ACCOUNTING PRINCIPLES 7 th Edition

Transcription

1 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 1 SOLUTIONS TO HERITAGE HOME FURNITURE A NARRATIVE PRACTICE SET FOR USE WITH ACCOUNTING PRINCIPLES 7 th Edition JERRY J. WEYGANDT Ph.D., C.P.A. Arthur Anderson Alumni Professor of Accounting University of Wisconsin - Madison Madison, Wisconsin DONALD E. KIESO Ph.D., C.P.A. KPMG Peat Marwick Emeritus Professor of Accountancy Northern Illinois University DeKalb, Illinois PAUL D. KIMMEL Ph.D., C.P.A. Associate Professor of Accounting University of Wisconsin - Milwaukee Milwaukee, Wisconsin Prepared By JOAN E. COOK, C.P.A. Milwaukee Area Technical College JOHN WILEY & SONS, INC. New York Chichester Weinheim Brisbane Singapore Toronto

2 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 2 COVER PHOTO James Bareham/Stone To order books or for customer service call CALL-WILEY ( ) Copyright 2004 by John Wiley & Sons, Inc. Excerpts from this work may be reproduced by instructors for distribution on a not-for-profit basis for testing or instructional purposes only to students enrolled in courses for which the text book has been adopted. Any other reproduction or translation of this work beyond that permitted by sections 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY ISBN Printed in he United States of America Printed and bound by Odyssey Press, Inc

3 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 3 TABLE OF CONTENTS Sales Journal Purchases Journal Cash Receipts Journal Cash Payments Journal General Journal General Ledgers Accounts Receivable Subsidiary Ledger Accounts Payable Subsidiary Ledger Accounts Receivable Schedule Accounts Payable Schedule Work Sheet Bank Reconciliation Depreciation Schedule for Delivery Trucks Income Statement Owner s Equity Statement Sheet Post-Closing Trial

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5 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 1 SALES JOURNAL S5 Cost of Goods Sold Dr. Inv. Accts. Rec. Dr. Merchandise Date Account Debited No. Ref. Sales Cr. Inventory Cr. 1 May 7 Willington Hotels Carthage Community College Salem Hotel Wallton Apartments Tollson Motel Carthage Community College Wallton Apartments Willington Hotels Salem Hotel (112)(411) (505)(120) PURCHASES JOURNAL P 12 Merchandise Inventory Dr. Accounts Date Account Credited Terms Ref. Payable Cr. 1 May 7 Lexis Fine Furniture 1/15, n/ Lexis Fine Furniture 3/15, n/ Georgia Carpet Mills 2/10,n/ American Mattress Co. n/ Cabbot Recliners, Inc. 1/15,n/ Austin Cabinet Makers 2/30,n/ (120)(201) Copyright 2004 by John Wiley & Sons, Inc. 1

6 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 2 CR 10 CASH RECEIPTS JOURNAL Date Bank Cash Deposit Dr. 1 May 1 Walton Apartments, Inc Cash sales Bank Deposit Bell and Gateway, CPAs Tollson Motel Carthage Community College Willington Hotels Bell and Gateway, CPAs Cash sales Bank Deposit Wallton Apartments Inc Brent Davis Capital Willington Hotels Cash Sales Bank Deposit Carthage Community College Salem Hotel Cash Sales Bank Deposit Other Receivables (Truck Sale) Dorothy Knight Cash Sales Bank Deposit (x) (101) Copyright 2004 by John Wiley & Sons, Inc. 2

7 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 3 CASH RECEIPTS JOURNAL CR 10 Cost of Goods Sold Dr. Sales Accounts Sales Maxicard Other Merchandise Discounts Receivable Cr. Cr. Sales Cr. Accounts Cr. Inventory Cr (414) (112) (401) (401) (X) (505/120) Copyright 2004 by John Wiley & Sons, Inc. 3

