Question

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Problem 5-03A al-a3, b-c The Deluxe Store is located in midtown Madison. During the past several years, net income has been declining because of suburban shopping centers. At the end of the company's fiscal year on November 30, 2020, the following accounts appeared in two of its trial balances. Adjusted $25,200 30,500 45,000 26,000 40,000 507,000 Unadjusted $29,000 37,000 10,500 Unadjusted $25,200 30,500 34,000 26,000 40,000 507,000 10,000 6,500 146,000 Accounts Payable Accounts Receivable Accumulated Depr.-Equipment Cash Common Stock Cost of Goods Sold Dividends Freight-Out Equipment Depreciation Expense Insurance Expense Interest Expense Interest Revenue Inventory Notes payable Prepaid Insurance Property Tax Expense Property Taxes Payable Rent Expense Retained Earnings Salaries and Wages Expense Sales Commissions Expense Sales Commissions Payable Sales Returns and Allowances Sales Revenue Utilities Expense 10,000 Adjusted $29,000 37,000 3,500 2,500 2,500 15,000 61,700 96,000 11,000 4,500 8,000 700,000 8,500 15,000 61,700 96,000 6,500 6,500 146,000 11,000 7,000 6,400 8,000 6,400 8,000 8,000 700,000 8,500

Answer 1

Income Statement:

Deluxe Store
Income Statement
For the year ended November 30,2020
Revenues:
Sales revenue		$700,000
(Less): Sales returns and allowances		($8,000)
Net sales		$692,000
Cost of goods sold		($507,000)
Gross profit		$185,000
Operating expenses:
Freight-out	$6,500
Depreciation expense	$11,000
Insurance expense	$7,000
Property tax expense	$2,500
Rent expense	$15,000
Salaries and Wages expense	$96,000
Sales commissions expense	$11,000
Utilities expense	$8,500
Total operating expenses		$157,500
Operating income		$27,500
Non-Operating/Other revenues:
Interest revenue	$8,000
Non-Operating/Other Expenses:
Interest expense	($6,400)	$1,600
Net income		$25,900

Statement of retained earnings:

Deluxe Store
Statement of retained earnings
For the year ended November 30,2020
Retained earnings, Beginning balance	$61,700
Add: Net income	$25,900
	$87,600
(Less): Dividends	($10,000)
Retained earnings, Ending balance	$77,600

Balance Sheet:

Deluxe Store
Balance sheet
As of November 30,2020
Current assets:
Cash	$26,000
Accounts receivable	$30,500
Inventory	$29,000
Prepaid insurance	$3,500
Total current assets		$89,000
Property,plant,and equipment:
Equipment	$146,000
Accumulated depreciation-Equipment	($45,000)	$101,000
Total Assets		$190,000
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$25,200
Property taxes payable	$2,500
Sales commissions pyable	$4,500
Total current liabilities		$32,200
Long-term debt:
Notes payable		$37,000
Total liabilities		$69,200
Stockholders' equity:
Common stock	$40,000
Retained earnings	$77,600
Total stockholders' equity		$117,600
Total liabilities and stockholders' equity		$186,800