Financial Accounting Chapter 4-1
Problem sET A
Problem 4-1A (40 minutes)
Aug. 1 Merchandise Inventory 6,000 Accounts Payable—Abilene 6,000 Purchased goods on credit.
4 Accounts Payable—Abilene 100 Cash 100 Paid freight for Abilene.
5 Accounts Receivable—Lux 4,200 Sales 4,200 Sold goods on credit.
5 Cost of Goods Sold 3,000 Merchandise Inventory 3,000 To record the cost of August 5 sale.
8 Merchandise Inventory 5,540 Accounts Payable—Welch 5,540 Purchased goods on credit.
9 Delivery Expense 120 Cash 120 Paid shipping charges on August 5 sale.
10 Sales Returns and Allowances 700 Accounts Receivable—Lux 700 …show more content…
Customer returned merchandise.
10 Merchandise Inventory 500 Cost of Goods Sold 500 Returned goods to inventory.
12 Accounts Payable—Welch 800 Merchandise Inventory 800 Received a credit memorandum for August 8 purchase.
Problem 4-1A (Concluded)
Aug. 15 Cash 3,430 Sales Discounts 70 Accounts Receivable—Lux 3,500 Collected receivable within 2% discount period.
18 Accounts Payable—Welch 4,740 Merchandise Inventory* 45 Cash** 4,695 Paid payable within discount period * (1% x [$5,300 - $800]) **([100%-1%] x [$5,300 - $800]) + $240 shipping.
19 Accounts Receivable—Trax 3,600 Sales 3,600 Sold goods on credit.
19 Cost of Goods Sold 2,500 Merchandise Inventory 2,500 To record cost of the August 19 sale.
22 Sales Returns and Allowances 600 Accounts Receivable—Trax 600 Issued credit memorandum.
29 Cash 2,970 Sales Discounts (1%) 30 Accounts Receivable—Trax 3,000 Collected receivable within discount period.
30 Accounts Payable—Abilene 5,900 Cash
5,900 Paid payable ($6,000 - $100); discount period has expired.
Problem 4-2A (40 minutes)
July 1 Merchandise Inventory 6,000 Accounts Payable—Black 6,000 Purchased goods on credit.
2 Accounts Receivable—Coke 800 Sales 800 Sold goods on credit.
2 Cost of Goods Sold 500 Merchandise Inventory 500 To record cost of the July 2 sale.
3 Merchandise Inventory 100 Cash 100 Paid freight on incoming goods.
8 Cash 1,600 Sales 1,600 Sold goods for cash.
8 Cost of Goods Sold 1,200 Merchandise Inventory 1,200 To record cost of the July 8 sale.
9 Merchandise Inventory 2,300 Accounts Payable—Lane 2,300 Purchased goods on credit.
11 Accounts Payable—Lane 200 Merchandise Inventory 200 Received credit memo from returning goods to supplier.
12 Cash 784 Sales Discounts (2%) 16 Accounts Receivable—Coke 800 Collected receivable within the discount period.
Problem 4-2A (Concluded)
July 16 Accounts Payable—Black 6,000 Merchandise Inventory (1%) 60 Cash 5,940 Paid payable within discount period.
19 Accounts Receivable—AKP 1,250 Sales 1,250 Sold goods on credit.
19 Cost of Goods Sold 900 Merchandise Inventory 900 To record cost of the July 19 sale.
21 Sales Returns and Allowances 150 Accounts Receivable—AKP 150 Issued credit memo for allowance on goods sold to customer.
24 Accounts Payable—Lane 2,100 Merchandise Inventory * 42 Cash 2,058 Paid payable in discount period (*2% x $2,100).
30 Cash 1,078 Sales Discounts (2%) 22 Accounts Receivable—AKP 1,100 Collected receivable within discount period. [($1,250 - $150) x .02]
31 Accounts Receivable—Coke 5,000 Sales 5,000 Sold goods on credit.
31 Cost of Goods Sold 3,200 Merchandise Inventory 3,200 To record cost of the July 31 sale.
Problem 4-3A (60 minutes)
Part 1
Adjustment (a)
Jan 31 Store Supplies Expense 3,150 Store Supplies 3,150 To record store supplies expense ($4,800 - $1,650).
Adjustment (b)
Jan 31 Insurance Expense 1,500 Prepaid Insurance 1,500 To record expired insurance.
