COMPREHENSIVE PROBLEM 2: Merchandise Concern

Christine Sousa Bags

Required 1: WORKSHEET
Christine Sousa Bags
Worksheet
For the Year Ended December 31, 2022

TRIAL BALANCE ADJUSTMENTS

No. Account Title Debit Credit Debit
110 Cash 72,000
120 Accounts Receivable 136,000
130 Merchandise Inventory 598,000
140 Prepaid Advertisement 75,000
150 Office Supplies 42,000
160 Land 400,000
170 Office Equipment 570,000
175 Accumulated Depreciation- Office Equipment 150,000
180 Office Building 1,600,000
185 Accumulated Depreciation- Office Building 100,000
210 Accounts Payable 74,000
220 Salaries Payable
230 Notes Payable- 2yrs. 200,000
240 Mortgage payable 1,100,000
310 Sousa, Capital 1,510,000
320 Sousa, Withdrawals 200,000

410 Sales 4,600,000

420 Sales Returns and Allowance 187,000
430 Sales Discounts 161,000
510 Purchases 2,643,000
520 Purchases Returns and Allowance 133,000
530 Purchases Discounts 172,000
540 Transportation in 72,000
610 Salaries Expense 862,000 c. 21,000
620 Insurance Expense 25,000
630 Travel Expense 188,000
640 Interest Expense 208,000
650 Office Supplies Expense a. 17,000
660 Advertising Expense b. 25,000
670 Depreciation Expense- Office Equipment d. 20,000
680 Depreciation Expense- Office Building d. 15,000
8,039,000 8,039,000 98,000
Profit
Merchandise Concern
Bags

Bags

mber 31, 2022

ADJUSTMENTS INCOME STATEMENT BALANCE SHEET

Credit Debit Credit Debit Credit
72,000
136,000
598,000 723,000 723,000
b. 25,000 50,000
a. 17,000 25,000
400,000
570,000
d. 20,000 170,000
1,600,000
d. 15,000 115,000
74,000
c. 21,000 21,000
200,000
1,100,000
1,510,000
200,000

4,600,000
187,000
161,000
2,643,000
133,000
172,000
72,000
883,000
25,000
188,000
208,000
17,000
25,000
20,000
15,000
98,000 5,042,000 5,628,000 3,776,000 3,190,000
586,000 586,000
5,628,000 5,628,000 3,776,000 3,776,000
Required 2: FINANCIAL STATEMENTS

INCOME STATEMENT

Christine Sousa Bags

Income Statement
For the Year Ended December 31, 2022
Net Sales
Sales P 4,600,000
Less: Sales Returns and Allowance -187,000
Sales Discounts -161,000 P 4,252,000

Cost of Sales
Beginning Inventory 598,000
Purchases P 2643000
Less: Purchases Returns and Allowance -133,000
Purchases Discounts -172,000
Net Purchases 2,338,000
Transportation In 72,000
Net Cost of Purchases 2,410,000
Goods Available for Sale 3,008,000
Less: Ending Inventory -723,000 2,285,000
Gross Profit 1,967,000
Less: Expenses
Salaries Exp. 883,000
Insurance Exp. 25,000
Travel Exp. 188,000
Interest Exp. 208,000
Office Supplies Exp. 17,000
Advertising Exp. 25,000
Depreciation Exp. Office Equipment 20,000
Depreciation Exp. Office Building 15,000 1,381,000
Profit 586,000

STATEMENT OF CHANGES IN EQUITY

Christine Sousa Bags

Statement of Changes in Equity
For the Year Ended December 31, 2022
Sousa, Owner's Equity, 1/1/2022 1,510,000
Add: Profit 586,000
Total 2,096,000
Less: Sousa, Withdrawals 200,000
Sousa, Owner's Equity, 12/31/2022 1,896,000
BALANCE SHEET
Christine Sousa Bags
Balance Sheet
For the Year Ended December 31, 2022
Assets
Current Assets
Cash P 72,000
Accounts Receivable 136,000
Merchandising Inventory 723,000
Prepaid Advertisement 50,000
Office Supplies 25,000 1,006,000
Noncurrent Assets
Land 400,000
Office Equipment, net 400,000
Office Building, net 1,485,000 2,285,000
Total Assets 3,291,000
Liabilities
Current Liabilities
Accounts Payable P 74,000
Salaries Payable 21,000 95,000
Noncurrent Liabilities
Notes Payable- 2yrs. 200,000
Mortgage Payable 1,100,000 1,300,000
Total Liabilities 1,395,000
Owner's Equity
Sousa, Capital, 12/31/2022 1,896,000
Total Liabilities and Owner's Equity 3,291,000
Required 3: ADJUSTING & CLOSING ENTRIES

ADJUSTING ENTRIES
Date Account Titles and Explanation P.R. Debit
1 2022
2 31-Dec Office Supplies Expense 650 P 17,000
3 Office Supplies 140
4
5 31 Advertising Expense 660 25,000
6 Prepaid Advertisement 150
7
8 31 Salaries Expense 610 21,000
9 Salaries Payable 220
10
11 31 Depreciation Expense- Office Building 670 15,000
12 Depreciation Expense- Office Equipment 680 20,000
13 Accumulated Depreciation- Office Building 175
14 Accumulated Depreciation- Office Equipment 185
15

CLOSING ENTRIES
Date Account Titles and Explanation P.R. Debit
1 2022
2 31-Dec Sales 410 P 4,600,000
3 Purchases Returns and Allowance 520 133,000
4 Purchases Discounts 530 172,000
5 Merchandising Inventory, Ending 130 723,000
6 Income Summary 330
7
8 31 Income Summary 330 P 5,042,000
9 Merchandising Inventory, Beginning 130
10 Sales Returns and Allowance 420
11 Sales Discounts 430
12 Purchases 510
13 Transportation In 540
14 Salaries Expense 610
15 Insurance Expense 620
Travel Expense 630
Interest Expense 640
Office Supplies Expense 650
Advertising Expense 660
Depreciation Expense- Office Building 670
Depreciation Expense- Office Equipment 680

31 Income Summary 330 P 586,000

Sousa, Capital 310
31 Sousa , Capital 310 P 200,000
Sousa, Withdrawals 320
 Credit

P 17,000

25,000

21,000

15,000
20,000

Credit

P 5,628,000

P598,000
187,000
161,000
2,643,000
72,000
883,000
25,000
188,000
208,000
17,000
25,000
15,000
20,000

P 586,000
P 200,000