Multi step income statement and adjusting entries- the Boston trading company, whose accounting year ends on December 31, had the following normal balances in its general ledger at December 31:
|
Cash
|
$13,000
|
|
Accounts Receivable
|
$56,600
|
|
Inventory
|
$73,000
|
|
prepaid insurance
|
$6,000
|
|
office supplies
|
$4,200
|
|
furniture and fixtures
|
$21,000
|
|
accumulated depreciation -
|
|
furniture and fixtures
|
$5,000
|
|
delivery equipment
|
$84,000
|
|
accumulated depreciation -
|
|
delivery equipment
|
$12,000
|
|
Accounts Payable
|
$41,000
|
|
long-term notes payable
|
$30,000
|
|
common stock
|
$75,000
|
|
retained earnings
|
$51,400
|
|
sales revenue
|
$630,000
|
|
cost of goods sold
|
$404,000
|
|
utilities expense
|
$4,800
|
|
sales salaries expense
|
$82,000
|
|
delivery expense
|
$10,800
|
|
advertising expense
|
$5,500
|
|
rent expense
|
$14,400
|
|
office salaries expense
|
$56,000
|
|
income tax expense
|
$9,000
|
During the year, the accounting department prepared monthly statements but no adjusting entries were made in the journals and ledgers. Data for the year and procedures are as follows:
1. prepaid insurance, December 31, was $1200
2. depreciation expense on furniture and fixtures for the year was $1800
3. depreciation expense on delivery equipment for the year was $13,000
4. salaries payable, December 31 ($1800 sales and $1200 office) was $3000
5. unused office supplies on December 31 were $1000
Required
a. record the necessary adjusting entries at December 31
b. prepare a multi step income statement for the year. Combine all operating expenses into one line on the income statement for selling, general and administrative expenses.