8 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 4 CP 11 CASH PAYMENTS JOURNAL Check Date No. Payee Account Debited 1 May Cabbot Recliners, Inc. Cabbot Recliners, Inc Zeekle Auto Shop Repairs and Maintenance-Delivery Trucks Wallace Office Superstore Wallace Office Superstore Eastern Freight Merchandise Inventory Lexis Fine Furniture Lexis Fine Furniture Old Hickory Furniture Old Hickory Furniture Brent Davis Ohio State Bank FICA Taxes Payable 8 9 Federal Income Tax WH Withholding Payable American Mattress Co. American Mattress Co Georgia Carpet Mills Georgia Carpet Mills Daily Advocate Lexis Fine Furniture Lexis Fine Furniture Austin Cabnet Makers Austin Cabnet Makers Reliable Freight Merchandise Inventory Falcon Truck Repairs and Maintenance-Delivery Trucks Daily Advocate Brent Davis Brent Davis, Drawing George Collins Office Supplies Store Supplies Ohio State Bank Interest Expense Mortgage Payable Oxford Utilities Utilities Expense Brent Davis Copyright 2004 by John Wiley & Sons, Inc. 4

9 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 5 CASH PAYMENTS JOURNAL CP 11 Other Advertising Salaries Accounts Merchandise Cash Ref. Accounts Dr. Expense Dr. Payable Dr. Payable Dr. Inventory Cr. Cr (X) (610) (212) (201) (120) (101) Copyright 2004 by John Wiley & Sons, Inc. 5

10 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 6 GENERAL JOURNAL Date Account Titles and Explanation Ref. Debit Credit 1 May 2 Delivery Trucks (new) Accumulated Depreciation-Delivery Trucks Delivery Trucks (old) Notes Payable, 8%, 3-Month To record exchange of old delivery truck 5 6 for a similar new delivery truck Notes Receivable Accounts Receivable / Jake Lansing To record acceptance of 30-day, 8% note of payment in full of open account Store Salaries Expense Office Salaries Expense FICA Taxes Payable Federal Income Tax Withholding Payable Salaries Payable Accrue Salaries Payroll Taxes Expense FICA Taxes Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Accrue Payroll Taxes Sales Returns & Allowances Accounts Receivable/Tollson Motel CM 129, Inv Merchandise Inventory Cost of Goods Sold Allowance for Doubtful Accounts Accounts Receivable/Dorothy Knight Write off - bad account J 12 Copyright 2004 by John Wiley & Sons, Inc. 6

11 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 7 GENERAL JOURNAL Date Account Titles and Explanation Ref. Debit Credit 1 May 29 Depreciation Expense - Delivery Truck Accumulated Depreciation-Delivery Trucks Record Depreciation on truck Other Receivables Accumulated Depreciation-Delivery Trucks Delivery Truck Gain on Disposal Trucks Record Sale of Truck Accounts Receivable/Dorothy Knight Allowance for Doubtful Accounts Reinstate account written off Store Salaries Expense Office Salaries Expense FICA Taxes Payable Federal Income Tax Withholding Payable Salaries Payable Accrue Salaries Payroll Tax Expense FICA Taxes Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Accrue payroll taxes J 13 GENERAL JOURNAL Date Account Titles and Explanation Ref. Debit Credit 1 May Adjusting Entries 1 2 (a) 31 Credit Card Expense Maxicard Payable To accrue credit card fees (30,900x4%) (b) 31 Maxicard payable Miscellaneous Expense Cash Bank Reconciliation J 14 Copyright 2004 by John Wiley & Sons, Inc. 7

12 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 8 GENERAL JOURNAL Date Account Titles and Explanation Ref. Debit Credit 1 May 1 2 (c) 31 Bad Debt Expense Allowance For Doubtful Accounts To accrue bad debt expense ((94,450 x 4%)-2,600) (d) 31 Interest Receivable Interest Receivable To accrue interest on note (6,000 x 6% x 21/360) (e) 31 Cost of Goods Sold Merchandise Inventory Inventory Adjustment (243, ,925) (f) 31 Office Supplies Expense Office Supplies Office Supplies used (4,275-2,050) Store Supplies Expense Store Supplies Store Supplies Used (2,580-1,075) (g) 31 Insurance Expense Prepaid Insurance Record expired insurance (h) 31 Depreciation Expense - Buildings Depreciation Expense - Office Equipment Depreciation Expense - Delivery Trucks Accumulated Depreciation - Buildings Accumulated Depreciation - Office Equipment Accumulated Depreciation - Delivery Trucks Record Depreciation (i) 31 Interest Expense Interest Payable Accrue interest on note (15,000 x 8% x 1/12) J 15 Copyright 2004 by John Wiley & Sons, Inc. 8