Adjustment (c)
Jan 31 Depreciation Expense—Store Equip 1,400 Accumulated Deprec.—Store Equip 1,400 To record depreciation expense.
Adjustment (d)
Jan 31 Cost of Goods Sold 400 Merchandise Inventory 400 To adjust inventory for shrinkage ($11,500 - $11,100).
Problem 4-3A (Continued)
Part 2 Multiple-step income statement:
REX COMPANY
Income Statement
For Year Ended January 31, 2011
Sales $104,000 Less: Sales discounts $ 1,000 Sales returns and allowances 2,000 3,000 Net sales 101,000 Cost of goods sold* 37,800 Gross profit 63,200
Expenses Selling expenses Depreciation expense—Store equipment 1,400 Sales salaries expense** 15,500 Rent expense—Selling space** 7,000 Store supplies expense 3,150 Advertising expense 9,900 Total selling expenses 36,950
General and administrative expenses Insurance expense 1,500 Office salaries expense 15,500 Rent expense—Office space 7,000 Total general and administrative expenses 24,000 Total expenses 60,950 Net income $ 2,250
* $37,800 = $37,400 + $400 (shrinkage)
**Salaries and rent expenses are equally divided between selling activities and general and administrative activities.
Problem 4-3A (Concluded)
Part 3 Single-step income statement:
REX COMPANY
Income Statement
For Year Ended January 31, 2011
Net sales $101,000 Expenses Cost of goods sold $37,800 Selling expenses 36,950* General and administrative expense 24,000** Total expenses 98,750 Net income $ 2,250
*$3,150 + $1,400 + $9,900 + 1/2($31,000 + $14,000) = $36,950 **$1,500 + 1/2($31,000 + $14,000) = $24,000
Part 4
Current assets
| Cash |$ 2,200 |
| Merchandise inventory* |11,100 |
| Store supplies** |1,650 |
| Prepaid insurance*** | 800 |
| Total current assets |$15,750 |
|Current liabilities |$ 9,000 |
|Current ratio ($15,750 / $9,000) |1.75 |
*$11,500 - $400 = $11,100 **$4,800-$3,150 = $1,650 ***$ 2,300 - $1,500 = $800
|Quick assets (Cash) |$ 2,200 |
|Current liabilities |$ 9,000 |
|Acid-test ratio ($2,200 / $9,000) |0.24 |
|Net Sales |$101,000 |
|Cost of goods sold | 37,800 |
|Gross margin |$ 63,200 |
|Gross margin ratio ($63,200 / $101,000) |0.63 |
Problem 4-4A (40 minutes)
1. Net sales:
|Sales | $212,000 |
|Less: Sales discounts | (3,250) |
| Sales returns and allowances | (14,000) |
|Net sales | $194,750 |
2. Cost of Merchandise purchased:
|Invoice cost of merchandise purchased | $ 91,000 |
|Purchase discounts received | (1,900) |
|Purchase returns and allowances | (4,400) |
|Costs of transportation-in | 3,900 |
|Total cost of merchandise purchased | $ 88,600 |
Problem 4-4A (Continued)
3. Multiple-step income statement
BIZKID COMPANY
Income Statement
For Year Ended August 31, 2011
Sales $212,000 Less: Sales discounts $ 3,250 Sales returns and allowances 14,000 17,250 Net sales 194,750 Cost of goods sold * 82,600 Gross profit 112,150 Expenses Selling expenses Sales salaries expense 29,000 Rent expense—Selling space 10,000 Store supplies expense 2,500 Advertising expense 18,000 Total selling expenses 59,500
General and administrative expenses Office salaries expense 26,500 Rent expense—Office space 2,600 Office supplies expense 800 Total general and administrative expenses 29,900 Total expenses 89,400 Net income $ 22,750
*Cost of goods sold (alternative computation): Merchandise inventory, August 31, 2010 $ 25,000 Total cost of merchandise purchased (from part 2) 88,600 Merchandise available for sale 113,600 Merchandise inventory, August 31, 2011 31,000 Cost of goods sold 82,600
Problem 4-4A (Concluded)
4. Single-step income statement
BIZKID COMPANY
Income Statement
For Year Ended August 31, 2011
Net sales $194,750 Expenses Cost of goods sold $82,600 Selling expenses 59,500 General and administrative expenses 29,900 Total expenses 172,000 Net income $ 22,750
Problem 4-5A (30 minutes)
Part 1
Closing entries:
Aug. 31 Sales 212,000 Income Summary 212,000 To close temporary accounts with credit balances.
