Chapter 2 Review of the Accounting Process Problem 2–13

Problem 2–13 Account Title Cash Accounts receivable Supplies Prepaid rent Inventory Equipment Accumulated depreciationequipment Accounts payable Wages payable Note payable Interest payable Common stock Retained earnings Sales revenue Cost of goods sold Interest expense Wage expense Rent expense Supplies expense Utility expense Depreciation expense Unadjusted Trial Balance Dr. Cr. 23,300 32,500 0 0 65,000 75,000 95,000 0 32,350 14,000 2,000 6,000 0 Adjusting Entries Dr. Cr. (4) 500 (5) 1,000 10,000 26,100 3,000 30,000 0 80,000 16,050 180,000 Adjusted Trial Balance Dr. Cr. 23,300 32,500 500 1,000 65,000 75,000 (1) 9,375 (2) 1,500 (3) 1,000 (3) 1,000 (2) 1,500 (5) 1,000 (4) 500 (1) 9,375 95,000 1,000 33,850 13,000 1,500 6,000 9,375 19,375 26,100 4,500 30,000 1,000 80,000 16,050 180,000 Net Income Totals 2–92 345,150 345,150 13,375 13,375 357,025 357,025 Income Statement Dr. Cr. Balance Sheet Dr. Cr. 23,300 32,500 500 1,000 65,000 75,000 19,375 26,100 4,500 30,000 1,000 80,000 16,050 180,000 95,000 1,000 33,850 13,000 1,500 6,000 9,375 159,725 20,275 ______ 180,000 ______ ______ 197,300 ______ ______ 177,025 20,275 180,000 180,000 197,300 197,300 Problem 2–13 (continued) EXCALIBUR CORPORATION Income Statement For the Year Ended December 31, 2013 Sales revenue ............................................... Cost of goods sold ....................................... Gross profit .................................................. Operating expenses: Wages ........................................................ Rent ............................................................ Supplies ..................................................... Utility ........................................................ Depreciation ............................................... Total operating expenses ............ Operating income ......................................... Other expense: Interest ...................................................... Net income ................................................... $180,000 95,000 85,000 33,850 13,000 1,500 6,000 9,375 63,725 21,275 1,000 $ 20,275 2– Solutions Manual, Vol.1, Chapter 2 93 Problem 2–13 (continued) EXCALIBUR CORPORATION Statement of Shareholders' Equity For the Year Ended December 31, 2013 Balance at January 1, 2013 Issue of common stock Net income for 2013 Less: Dividends Balance at December 31, 2013 2–94 Common Stock $80,000 -0______ $80,000 Retained Earnings $22,050 20,275 (6,000) $36,325 Total Shareholders’ Equity $102,050 -020,275 (6,000) $116,325 Problem 2–13 (continued) EXCALIBUR CORPORATION Balance Sheet At December 31, 2013 Assets Current assets: Cash ............................................................... Accounts receivable ...................................... Supplies ......................................................... Prepaid rent .................................................... Inventory ....................................................... Total current assets ..................................... Equipment ........................................................ Less: Accumulated depreciation ................... Total assets ............................................... $ 23,300 32,500 500 1,000 65,000 122,300 $75,000 (19,375) 55,625 $177,925 Liabilities and Shareholders' Equity Current liabilities: Accounts payable .......................................... Wages payable .............................................. Note payable .................................................. Interest payable ............................................. Total current liabilities ............................... Shareholders’ equity: Common stock .............................................. Retained earnings .......................................... Total shareholders’ equity .......................... Total liabilities and shareholders’ equity $ 26,100 4,500 30,000 1,000 61,600 $80,000 36,325 116,325 $177,925 2– Solutions Manual, Vol.1, Chapter 2 95 Problem 2–13 (concluded) December 31, 2013 Sales revenue ................................................................... 180,000 Income summary ......................................................... 180,000 2–96 Income summary ............................................................. 159,725 Cost of goods sold ....................................................... Interest expense ........................................................... Wage expense.............................................................. Rent expense ............................................................... Supplies expense ........................................................ Utility expense ............................................................ Depreciation expense .................................................. 95,000 1,000 33,850 13,000 1,500 6,000 9,375 Income summary ($180,000 – 159,725) .............................. Retained earnings ........................................................ 20,275 20,275