21,500
Delivery wages expense
60,330
Depreciation expense—Delivery equipment
9,800
Total selling expenses
$360,830
General and administrative expenses
Salaries expense—Office
$70,600
Office supplies expense
4,000
Insurance expense
6,200
Utilities expense
9,290
Telephone expense
6,520
Payroll taxes expense
59,000
Property taxes expense
5,600
Uncollectible accounts expense
5,800
Depreciation expense—Building
9,000
Depreciation expense—Office equipment
4,000
Total general and administrative exp.
$180,010
Total operating expenses
753,340
Income from operations
$142,260
Other income
Interest income
$1,580
Other expenses
Interest expense
$8,200
Net nonoperating expenses
-6,620
Net income for year
$135,640
2
statement of owner’s equity for the year ended December 31,
QUALITY HARDWOODS COMPANY
Statement of Owner's Equity
For the year ended December 31, 2016
Chuck Kirby, Capital, January 1, 2016
462460
Net income for year
135640
Less: Withdrawals for year
127000
Increase in capital
8640
Chuck Kirby, Capital, December 31, 2016
471100
3
a classified balance sheet as of December 31, 2016
QUALITY HARDWOODS COMPANY
Balance Sheet
31-Dec-16
Assets
Current assets
Cash
$24,100
Petty cash fund
500
Notes receivable
11,800
Accounts receivable
$96,000
Less: Allowance for doubtful accounts
6,000
90,000
Merchandise inventory
234,000
Prepaid expenses
Warehouse supplies
$2,860
Office supplies
1,420
Prepaid insurance
10,200
14,480
Total current assets
$374,880
Plant and equipment
Land
$46,000
Building
$178,000
Less: Accumulated depreciation
54,000
$124,000
Warehouse equipment
$37,000
Less: Accumulated depreciation
17,400
$19,600
Delivery equipment
$51,000
Less: Accumulated depreciation
19,600
$31,400
Office equipment
$25,000
Less: Accumulated depreciation
12,000
$13,000
Total plant and equipment
234,000
Total assets
$608,880
Liability and Owner’s Equity
Current liabilities
Notes payable
$20,200
Accounts payable
39,000
Interest payable
580
Total current liabilities
$59,780
Long-term liabilities
Mortgage payable
$61,000
Loans payable
17,000
Total long term liabilities
$78,000
Total liabilities
$137,780
Owner’s equity
Chuck Kirby, Capital
$471,100
Total liabilities and owner's equity
$608,880
QUALITY HARDWOODS COMPANY
Income Statement
For the year ended December 31, 2016
Operating revenue
Sales
$1,685,000
Less: Sales returns and allowances
18,200
Net sales
$1,666,800
Cost of goods sold
Merchandise inventory, January 1, 2016
$244,000
Purchases
$767,000
Freight in
13,800
Delivered cost of purchases
$780,800
Purchases returns and allowances
$8,440
Purchases discounts
11,160
19,600
Net delivered cost of purchases
761,200
Total merchandise available for sale
$1,005,200
Less: Merchandise inventory, December 31, 2016
234,000
Cost of goods sold
771,200
Gross profit on sales
$895,600
Operating expenses
Warehouse expenses
Warehouse wages expense
$199,600
Warehouse supplies expense
7,100
Depreciation expense—Warehouse equipment
5,800
Total warehouse expenses
$212,500
Selling expenses
Salaries expense—Sales
$269,200
Travel and entertainment expense
21,500
Delivery wages expense
60,330
Depreciation expense—Delivery equipment
9,800
Total selling expenses
$360,830
General and administrative expenses
Salaries expense—Office
$70,600
Office supplies expense
4,000
Insurance expense
6,200
Utilities expense
9,290
Telephone expense
6,520
Payroll taxes expense
59,000
Property taxes expense
5,600
Uncollectible accounts expense
5,800
Depreciation expense—Building
9,000
Depreciation expense—Office equipment
4,000
Total general and administrative exp.
$180,010
Total operating expenses
753,340
Income from operations
$142,260
Other income
Interest income
$1,580
Other expenses
Interest expense
$8,200
Net nonoperating expenses
-6,620
Net income for year
$135,640