Aug. 31 Income Summary 189,250 Sales Discounts 3,250 Sales Returns and Allowances 14,000 Cost of Goods Sold 82,600 Sales Salaries Expense 29,000 Rent Expense—Selling Space 10,000 Store Supplies Expense 2,500 Advertising Expense 18,000 Office Salaries Expense 26,500 Rent Expense—Office Space 2,600 Office Supplies Expense 800 To close temporary accounts with debit balances.
Aug. 31 Income Summary 22,750 Retained Earnings 22,750 To close the Income Summary account.
Aug. 31 Retained Earnings 8,000 Dividends 8,000 To close the dividends account.
Problem 4-5A (Concluded)
Part 2
The first step is to determine the amount of purchases that are subject to a discount during the year:
|Invoice cost of merchandise purchases |$91,000 |
|Purchase returns and allowances | (4,400) |
|Total cost of merchandise payable |$86,600 |
This amount is used to determine the maximum discount, which is then compared to the actual discount:
|Maximum discount available (3% x $86,600) |$ 2,598 |
|Purchase discounts received | (1,900) |
|Purchase discounts missed |$ 698 |
As a percent of available discounts ($698/$2,598) 26.9%
This analysis suggests that nearly 27% of available discounts have been missed. As a result, it would appear that cash is not being well managed. Management should try to identify a better system for ensuring that all favorable discounts are taken. It is possible that the discounts not taken are actually not favorable to the company—further information is required to assess this possibility.
Part 3
The first step is to compute this year’s sales returns and allowances rate:
|Sales |$212,000 |
|Sales returns and allowances |$ 14,000 |
|Percent of returns and allowances to sales |6.6% |
This calculation shows that the company’s customers are returning or requiring allowances on items at a higher rate than the 5% rate observed in prior years. It appears that management should investigate the situation to see why there are more dissatisfied customers this year than in prior years.
Problem 4-6AB (50 minutes)
|REX COMPANY |
|Work Sheet |
|For Year Ended January 31, 2011 |
| |Unadjusted
Trial Balance |
Adjustments |Adjusted
Trial Balance |Income
Statement |
Balance Sheet | |Account Title |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. | |Cash |2,200 | | | | | |2,200 | | | |2,200 | | |Merchandise inventory |11,500 | | | |(d) |400 |11,100 | | | |11,100 | | |Store supplies |4,800 | | | |(a) |3,150 |1,650 | | | |1,650 | | |Prepaid insurance |2,300 | | | |(b) |1,500 |800 | | | |800 | | |Store equipment |41,900 | | | | | |41,900 | | | |41,900 | | |Accum. depreciation—Store eq | |15,000 | | |(c) |1,400 | |16,400 | | | |16,400 | |Accounts payable | |9,000 | | | | | |9,000 | | | |9,000 | |Common stock | |5,000 | | | | | |5,000 | | | |5,000 | |Retained earnings | |27,000 | | | | | |27,000 | | | |27,000 | |Dividends |2,000 | | | | | |2,000 | | | |2,000 | | |Sales | |104,000 | | | | | |104,000 | |104,000 | | | |Sales discounts |1,000 | | | | | |1,000 | |1,000 | | | | |Sales returns and allowances |2,000 | | | | | |2,000 | |2,000 | | | | |Cost of goods sold |37,400 | |(d) |400 | | |37,800 | |37,800 | | | | |Depreciation expense—Store eq |0 | |(c) |1,400 | | |1,400 | |1,400 | | | | |Salaries expense |31,000 | | | | | |31,000 | |31,000 | | | | |Insurance expense |0 | |(b) |1,500 | | |1,500 | |1,500 | | | | |Rent expense |14,000 | | | | | |14,000 | |14,000 | | | | |Store supplies expense |0 | |(a) |3,150 | | |3,150 | |3,150 | | | | |Advertising expense | 9,900 |______ | |____ | |____ | 9,900 |______ | 9,900 |______ |______ |______ | |Totals |160,000 |160,000 | |6,450 | |6,450 |161,400 |161,400 |101,750 |104,000 |59,650 |57,400 | |Net income | | | | | | | | | 2,250 |______ |______ | 2,250 | |Totals | | | | | | | | |104,000 |104,000 |59,650 |59,650 | |
Problem 4-1A (40 minutes)
Aug. 1 Merchandise Inventory 6,000 Accounts Payable—Abilene 6,000 Purchased goods on credit.
