Solution-Review the companys year-end listing of accounts

Review the companys year-end listing of accounts balances

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Reference no: EM13535101

Review the company's year-end listing of accounts' balances shown below.

a. How can you tell from this listing of accounts that the business has not recorded its following three expenses for the year?

Bad debts expense: Caused by uncollectible accounts receivable
Cost of goods sold expense: For the cost of products sold; the revenue from these sales has been recorded in the sales revenue account
Depreciation expense: For the use of fixed assets (property, plant, and equipment) during the year

b. Also, did you notice that there is no income tax expense account? What is the explanation for this omission?

	End of First Year
	Debits	Credits
Cash	$559,750
Accounts Receivable	$645,000
Allowance for Doubtful Accounts		$0
Inventory	$3,725,000
Prepaid Expenses	$185,000
Property, Plant & Equipment	$1,150,000
Accumulated Depreciation		$0
Accounts Payable		$309,500
Accrued Expenses Payable		$108,500
Short-term Notes Payable		$350,000
Long-term Notes Payable		$500,000
Owners' Equity - Capital Stock		$1,500,000
Owners' Equity - Retained Earnings		$0
Sales Revenue		$4,585,000
Cost of Goods Sold Expense	$0
Depreciation Expense	$0
Bad Debts Expense	$0
Selling & General Expenses	$1,033,000
Interest Expense	$55,250
Totals	$7,353,000	$7,353,000

Reference no: EM13535101

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Review the companys year-end listing of accounts balances

Reference no: EM13535101

Reference no: EM13535101

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