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The Wyndham Wholesale Company began operations on 8/1/16. The following transactions occur during the month of August.

  1. Aug 1. Owners invest $100,000 cash in exchange for 10,000 shares of $1 par-common stock.
  2. Aug 1. Equipment is purchased for $20,000 in exchange for a 6 month, 6% note. Interest is not to be paid until the end of the life of the note (i.e., on 7/31/2017). The equipment has a 5 year life and a $2,000 salvage value. Depreciation will be taken on a straight-line basis.
  3. Aug 1. A rent agreement is signed and $6,000 is remitted for rent on a building for the months of August, September and October.
  4. Aug 5. Merchandise inventory costing $48,000 is purchased on account. The company uses the perpetual inventory system.
  5. Credit sales for the month are $80,000. The cost of merchandise sold is $32,000.
  6. $25,000 is collected on account from customers.
  7. $20,000 is paid on account to suppliers of merchandise.
  8. Employees earn $3,000 / 5-day week and are paid bi-weekly (one week after the pay period ends). The first pay periods was for the 2 weeks 8/1/16-8/12/16 and was paid on 8/19/16. The last pay date for the month of August was 8/19.
  9. A bill for $4,000 is received from the local utility company for the month of August and is not paid until September.
  10. $20,000 cash is loaned to another company, evidenced by a note receivable. The note receivable is dated 8/16/16. The note requires the entire $20,000 in principal plus interest at 12% to be repaid in 4 months (the loan was outstanding for ½ month during August)
  11. The corporation declares its shareholders a cash dividend of $1,000.

REQUIREMENT 1

Prepare any necessary adjusting entries at 8/31/16.

Post the adjusting entries to the UNADJUSTED trial balance in PART 1 to get an ADJUSTED TRIAL BALANCE.

What is the total (amount) net effect on income and direction (overstated or understated) if these entries are not made?

Prepare an income statement, statement of stockholders’ equity for the month ended 8/31/16 and a balance sheet as of 8/31/1

Assume that 8/31 is the company’s fiscal year-end. Prepare the necessary closing entries.

I NEED HELP WITH THIS PART ^^^ I HAVE PROVIDED THE TRIAL BALANCE BELOW

THE INITIAL JOURNAL ENTRIES ARE ALSO PROVIDED, I DON'T HAVE THE ADJUSTING ENTRIES

THE ADJUSTING ENTRIES ARE BASED ON THE TRANSACTIONS A - K

JOURNAL ENTRY Ref Date Account Title Debit Credit Aug.1 Cash $100,000 Common stock $100,000 Aug.1 Equipment $20,000 Notes Payable $20,000 Aug.1 Prepaid Rent $6,000 Cash $6,000 Cash Aug.5 Merchandise Inventory $48,000 Accounts Payable $48,000 Aug.5 Accounts Receivable $80,000 $80,000 Sales Revenue Cost of goods sold Merchandise Inventory $32,000 $32,000 Aug.5 Cash $25,000 Accounts receivable $25,000

9 Aug.5 Accounts Payable $20,000 Cash $20,000 Aug.19Wage expenses $6,000 Cash $6,000 Aug.19 Utilities expenses $4,000 Accrued expenses $4,000 Aug.16 Note receivable $20,000 Cash $20,000 Dividend $1,000 Dividend payable $1,000

TRIAL BALANCE Account Debit Credit $73,000 $55,000 $20,000 $6,000 $16,000 $20,000 Cash Accounts Receivable Note Receivable Prepaid Rent Merchandise Inventor Equipment Accounts Payable Note Payable Accrued expenses Dividend Payable Common Stock Sales Revenue Cost of goods sold Wages expenses Utilities expenses Dividend Total $28,000 $20,000 $4,000 $1,000 $100,000 $80,000 $32,000 $6,000 $4,000 $1,000 233,000 2 233,000

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Answer #1

Below is journal entries, trial balance, income statement, balance sheet and equity statement with calculations

Adiusting Journal entries Date Account Debit Credit Calculation 31-Aug Depreciation expense 300 (20000-2000)/5*1/12 Accumulated Depreciation-Equipment $300 $100 -20000*6% *1/12 31-Aug Interest expense Interest Payable $100 $ 2,000 -6000/3 31-Aug Rent expense Prepaid Rent $ 2,000 31-Aug Wages expenses $ 7,800 (3000*2)+(3000/5*3) Accrued expenses $ 7,800 31-Aug Interest Receivable $100 -20000*12%*0.5/12 Interest Income $100 Wages are accrued for all remaining days of Aug, so $3,000 for next 2 weeks &3 days in last week of Aug Closing Journal entries $ 80,000 $100 31-Aug Sales Revenue Interest Income Retained Earnings $ 80,100 To close revenue and income accounts) 31-Aug Retained Earnings $52,200 Cost of goods sold Wages expenses Utilities expenses Depreciation expense Interest expense Rent expense To close expense and loss accounts) $32,000 $13,800 $ 4,000 $300 $100 $ 2,000 31-Aug Retained Earnings $ 1,000 Dividend $ 1,000 (To close dividend account)Unadjusted TB Credit Adjustments Debit Credit Adjusted TB Debit Credit Debit Account Name Cash Accounts Receivable Notes Receivable Prepaid Rent Merchandise Invento Interest Receivable Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable Interest Payable Accrued expenses Dividend Payable Common Stock Income Statement Sales Revenue Cost of goods sold Wages expenses Utilities expenses Depreciation expense Interest expense Rent expense Interest Income Dividend Total Net income 73,000 55,000 20,000 6,000 16,000 73,000 55,000 20,000 4,000 16,000 100 20,000 2,000 100 20,000 300 300 28,000 20,000 100 11,800 1,000 100,000 28,000 20,000 100 7,800 4,000 1,000 100,000 80,000 80,000 32,000 6,000 4,000 32,000 13,800 4,000 300 100 2,000 7,800 300 100 2,000 100 100 1,000 1,000 233,000233,000 38,000 10,300 10,300241,300 241,300 (10,100) 27,900 Revenue less Expenses (excluding dividend) -100-7800-300-100-2000 Calculation Net income is overstated by $10,100 if adjusting entries are not passedWyndham Wholesale Company Income Statement For year ended Aug 31, 2016 Sales Revenue Cost of goods sold Gross profit Wages expenses Utilities expenses Rent expense Depreciation expense Interest expense Total Operating expenses Operating profit Other income (expense Interest Income Net profit 80,000 32,000 48,000 13,800 4,000 2,000 300 100 20,200 27,800 100 27,900Wyndham Wholesale Company Statement of Stockholders Equity For year ended Aug 31, 2016 Common Stock Retained Earnings Total Stockholders equity Beginning balance Issue of common shares Net profit Dividends Ending Balance 100,000 27,900 (1,000) 26,900 100,000 27,900 (1,000) 126,900 100,000Wyndham Wholesale Company Balance Sheet As of Aug 31, 2016 Liabilities Assets Current Assets Cash Accounts Receivable Notes Receivable Merchandise Invento Prepaid Rent Interest Receivable Total Current Assets Current Liabilities 73,000 Accounts Payable 28,000 20,000 11,800 1,000 100 55,000 Notes Payable 20,000 Accrued expenses 16,000 Dividend Payable 4,000 Interest Payable 100 168,100 Total Current Liabilities 60,900 Fixed Assets Equipment Accumulated Depreciation-Equipment Total Fixed Assets Stockholders Equity 20,000 Common Stock (300) Retained earnings 19,700 Total Stockholders Equity 100,000 26,900 126,900 Total Assets 187,800 Tal Liabilities & Stockholders Equity 187,800

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