4 Accounts Payable—Abilene 100 Cash 100 Paid freight for Abilene.
5 Accounts Receivable—Lux 4,200 Sales 4,200 Sold goods on credit.
5 Cost of Goods Sold 3,000 Merchandise Inventory 3,000 To record the cost of August 5 sale.
8 Merchandise Inventory 5,540 Accounts Payable—Welch 5,540 Purchased goods on credit.
9 Delivery Expense 120 Cash 120 Paid shipping charges on August 5 sale.
10 Sales Returns and Allowances 700 Accounts Receivable—Lux 700 …show more content…
Customer returned merchandise.
10 Merchandise Inventory 500 Cost of Goods Sold 500 Returned goods to inventory.
12 Accounts Payable—Welch 800 Merchandise Inventory 800 Received a credit memorandum for August 8 purchase.
Problem 4-1A (Concluded)
Aug. 15 Cash 3,430 Sales Discounts 70 Accounts Receivable—Lux 3,500 Collected receivable within 2% discount period.
18 Accounts Payable—Welch 4,740 Merchandise Inventory* 45 Cash** 4,695 Paid payable within discount period * (1% x [$5,300 - $800]) **([100%-1%] x [$5,300 - $800]) + $240 shipping.
19 Accounts Receivable—Trax 3,600 Sales 3,600 Sold goods on credit.
19 Cost of Goods Sold 2,500 Merchandise Inventory 2,500 To record cost of the August 19 sale.
22 Sales Returns and Allowances 600 Accounts Receivable—Trax 600 Issued credit memorandum.
29 Cash 2,970 Sales Discounts (1%) 30 Accounts Receivable—Trax 3,000 Collected receivable within discount period.
30 Accounts Payable—Abilene 5,900 Cash
5,900 Paid payable ($6,000 - $100); discount period has expired.
Problem 4-2A (40 minutes)
July 1 Merchandise Inventory 6,000 Accounts Payable—Black 6,000 Purchased goods on credit.
2 Accounts Receivable—Coke 800 Sales 800 Sold goods on credit.
2 Cost of Goods Sold 500 Merchandise Inventory 500 To record cost of the July 2 sale.
3 Merchandise Inventory 100 Cash 100 Paid freight on incoming goods.
8 Cash 1,600 Sales 1,600 Sold goods for cash.
8 Cost of Goods Sold 1,200 Merchandise Inventory 1,200 To record cost of the July 8 sale.
9 Merchandise Inventory 2,300 Accounts Payable—Lane 2,300 Purchased goods on credit.
11 Accounts Payable—Lane 200 Merchandise Inventory 200 Received credit memo from returning goods to supplier.
12 Cash 784 Sales Discounts (2%) 16 Accounts Receivable—Coke 800 Collected receivable within the discount period.
Problem 4-2A (Concluded)
July 16 Accounts Payable—Black 6,000 Merchandise Inventory (1%) 60 Cash 5,940 Paid payable within discount period.
19 Accounts Receivable—AKP 1,250 Sales 1,250 Sold goods on credit.
19 Cost of Goods Sold 900 Merchandise Inventory 900 To record cost of the July 19 sale.
21 Sales Returns and Allowances 150 Accounts Receivable—AKP 150 Issued credit memo for allowance on goods sold to customer.
24 Accounts Payable—Lane 2,100 Merchandise Inventory * 42 Cash 2,058 Paid payable in discount period (*2% x $2,100).
30 Cash 1,078 Sales Discounts (2%) 22 Accounts Receivable—AKP 1,100 Collected receivable within discount period. [($1,250 - $150) x .02]
31 Accounts Receivable—Coke 5,000 Sales 5,000 Sold goods on credit.
31 Cost of Goods Sold 3,200 Merchandise Inventory 3,200 To record cost of the July 31 sale.
Problem 4-3A (60 minutes)
Part 1
Adjustment (a)
Jan 31 Store Supplies Expense 3,150 Store Supplies 3,150 To record store supplies expense ($4,800 - $1,650).
Adjustment (b)
Jan 31 Insurance Expense 1,500 Prepaid Insurance 1,500 To record expired insurance.
