I am having trouble with this question can anyone help me plz
The trial balance of the Coleman-Foose Company was prepared from the record of the company on November 30, 20X2, the close of its fiscal year. COLEMAN-FOOSE COMPANY Trial Balance November 30, 20X2 Cash $ 12,200 Accounts Receivable 16,300 Allowance for Doubtful Accounts $ 200 Inventory—12/1/X1 14,175 Unexpired Insurance 660 Supplies on Hand 265 Land 18,000 Building 22,000 Accumulated Depreciation—Building 6,000 Office Equipment 6,800 Accumulated Depreciation—Office Equipment 2,100 Accounts Payable 11,400 Mortgage Payable 9,000 Capital Stock 40,000 Retained Earnings 2,200 Dividends 8,000 Sales 172,000 Sales Returns and Allowances 600 Sales Discounts 2,700 Purchases 109,800 Purchase Returns and Allowances 1,200 Purchase Discounts 2,300 Transportation-In 900 Salaries Expense 23,000 Travel Expense 5,200 Office Expense 1,300 Professional Fee Expense 2,500 Telephone Expense 1,200 Building Repair Expense 800 $246,400 $246,400
Additional data: a. The Allowance for Doubtful Accounts should be increased by $400. b. Merchandise Inventory at November 30, 20X2, was $16,200. c. Unexpired Insurance on November 30, 20X2, amounted to $440. d. Supplies on Hand November 30, 20X2, $120. e. Building depreciation is calculated at 5% per year. f. Office depreciation is calculated at 10% per year. g. Salaries accrued at November 30, 20X2, are $400.
REQUIRED: 1. Prepare a work sheet. (The adjusted trial balance columns are to be omitted.) 2. Prepare an income statement for the year. 3. Prepare closing entries.
To prepare a worksheet, follow these steps:
Step 1: Create the heading of the worksheet
Write the company name, the title "Worksheet," and the period covered (November 30, 20X2) at the top of the document.
Step 2: Divide the worksheet into relevant columns
Create the following column headings from left to right:
- Account: list all the accounts from the trial balance.
- Trial Balance: enter the balances from the trial balance in this column.
- Adjustments: leave this column blank for now.
- Adjusted Trial Balance: also leave this column blank for now.
- Income Statement: leave this column blank.
- Balance Sheet: leave this column blank.
Step 3: Copy the account balances from the trial balance to the Trial Balance column
Copy each account and its corresponding balance from the trial balance to the Trial Balance column of the worksheet, starting from the first row beneath the column heading.
Step 4: Record the adjustments in the Adjustments column
Referencing the additional data provided, make the necessary adjustments to the account balances and record them in the Adjustments column.
a. Increase the Allowance for Doubtful Accounts by $400:
Enter -$400 in the Adjustments column for the Allowance for Doubtful Accounts.
b. Adjust Merchandise Inventory to $16,200:
Subtract $975 from the Merchandise Inventory balance in the Adjustments column. ($14,175 - $975 = $16,200)
c. Adjust Unexpired Insurance to $440:
Subtract $220 from the Unexpired Insurance balance in the Adjustments column. ($660 - $220 = $440)
d. Adjust Supplies on Hand to $120:
Subtract $145 from the Supplies on Hand balance in the Adjustments column. ($265 - $145 = $120)
e. Calculate Building depreciation at 5% per year:
Calculate the depreciation expense and record it in the Adjustments column. Multiply the Building balance by 5% ($22,000 * 5% = $1,100).
f. Calculate Office depreciation at 10% per year:
Calculate the depreciation expense and record it in the Adjustments column. Multiply the Office Equipment balance by 10% ($6,800 * 10% = $680).
g. Record the accrued Salaries expense:
Add $400 to the Salaries Expense balance in the Adjustments column.
Step 5: Calculate the Adjusted Trial Balance
In the Adjusted Trial Balance column, calculate the new balances for each account after considering the adjustments.
For each account, add the Trial Balance balance and the Adjustments balance together.
Step 6: Complete the Income Statement and Balance Sheet sections
Based on the account classification, transfer the Adjusted Trial Balance balances to the appropriate columns for the Income Statement and Balance Sheet sections.
Step 7: Calculate the totals for the Income Statement and Balance Sheet columns
Calculate the total amounts for the Income Statement and Balance Sheet sections by summing up the respective columns.
Step 8: Calculate the Net Income or Net Loss
Subtract the total expenses from the total revenue in the Income Statement section to calculate the Net Income or Net Loss.
This completes the worksheet preparation process. Use the worksheet to answer questions 2 and 3 about the income statement and closing entries.