13 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 9 GENERAL JOURNAL Date Account Titles and Explanation Ref. Debit Credit 1 May Closing Entries Sales Gain on Disposal of Truck Interest Revenue Income Summary To close credit balances May 31 Income Summary Sales Returns & allowances Sales Discounts Cost of Goods Sold Advertising Expense Bad Debt Expense Credit Card Expense Depreciation Expense - Delivery Truck Repairs and Maintenance - Delivery Trucks Store Salaries Expense Store Supplies Expense Depreciation Expense - Building Depreciation Expense - Office Equipment Insurance Expense Office Salaries Expense Office Supplies Expense Payroll Tax Expense Utilities Expense Miscellaneous Expense Interest Expense To Close Debit s Income Summary Brent David, Capital To Close Income Summary Brent David, Capital Brent David, Drawing To Close Account J 16 Copyright 2004 by John Wiley & Sons, Inc. 9

14 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 10 GENERAL LEDGER Cash ACCOUNT NO. 101 May CR CP J Petty Cash ACCOUNT NO. 105 May Accounts Receivable ACCOUNT NO. 112 May J J J J S CR Allowance for Doubtful Accounts ACCOUNT NO. 113 May J J J Notes Receivable ACCOUNT NO. 115 May J Copyright 2004 by John Wiley & Sons, Inc. 10

15 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 11 GENERAL LEDGER Interest Receivable ACCOUNT NO. 118 May J Other Receivable ACCOUNT NO. 119 May 29 J CR Merchandise Inventory ACCOUNT NO. 120 May P S CR CP CP CP J J Office Supplies ACCOUNT NO. 125 May CP J Store Supplies ACCOUNT NO. 127 May CP J Copyright 2004 by John Wiley & Sons, Inc. 11

16 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 12 GENERAL LEDGER Prepaid Insurance ACCOUNT NO. 130 May J Land ACCOUNT NO. 140 May Buildings ACCOUNT NO. 145 May Accumulated Depreciation - Buildings ACCOUNT NO. 146 Date Item Ref. Debit Credit Credit May J Office Equipment ACCOUNT NO. 151 May Accumulated Depreciation - Office Equipment ACCOUNT NO. 152 Date Item Ref. Debit Credit Credit May J Copyright 2004 by John Wiley & Sons, Inc. 12

17 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 13 GENERAL LEDGER Delivery Trucks ACCOUNT NO. 163 May J J J Accumulated Depreciation - Delivery Trucks ACCOUNT NO. 164 Date Item Ref. Debit Credit Credit May J J J J Notes Payable ACCOUNT NO. 200 Date Item Ref. Debit Credit Credit May 2 J Accounts Payable ACCOUNT NO. 201 Date Item Ref. Debit Credit Credit May P CP Salaries Payable ACCOUNT NO. 212 Date Item Ref. Debit Credit Credit May 15 J J CP Copyright 2004 by John Wiley & Sons, Inc. 13

18 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 14 GENERAL LEDGER FICA Taxes Payable ACCOUNT NO. 214 Date Item Ref. Debit Credit Credit May J J J J CP Federal Income Tax Withholding Payable ACCOUNT NO. 216 Date Item Ref. Debit Credit Credit May J J CP Federal Unemployment Tax Payable ACCOUNT NO. 224 Date Item Ref. Debit Credit Credit May J J State Unemployment Tax Payable ACCOUNT NO. 226 Date Item Ref. Debit Credit Credit May J J Interest Payable ACCOUNT NO. 230 Date Item Ref. Debit Credit Credit May J Copyright 2004 by John Wiley & Sons, Inc. 14

