Chapter 5: 5-44PGB (page 315)

The unadjusted trial balance for Tuttle Electronics Company follows:
TUTTLE ELECTRONICS COMPANY
Unadjusted Trial Balance
October 31, 2018
Balance
Account Title Debit Credit
Cash $4,200
Accounts Receivable 33,800
Merchandise Inventory 45,700
Office Supplies 5,700
Equipment 129,500
Accumulated Depreciation-Equipment $37,200
Accounts Payable 15,600
Unearned Revenue 13,400
Notes Payable, long-term 53,000
Common Stock 48,000
Retained Earnings 6,700
Dividends 27,000
Sales Revenue 300,300
Cost of Goods Sold 171,600
Salaries Expense (Selling) 26,000
Rent Expense (Selling) 15,400
Salaries Expense (Administrative) 4,800
Utilities Expense (Administrative) 10,500
Total $474,200 $474,200
Requirements
1. Journalize the adjusting entries using the following data:
a. Interest revenue accrued, $550.
b. Salaries (Selling) accrued, $2,800.
c. Depreciation Expense—Equipment (Administrative), $1,295.
d. Interest expense accrued, $1,500.
e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of $45,300.
f. Tuttle estimates that approximately $6,200 of merchandise sold will be returned with a cost of $2,480.
2. Prepare Tuttle Electronics’s adjusted trial balance as of October 31, 2018.
3. Prepare Tuttle Electronics’s multi-step income statement for year ended October 31, 2018.

Short Answer

Expert verified

The net income of the company is $57,875.

Step by step solution

Meaning of Financial Information

Inaccounting,the term financial information refers to theeconomic data associated with a business entity. A business records its financial information in the books and summarizes the same annually, to preparefinancial reports.

Preparation of adjusting entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
a.	Interest receivable	550
	Interest revenue		550
	(To record the interest revenue)
b.	Salaries expenses	2,800
	Salaries payable		2,800
	(To record accrued salaries)
c.	Deprecation on equipment	1,295
	Accumulated depreciation		1,295
	(To record accumulated depreciation)
d.	Interest expense	1,500
	Interest payable		1,500
	(To record accrued interest expense)
e.	Cost of goods sold	400
	Merchandise inventory		400
	(To adjust the inventory account)
f.	Sales returns	2,840
	Cash		2,840
	(To record sales returns)

Preparation of adjusted trial balance

TUTTLE ELECTRONICS COMPANY
Adjusted Trial Balance
As of October 31, 2018
Account Title	Debit ($)	Credit ($)
Cash	4,200
Accounts receivable	27,600
Interest receivables	550
Merchandise inventory	42,820
Office supplies	5,700
Equipment	129,500
Accumulated depreciation on equipment		38,495
Accounts payable		15,600
Salary payable		2,800
Interest payable		1,500
Unearned revenue		13,400
Notes payable, long-term		53,000
Common stock		48,000
Retained earnings		6,700
Dividends	27,000
Sales revenue		300,300
Interest revenue		550
Sales return	6,200
Cost of goods sold	174,480
Salaries expense (Selling)	28,800
Rent expense (Selling)	15,400
Interest expense	1,500
Depreciation on equipment (Administrative)	1,295
Salaries expense (Administrative)	4,800
Utilities expense (Administrative)	10,500
Total	480,345	480,345

Preparation of multi-step income statement

TUTTLE ELECTRONICS COMPANY
Multi-step Income Statement
For the year ended October 31, 2018
Particulars	Amounts ($)
Sales revenue	300,300
Less: Sales return	(6,200)
Net sales revenue	294,100
Less: Cost of goods sold	(174,480)
Gross profit	119,620
Less: Operating expenses
Selling expenses
Salaries expense	(28,800)
Rent expense	(15,400)
Less: Administrative expense
Depreciation on equipment	(1,295)
Salaries expense	(4,800)
Utilities expense	(10,500)
Income from operations	58,825
Add: Other revenues and gains
Interest revenue	550
Less: Other expenses and losses
Interest expense	(1,500)
Net income	$57,875