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    Sharp Co. for year-end 2007: accounting cycle problem

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    The following information relates to Sharp Co. for year-end 2007.
    1. The allowance for bad debts should be 6% of accounts receivables.
    2. A physical count of supplies at year-end showed $3,200 on hand.
    3. The note receivable came from a customer on October 1. It was a six month note at 6% interest.
    4. On September 1 the company paid $12,000 for years rent on the office building.
    5. The useful life of the equipment is 10 years and the company uses the straight line method.
    6. Accrued wages at year-end amounted to $900.
    7. The note payable was taken out on June 1. It is a two year note at 8%.
    8. On October 1 the company received $6,000 for a customer for future work. As of year-end 2/3 of the amount has been earned.
    9. A count of year-end inventory showed $90,000 on hand.
    10. The investment in stock is long term and the year end value was equal to the cost of the investment.
    11. The land is held for future use.
    12. The company purchased a one year insurance policy on May 1 and recorded it in Prepaid Insurance.
    13. The company is 100,000 shares of common stock outstanding.
    Required:
    1. Prepare the adjusted trial balance.
    2. Prepare an income statement, statement of retained earnings and a classified balance sheet.

    Unadjusted Trial balance:
    Cash: 36,000
    Accounts Receivable: 80,000
    Allowance for Bad Debts 2,000
    Supplies 3,000
    Inventory 110,000
    Note Rec 40,000
    Interest Rec
    Prepaid Rent
    Prepaid Insur 2,400
    Investments 10,000
    Equipment 120,000
    land 20,000
    Accum. Depr. 40,000
    Accts Pay 38,000
    Wages Pay.
    Notes Pay. 60,000
    Interest Pay.
    Unearned Rev. 6,000

    common stock: 100,000
    retained earns. 35,500
    dividends 4,000
    sales 348,000
    interest rev.
    cost of goods 140,000
    wage expense 42,000
    rent expense 12,000
    deprec. expense
    interest exp
    supplies ex 1,1,00
    insurance exp 6,000
    bad debt exp 3,000
    totals 629,500 629,500

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    https://brainmass.com/business/the-accounting-cycle/sharp-co-for-year-end-2007-accounting-cycle-problem-422441

    Solution Summary

    Your tutorial is in Excel and sets up an unadjusted trial balance, adjusting entries, the adjusted trial balance and the required financial statements. This is now a template for similar problems.

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