Reference no: EM132984043
JanMar Fabrics adjusted, postclosing trial balance June 30, 2012
Cash $221,000
Accounts Receivable $136,250
Merchandise Inventory $340,750
Prepaid Insurance $2,000
Equipment $1,050,000
Accumulated Depreciation $420,000
Accounts Payable 165,500
Notes Payable 25,000
Salaries Payable 6,250
Common Stock 750,000
Retained Earnings 383,250
$1,750,000 $1,750,000
The firm made the following transactions during July:
Sold merchandise on account for a total selling price of $425,000.
Purchased merchandise inventory on account from various suppliers for $231,500.
Paid rent for the month of July of $58,750.
Paid salaries to employees during July of $103,000.
Collected accounts receivable of $170,750.
Paid accounts payable of $194,750.
Paid miscellaneous expenses of $16,000.
Adjusting entries required at the end of July relate to the following:
- The company paid the premium on a one-year insurance policy on 1 March 2012, with coverage beginning on that date. This is the only insurance policy in force on 30 June 2012.
- The firm depreciates its equipment over a 10-year life. The equipment is not expected to have any residual value.
- Employees earned salaries of $8,000 during the last three days of July but were not paid. These are the only unpaid salaries at the end of July.
- The note payable is a 90-day, 12% note issued on 30 June 2012.
- Merchandise inventory on hand on 31 July 2012 was $389,750.
Required
Problem 1: Using a trial balance and T-accounts, prepare an income statement for the month of July 2012, and prepare a balance sheet dated 31 July 2012. Cross-reference entries in the T-accounts using the numbers of the transactions shown above.