Reference no: EM132485660
The following trial balance (at the end of Year Three) was produced by an accountant working for the Washburn Company. No adjusting entries have yet been made. During the year, all cash transactions were recorded, but no other journal entries were prepared.
WASHBURN COMPANY Unadjusted Trial Balance
December 31, Year Three
ACCOUNT DEBIT CREDIT
Accounts Payable 27,000
Accounts Receivable 65,000
Capital Stock 120,000
Cash 29,000
Cost of Goods Sold 232,000
Dividends Paid 14,000
Insurance Expense 10,000
Inventory 132,000
Land 270,000
Notes Payable 170,000
Prepaid Rent 10,000
Retained Earnings (1/1/Y3) 150,000
Salary Expense 110,000
Sales Revenue 450,000
Supplies Expense 8,000
Utilities Expense 37,000
TOTALS $917,000
$917,000
Other Information:
- Income taxes of $9,000 will have to be paid for Year Three, early in Year Four.
- Supplies were bought for $8,000 early in the year, but $3,000 of that amount is still on hand at the end of the year.
- On January 1, Year Three, insurance for eight months was obtained for $4,000 in cash. On September 1, Year Three, insurance for another fifteen months was obtained for $6,000 in cash.
- During November, a payment of $5,000 was made for advertising during that month. By accident, the debit was made to utilities expense.
- On January 1, Year Three, the company paid $2,000 to rent a building for four months. On May 1, Year Three, the company paid another $8,000 to rent the same building for an additional sixteen months.
- Employees are paid $10,000 for each month with payments two weeks after the end of the month.
Required:
Question 1: Prepare the needed adjusting entries and an updated adjusted trial balance.
Question 2: Prepare the income statement for Washburn Company for the Year Ended December 31, Year Three.
Question 3: Prepare the statement of retained earnings for the Year Ended December 31, Year Three, for Washburn Company.
Question 4: Prepare the balance sheet as of December 31, Year Three, for Washburn Company.