Question

Review 7: Listed below are the account balances of a merchandise co company as of December 3 2018. Account Balance Cash 11.600 Salaries Payable 16.000 VAT Payable 3.200 Sales Revenue 78.000 Building 120.000 COGS 38.000 Accounts Receivable 8.000 Sales Returns 1.800 Sales Allowances 2.000 ccumulated Depreciation (Building) 48.000 Accumulated Depreciation (Equipment) 6.000 Equipment 22.000 VAT Deductible 1.600 Merchandise Inventory 7.500 Sales discounts 800 Capital 72.100 Utilities Expense 6.200 Accounts Payable 14.700 Rent Expense 500 Depreciation Expense 9.000 Salaries Expense 16.000 Notes Payable 7.000 A. Prepare the trial balance in a good (correct) format. B. Calculate the book value for the building and equipment C. Prepare the Statement of Financial Position (Balance Sheet) and the Income Statement for this merchandise company

Answer 1

Answer)

1. Trail balance

	Debit	Credit
Cash	11,600
building	72,000
Accounts receivable	8,000
equipment	16,000
merchandise inventory	7,500
Salaries payable		16,000
VAT payable		3,200
capital		72,100
accounts payable		14,700
notes payable		7,000
Sales revenue		78,000
cogs	38,000
sales return	1,800
sales allowances	2,000
VAT deductible	1,600
sales discounts	800
utilities expenses	6,200
rent expenses	500
depreciation expense	9,000
salaries exp	16,000
Total	$191,000	$191,000

2. Book value of Building and equipment is determined below:

Book value = Cost of asset- accumulated depreciation

Book value of Building=120,000-48,000=$72,000

Book Value of equipment=22,000-6,000=$16,000

3. Income statement

Sales revenue	78,000
Less: sales return	(1,800)
Net sales revenue		$76,200
Less: cogs	(38,000)
Gross revenues		$38,200
Operational and other expenses
salaries exp	16,000
utilities expenses	6,200
rent expenses	500
sales allowances	2,000
VAT deductible	1,600
sales discounts	800
Total expenses		(27,100)
Earnings before depreciation		11,100
Less: Depreciation expense	(9,000)
Net profit		$2,100

Balance sheet:

Assets
Fixed assets
building	1,20,000
accumulated depreciation for building	-48,000
Net value of Building		72,000
equipment	22,000
accumulated depreciation for equipment	-6,000
Net value of equipment		16,000
Total fixed assets		88,000
Current assets
Cash	11,600
Accounts receivable	8,000
merchandise inventory	7,500
Total Current assets		27,100
Total assets		$115,100
Liabilities
Capital	72,100
Add: Net profits	2,100
Total equity		74,200
Current liabilities
Salaries payable	16,000
VAT payable	3,200
accounts payable	14,700
notes payable	7,000
Total liabilities		40,900
Total liabilities and capital		$115,100

Thanks