19 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 15 GENERAL LEDGER Maxicard Payable ACCOUNT NO. 240 Date Item Ref. Debit Credit Credit May J J Mortgage Payable ACCOUNT NO. 275 Date Item Ref. Debit Credit Credit May CP Brent Davis, Capital ACCOUNT NO. 301 Date Item Ref. Debit Credit Credit May CR J J Brent David, Drawing ACCOUNT NO. 306 May 29 CP J Income Summary ACCOUNT NO. 350 Date Item Ref. Debit Credit Credit May 31 J J J Copyright 2004 by John Wiley & Sons, Inc. 15

20 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 16 GENERAL LEDGER Sales ACCOUNT NO. 401 Date Item Ref. Debit Credit Credit May 31 S CR CR J Sales Return and Allowances ACCOUNT NO. 412 May 23 J J Sales Discounts ACCOUNT NO. 414 May 31 CR J Cost of Goods Sold ACCOUNT NO. 505 May 23 J (500 ) 31 S CR J J Advertising Expense ACCOUNT NO. 610 May 31 CP J Bad Debt Expense ACCOUNT NO. 612 May 31 J J Copyright 2004 by John Wiley & Sons, Inc. 16

21 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 17 GENERAL LEDGER Credit Card Expense ACCOUNT NO. 613 May 31 J J Depreciation Expense - Delivery Trucks ACCOUNT NO. 617 May 29 J J J Repairs and Maintenance - Delivery Trucks ACCOUNT NO. 624 May 6 CP CP J Store Salaries Expense ACCOUNT NO. 626 May 15 J J J Store Supplies Expense ACCOUNT NO. 659 May 31 J J Depreciation Expense - Buildings ACCOUNT NO. 713 May 31 J J Copyright 2004 by John Wiley & Sons, Inc. 17

22 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 18 GENERAL LEDGER Depreciation Expense - Office Equipment ACCOUNT NO. 715 May 30 J J Insurance Expense ACCOUNT NO. 722 May 31 J J Office Salaries Expense ACCOUNT NO. 728 May 15 J J J Office Supplies Expense ACCOUNT NO. 728 May 31 J J Payroll Taxes Expense ACCOUNT NO. 730 May 15 J J J Utilities Expense ACCOUNT NO. 732 May 30 CP J Copyright 2004 by John Wiley & Sons, Inc. 18

23 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 19 GENERAL LEDGER Miscellaneous Expense ACCOUNT NO. 735 May 31 J J Gain on Disposal of Truck ACCOUNT NO. 812 Date Item Ref. Debit Credit Credit May 29 J J Interest Revenue ACCOUNT NO. 820 Date Item Ref. Debit Credit Credit May 31 J J Interest Expense ACCOUNT NO. 905 MAY 30 CP J J Copyright 2004 by John Wiley & Sons, Inc. 19

24 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 20 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Bell and Gateway, CPAs ADDRESS 109 Westview Dr. Belmont, OH Date Item Ref. Debit Credit Apr 26 Invoice 612 S Invoice 619 S May 6 CR CR NAME Carthage Community College ADDRESS 1927 Herbert Street, Streetor, OH Date Item Ref. Debit Credit Apr 26 Invoice 614 S May 6 CR Invoice 622 S CR Invoice 626 S NAME Dorothy Knight ADDRESS 9007 Neely Rd., Fulton, OH Date Item Ref. Debit Credit Jan 15 Invoice 535 S MAY 24 Write off J Reinstate J CR Copyright 2004 by John Wiley & Sons, Inc. 20

25 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 21 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Jake Lansing ADDRESS 291 Hightower, Oxford, OH Date Item Ref. Debit Credit Apr 14 Invoice 601 S May 10 J NAME Salem Hotel ADDRESS 1412 St. Louis Street, Oxford, OH Date Item Ref. Debit Credit Apr 12 Invoice 599 S May 13 Invoice 623 S CR Invoice 629 S NAME Tollson Motel ADDRESS 1943 Ester Place, Riding, OH Date Item Ref. Debit Credit Apr 26 Invoice 613 S May 6 CR Invoice 625 S Credit Memo No. 129 J Copyright 2004 by John Wiley & Sons, Inc. 21

26 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 22 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Wallton Apartments, Inc. ADDRESS 304 Colter Ave., Oxford, OH Date Item Ref. Debit Credit Apr 24 Invoice 611 S Invoice 620 S May 1 CR CR S S NAME Willington Hotels ADDRESS 1200 Hovey, Oxford, OH Date Item Ref. Debit Credit Apr 30 Invoice 617 S May 7 Invoice 621 S CR CR Invoice 628 S Copyright 2004 by John Wiley & Sons, Inc. 22

