Answered: $ 92,100 361,500 24,600 2,000 2,190,000…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Tarkington Freight Service provides delivery of merchandise to retail grocery stores in the Northeast. At the beginning of 2019, the following account balances were available:                                 a. Tarkington performed deliveries for customers, all on credit, for $2,256,700. Tarkington also made cash deliveries for $686,838.
b. There remains $286,172 of accounts receivable to be collected at December 31, 2019.                                                               c. Tarkington purchased advertising of $138,100 during 2019 and debited the amount to prepaid
advertising.
d. Supplies of $27,200 were purchased on credit and debited to the supplies account.
e. Accounts payable at the beginning of 2019 were paid early in 2019. There remains $5,600 of
accounts payable unpaid at year end.
f. Wages payable at the beginning of 2019 were paid early in 2019. Wages were earned and
paid during 2019 in the amount of $666,142.
g. During the year, Trish Hurd, a principal stockholder, purchased an automobile costing
$42,000 for her personal use.
h. One-half year’s interest at 6% annual rate was paid on the note payable on July 1, 2019.
i. Property taxes were paid on the land and buildings in the amount of $170,000.
j. Dividends were declared and paid in the amount of $25,000.
The following data are available for adjusting entries:
. Supplies in the amount of $13,685 remained unused at year end.
. Annual depreciation on the warehouse building is $70,000.
. Annual depreciation on the warehouse equipment is $145,000.
. Wages of $60,558 were unrecorded and unpaid at year end.
. Interest for 6 months at 6% per year on the note is unpaid and unrecorded at year end.
. Advertising of $14,874 remained unused at the end of 2019.
. Income taxes of $482,549 related to 2019 are unpaid at year end.
Required:
1. Post the 2019 beginning balances to T-accounts. Prepare journal entries for Transactions a
through j and post the journal entries to T-accounts, adding any new T-accounts you need.
2. Prepare the adjustments and post the adjustments to the T-accounts, adding any new
T-accounts you need.
3. Prepare an income statement.
4. Prepare a retained earnings statement.
5. Prepare a classified balance sheet
6. Prepare closing entries.
7. CONCEPTUAL CONNECTION Did you include Transaction g among Tarkington’s 2019
journal entries? Why or why not?

$ 92,100
361,500
24,600
2,000
2,190,000
Accumulated Depreciation
(Equipment)
Land
Cash
$ 580,000
304,975
17,600
30,200
1,000,000
1,400,000
462,375
Accounts Receivable
Supplies
Prepaid Advertising
Building
Accumulated Depreciation
(Building)
Equipment
Accounts Payable
Wages Payable
Notes Payable (due in 2023)
Common Stock
280,000
795,000
Retained Earnings, 12/31/2018

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