Adjustment (c)
Jan 31 Depreciation Expense—Store Equip 1,400 Accumulated Deprec.—Store Equip 1,400 To record depreciation expense.
Adjustment (d)
Jan 31 Cost of Goods Sold 400 Merchandise Inventory 400 To adjust inventory for shrinkage ($11,500 - $11,100).
Problem 4-3A (Continued)
Part 2 Multiple-step income statement:
REX COMPANY
Income Statement
For Year Ended January 31, 2011
Sales $104,000 Less: Sales discounts $ 1,000 Sales returns and allowances 2,000 3,000 Net sales 101,000 Cost of goods sold* 37,800 Gross profit 63,200
Expenses Selling expenses Depreciation expense—Store equipment 1,400 Sales salaries expense** 15,500 Rent expense—Selling space** 7,000 Store supplies expense 3,150 Advertising expense 9,900 Total selling expenses 36,950
General and administrative expenses Insurance expense 1,500 Office salaries expense 15,500 Rent expense—Office space 7,000 Total general and administrative expenses 24,000 Total expenses 60,950 Net income $ 2,250
* $37,800 = $37,400 + $400 (shrinkage)
**Salaries and rent expenses are equally divided between selling activities and general and administrative activities.
Problem 4-3A (Concluded)
Part 3 Single-step income statement:
REX COMPANY
Income Statement
For Year Ended January 31, 2011
Net sales $101,000 Expenses Cost of goods sold $37,800 Selling expenses 36,950* General and administrative expense 24,000** Total expenses 98,750 Net income $ 2,250
*$3,150 + $1,400 + $9,900 + 1/2($31,000 + $14,000) = $36,950 **$1,500 + 1/2($31,000 + $14,000) = $24,000
Part 4
Current assets
| Cash |$ 2,200 |
| Merchandise inventory* |11,100 |
| Store supplies** |1,650 |
| Prepaid insurance*** | 800 |
| Total current assets |$15,750 |
|Current liabilities |$ 9,000 |
|Current ratio ($15,750 / $9,000) |1.75 |
*$11,500 - $400 = $11,100 **$4,800-$3,150 = $1,650 ***$ 2,300 - $1,500 = $800
|Quick assets (Cash) |$ 2,200 |
|Current liabilities |$ 9,000 |
|Acid-test ratio ($2,200 / $9,000) |0.24 |
|Net Sales |$101,000 |
|Cost of goods sold | 37,800 |
|Gross margin |$ 63,200 |
|Gross margin ratio ($63,200 / $101,000) |0.63 |
Problem 4-4A (40 minutes)
1. Net sales:
|Sales | $212,000 |
|Less: Sales discounts | (3,250) |
| Sales returns and allowances | (14,000) |
|Net sales | $194,750 |
2. Cost of Merchandise purchased:
|Invoice cost of merchandise purchased | $ 91,000 |
|Purchase discounts received | (1,900) |
|Purchase returns and allowances | (4,400) |
|Costs of transportation-in | 3,900 |
|Total cost of merchandise purchased | $ 88,600 |
Problem 4-4A (Continued)
3. Multiple-step income statement
BIZKID COMPANY
Income Statement
For Year Ended August 31, 2011
Sales $212,000 Less: Sales discounts $ 3,250 Sales returns and allowances 14,000 17,250 Net sales 194,750 Cost of goods sold * 82,600 Gross profit 112,150 Expenses Selling expenses Sales salaries expense 29,000 Rent expense—Selling space 10,000 Store supplies expense 2,500 Advertising expense 18,000 Total selling expenses 59,500
General and administrative expenses Office salaries expense 26,500 Rent expense—Office space 2,600 Office supplies expense 800 Total general and administrative expenses 29,900 Total expenses 89,400 Net income $ 22,750
*Cost of goods sold (alternative computation): Merchandise inventory, August 31, 2010 $ 25,000 Total cost of merchandise purchased (from part 2) 88,600 Merchandise available for sale 113,600 Merchandise inventory, August 31, 2011 31,000 Cost of goods sold 82,600
Problem 4-4A (Concluded)
4. Single-step income statement
BIZKID COMPANY
Income Statement
For Year Ended August 31, 2011
Net sales $194,750 Expenses Cost of goods sold $82,600 Selling expenses 59,500 General and administrative expenses 29,900 Total expenses 172,000 Net income $ 22,750
Problem 4-5A (30 minutes)
Part 1
Closing entries:
Aug. 31 Sales 212,000 Income Summary 212,000 To close temporary accounts with credit balances.