27 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 23 ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME American Mattress Co. ADDRESS 1212 Northgate Street, St.Louis, MO Date Item Ref. Debit Credit Apr 18 n/30 P May 17 CP n/30 P NAME Austin Cabinet Makers ADDRESS 231 Deemer Ave., Austin, TX Date Item Ref. Debit Credit Apr 22 2/30, n/60 P May 20 CP /30, n/60 P NAME Cabbot Recliners, Inc. ADDRESS 111 Third Street, New York, NY Date Item Ref. Debit Credit Apr 19 n/30 P May 3 CP /15, n/30 P NAME Georgia Carpet Mills ADDRESS 333 State Street, Atlanta, GA Date Item Ref. Debit Credit Apr 18 2/30, n/60 P May 20 CP /10, n/60 P Copyright 2004 by John Wiley & Sons, Inc. 23

28 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 24 ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME Lexis Fine Furniture ADDRESS 310 Eastland Drive, Salem, NC Date Item Ref. Debit Credit Apr 14 2/30, n/60 P May 7 1/15, n/30 P CP CP /15, n/30 P NAME Old Hickory Furniture, Inc. ADDRESS 117 East Ave., Bellmore, MA Date Item Ref. Debit Credit Apr 30 2/15, n/30 P May 14 CP NAME Wallace Office Superstore ADDRESS Vetmar Ave., Baton Rouge, LA Date Item Ref. Debit Credit Apr 28 n/15 P May 7 CP Copyright 2004 by John Wiley & Sons, Inc. 24

29 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 25 HERITAGE HOME FURNITURE Accounts Receivable Schedule May 31, 1 Carthage Community College Salem Hotel Tollson Motel Wallton Apartments, Inc Willington Hotels Total Accounts Receivable HERITAGE HOME FURNITURE Accounts Payable Schedule May 31, 1 American Mattress Co Austin Cabinet Makers Cabbot Recliners, Inc Georgia Carpet Mills Lexis Fine Furniture Total Accounts Payable Copyright 2004 by John Wiley & Sons, Inc. 25

30 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 26 HERITAGE HOME FURNITURE Worksheet For the Month Ended May 31, Acct. Trial No. Account Title. Debit Credit Cash Petty Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Interest Receivable Other Receivables Merchandise Inventory Office Supplies Store Supplies Prepaid Insurance Land Buildings Accumulated Depreciation Building Office Equipment Accumulated Depreciation Office Equipment Delivery Trucks Accumulated Depreciation Delivery Trucks Notes Payable Accounts Payable Salaries Payable FICA Taxes Payable Federal Income Tax Withholding Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Interest Payable Maxicard Payable Mortgage Payable Brent Davis, Capital Brent Davis, Drawing Copyright 2004 by John Wiley & Sons, Inc. 26

31 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 27 Adjustments Adjusted Trial Income Statement Sheet Debit Credit Debit Credit Debit Credit Debit Credit 1 b c d e f f g h h h I b 1530 a Copyright 2004 by John Wiley & Sons, Inc. 27

32 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 28 HERITAGE HOME FURNITURE Worksheet For the Month Ended May 31, Acct. Trial No. Account Title. Debit Credit Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Advertising Expense Bad Debt Expense Credit Card Expense Depreciation Expense - Delivery Trucks Repairs and Maintenance - Delivery Trucks Store Salaries Expense Store Supplies Expense Depreciation Expense - Building Depreciation Expense - Office Equipment Insurance Expense Office Salaries Expense Office Supplies Expense Payroll Tax Expense Utilities Expense Miscellaneous Expense Gain of Disposal of Truck Interest Revenue Interest Expense Net Income Copyright 2004 by John Wiley & Sons, Inc. 28

33 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 29 Adjustments Adjusted Trial Income Statement Sheet Debit Credit Debit Credit Debit Credit Debit Credit e c a h f h h g f b d I Copyright 2004 by John Wiley & Sons, Inc. 29

