The adjusted trial balance of King Cornelius Company follows:
|
KING CORNELIUS COMPANY |
||
|
Cash |
$ 5,600 |
|
|
Accounts receivable |
37,100 |
|
|
Inventory |
25,800 |
|
|
Supplies |
1,300 |
|
|
Prepaid rent |
1,000 |
|
|
Furniture |
26,500 |
|
|
Accumulated depreciation |
|
$ 23,800 |
|
Accounts payable |
|
6,300 |
|
Salary payable |
|
2,000 |
|
Interest payable |
|
600 |
|
Unearned sales revenue |
|
2,400 |
|
Note payable, long term |
|
35,000 |
|
Common stock |
|
5,000 |
|
Retained earnings |
|
17,200 |
|
Dividends |
48,000 |
|
|
Sales revenue |
|
244,000 |
|
Interest revenue |
|
2,000 |
|
Sales discounts |
10,000 |
|
|
Sales returns and allowances |
8,000 |
|
|
Cost of goods sold |
81,000 |
|
|
Salary expense |
72,700 |
|
|
Rent expense |
7,700 |
|
|
Depreciation expense |
2,700 |
|
|
Utilities expense |
5,800 |
|
|
Supplies expense |
2,200 |
|
|
Interest expense |
2,900 |
|
|
Total |
$338,300 |
$338,300 |
Requirements
1. Journalize the closing entries at December 31. Post to the Income summary account as an accuracy check on net income. Recall that the credit balance closed out of Income summary should equal net income as computed on the income statement. Also post to Retained earnings, whose balance should agree with the amount reported on the balance sheet.
2. Prepare the company’s multi step income statement, statement of retained earnings, and balance sheet in account form. Draw arrows linking the statements.
Note: King Cornelius doesn’t separate its operating expenses as either selling or general.
3. Compute the inventory turnover and days in inventory for 2014. Inventory at December 31, 2013, was $21,000. Turnover for 2013 was 3.0 times. Would you expect King Cornelius Company to be more profitable or less profitable in 2014 than in 2013? Why?