Aug. 31 Income Summary 189,250 Sales Discounts 3,250 Sales Returns and Allowances 14,000 Cost of Goods Sold 82,600 Sales Salaries Expense 29,000 Rent Expense—Selling Space 10,000 Store Supplies Expense 2,500 Advertising Expense 18,000 Office Salaries Expense 26,500 Rent Expense—Office Space 2,600 Office Supplies Expense 800 To close temporary accounts with debit balances.
Aug. 31 Income Summary 22,750 Retained Earnings 22,750 To close the Income Summary account.
Aug. 31 Retained Earnings 8,000 Dividends 8,000 To close the dividends account.
Problem 4-5A (Concluded)
Part 2
The first step is to determine the amount of purchases that are subject to a discount during the year:
|Invoice cost of merchandise purchases |$91,000 |
|Purchase returns and allowances | (4,400) |
|Total cost of merchandise payable |$86,600 |
This amount is used to determine the maximum discount, which is then compared to the actual discount:
|Maximum discount available (3% x $86,600) |$ 2,598 |
|Purchase discounts received | (1,900) |
|Purchase discounts missed |$ 698 |
As a percent of available discounts ($698/$2,598) 26.9%
This analysis suggests that nearly 27% of available discounts have been missed. As a result, it would appear that cash is not being well managed. Management should try to identify a better system for ensuring that all favorable discounts are taken. It is possible that the discounts not taken are actually not favorable to the company—further information is required to assess this possibility.
Part 3
The first step is to compute this year’s sales returns and allowances rate:
|Sales |$212,000 |
|Sales returns and allowances |$ 14,000 |
|Percent of returns and allowances to sales |6.6% |
This calculation shows that the company’s customers are returning or requiring allowances on items at a higher rate than the 5% rate observed in prior years. It appears that management should investigate the situation to see why there are more dissatisfied customers this year than in prior years.
Problem 4-6AB (50 minutes)
|REX COMPANY |
|Work Sheet |
|For Year Ended January 31, 2011 |
| |Unadjusted
Trial Balance |
Adjustments |Adjusted
Trial Balance |Income
Statement |
Balance Sheet | |Account Title |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. | |Cash |2,200 | | | | | |2,200 | | | |2,200 | | |Merchandise inventory |11,500 | | | |(d) |400 |11,100 | | | |11,100 | | |Store supplies |4,800 | | | |(a) |3,150 |1,650 | | | |1,650 | | |Prepaid insurance |2,300 | | | |(b) |1,500 |800 | | | |800 | | |Store equipment |41,900 | | | | | |41,900 | | | |41,900 | | |Accum. depreciation—Store eq | |15,000 | | |(c) |1,400 | |16,400 | | | |16,400 | |Accounts payable | |9,000 | | | | | |9,000 | | | |9,000 | |Common stock | |5,000 | | | | | |5,000 | | | |5,000 | |Retained earnings | |27,000 | | | | | |27,000 | | | |27,000 | |Dividends |2,000 | | | | | |2,000 | | | |2,000 | | |Sales | |104,000 | | | | | |104,000 | |104,000 | | | |Sales discounts |1,000 | | | | | |1,000 | |1,000 | | | | |Sales returns and allowances |2,000 | | | | | |2,000 | |2,000 | | | | |Cost of goods sold |37,400 | |(d) |400 | | |37,800 | |37,800 | | | | |Depreciation expense—Store eq |0 | |(c) |1,400 | | |1,400 | |1,400 | | | | |Salaries expense |31,000 | | | | | |31,000 | |31,000 | | | | |Insurance expense |0 | |(b) |1,500 | | |1,500 | |1,500 | | | | |Rent expense |14,000 | | | | | |14,000 | |14,000 | | | | |Store supplies expense |0 | |(a) |3,150 | | |3,150 | |3,150 | | | | |Advertising expense | 9,900 |______ | |____ | |____ | 9,900 |______ | 9,900 |______ |______ |______ | |Totals |160,000 |160,000 | |6,450 | |6,450 |161,400 |161,400 |101,750 |104,000 |59,650 |57,400 | |Net income | | | | | | | | | 2,250 |______ |______ | 2,250 | |Totals | | | | | | | | |104,000 |104,000 |59,650 |59,650 | |