34 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 30 HERITAGE HOME FURNITURE Bank Reconciliation May 31, 1 per bank statement Add: Deposits in Transit, 5/ Subtract: Outstanding Checks 5 6 No No No No No No Adjusted balance per bank per books Subtract: Check printing fee Monthly service charge Maxicard fee Adjusted balance per books Copyright 2004 by John Wiley & Sons, Inc. 30

35 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 31 HERITAGE HOME FURNITURE Depreciation Schedule for Delivery Trucks Item: Delivery Truck Acquisition Date: May 2, Cost: $42,000 Estimated Salvage: $4,000 Estimated Life: 4 years Depreciation Method: Declining balance, double the straight-line rate Year Beginning Book Value x Depreciation Rate = Annual Depreciation () 1 $ 42,000 50% 21, ,000 50% 10, ,500 50% 5, ,250 50% 1,250 (limit) Depreciation for the month of May: Year 1 Depreciation x 1/12 21,000 x 1/12 = $1,750 Copyright 2004 by John Wiley & Sons, Inc. 31

36 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 32 HERITAGE HOME FURNITURE Income Statement For the Month Ended May 31, 1 Revenues 1 2 Sales Less: Sales Returns and Allowances Sales Discounts Net Sales Cost of Goods Sold Gross Profit Operating Expenses 8 9 Selling Expenses 9 10 Store Salaries Expense Advertising Expense Depreciation Expense - Delivery Truck Store Supplies Expense Credit Card Expense Repairs and Maintenance - Delivery Truck Bad Debt Expense Total Selling Expenses Administrative Expenses Office Salaries Expense Payroll Tax Expense Office Supplies Expense Depreciation Expense - Building Utilities Expense Depreciation Expense - Office Supplies Insurance Expense Miscellaneous Expense Total Administrative Expense Total Operating Expense Income from Operations Other Revenues and Gains Gain of disposal of Truck Interest Revenue Other Expenses and Losses Interest Expense Net Income Copyright 2004 by John Wiley & Sons, Inc. 32

37 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 33 HERITAGE HOME FURNITURE Owner s Equity Statement For the Month Ended May 31, 1 Brent Davis Capital, May Add: Additional investment Net income for May Less: Drawings Brent Davis, Capital, May Copyright 2004 by John Wiley & Sons, Inc. 33

38 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 34 HERITAGE HOME FURNITURE Sheet May 31, 1 Assets 1 2 Current Assets 2 3 Cash Petty Cash Accounts receivable Allowance for Doubtful Accounts Notes Receivable Interest Receivable Merchandise Inventory Office Supplies Store supplies Prepaid Insurance Total Current Assets Property, Plant and Equipment Accumulated Net Book Cost Depreciation Value Land Buildings Office Equipment Delivery Trucks Total Property, Plant & Equipment Total Assets Copyright 2004 by John Wiley & Sons, Inc. 34

39 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 35 HERITAGE HOME FURNITURE Sheet (Continued) May 31, 1 Liabilities and Owner s Equity 1 2 Current Liabilities 2 3 Notes payable Accounts payable FICA taxes payable Federal income taxes withholding payable Federal unemployment taxes payable State unemployment taxes payable Interest payable Maxicard payable Total current liabilities Long-term liabilities Mortgage payable Total long-term liabilities Total liabilities Owner s Equity Brent Davis, Capital Total liabilities and owner s equity Copyright 2004 by John Wiley & Sons, Inc. 35

40 Heritage Home Solution 2004.qrk 3/16/04 9:15 AM Page 36 HERITAGE HOME FURNITURE Post-Closing Trial May 31, Acct. No. Account Title Debit Credit Cash Petty Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Interest Receivable Merchandise Inventory Office Supplies Store Supplies Prepaid Insurance Land Buildings Accumulated Depreciation Buildings Office Equipment Accumulated Depreciation Office Equipment Delivery Trucks Accumulated Depreciation Delivery Trucks Notes Payable, 10%, 3-month Accounts Payable Federal Income Tax Withholding Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Interest Payable Maxicard Payable Mortgage Payable Brent Davis, Capital Copyright 2004 by John Wiley & Sons, Inc. 36