Question: The Green Thumb Gardener is a retail store that sells plants, soil, and decorative pots. On December 31, 2019, the firm's general ledger contained the accounts and balances that appear below.
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ACCOUNTS AND BALANCES
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Cash
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$6,200
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Dr.
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Accounts Receivable
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3,100
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Dr.
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Allowance for Doubtful Accounts
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57
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Cr.
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Merchandise Inventory
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11,800
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Dr.
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Supplies
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1,250
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Dr.
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Prepaid Advertising
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900
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Dr.
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Store Equipment
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8,400
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Dr.
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Accumulated Depreciation-Store Equipment
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1,550
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Cr.
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|
Office Equipment
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1,900
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Dr.
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Accumulated Depreciation-Office Equipment
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330
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Cr.
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|
Accounts Payable
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2,675
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Cr.
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|
Social Security Tax Payable
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480
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Cr.
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|
Medicare Tax Payable
|
93
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Cr.
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|
Federal Unemployment Tax Payable
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|
|
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State Unemployment Tax Payable
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|
|
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Salaries Payable
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|
|
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Beth Argo, Capital
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27,947
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Cr.
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Beth Argo, Drawing
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20,500
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Dr.
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Sales
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92,548
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Cr.
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Sales Returns and Allowances
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1,150
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Dr.
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Purchases
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47,900
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Dr.
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Purchases Returns and Allowances
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480
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Cr.
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|
Rent Expense
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6,500
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Dr.
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Telephone Expense
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640
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Dr.
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Salaries Expense
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14,600
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Dr.
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Payroll Taxes Expense
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1,320
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Dr.
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Income Summary
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|
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Supplies Expense
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|
|
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Advertising Expense
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|
|
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Depreciation Expense-Store Equipment
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|
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Depreciation Expense-Office Equipment
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|
|
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Uncollectible Accounts Expense
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|
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ADJUSTMENTS: a.-b. Merchandise inventory on December 31, 2019, is $12,821.
c. During 2019, the firm had net credit sales of $40,000; the firm estimates that 0.7 percent of these sales will result in uncollectible accounts.
d. On December 31, 2019, an inventory of the supplies showed that items costing $300 were on hand.
e. On October 1, 2019, the firm signed a six-month advertising contract for $900 with a local newspaper and paid the full amount in advance.
f. On January 2, 2018, the firm purchased store equipment for $8,400. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $650.
g. On January 2, 2018, the firm purchased office equipment for $1,900. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $250.
h. On December 31, 2019, the firm owed salaries of $1,880 that will not be paid until 2020.
i. On December 31, 2019, the firm owed the employer's social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $1,880 of accrued wages.
j. On December 31, 2019, the firm owed federal unemployment tax (assume 0.6 percent) and state unemployment tax (assume 5.4 percent) on the entire $1,880 of accrued wages.
Required: 1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2019.
2. Enter the adjustments above in the Adjustments section of the worksheet.
3. Complete the worksheet.
Analyze: By what amount were the assets of the business affected by adjustments?