Question l The taccounts on page 2 show account balances as

Question l The t-accounts on page 2 show account balances as of January 1, 2018 for Honeydukes Sweet Shop Listed below is a summary of the company\'s transactions for 2018, as well as other information about account balances 1. 2. 3. Retail sales for th year totaled $1,800, $1,200 was received in cash and $600 was on account. Purchased $1,340 of inventory on account. Made payments to suppliers (for inventory previously purchased on account) in the amount of 4. 5. 6. $1,352 Collected $604 on accounts receivable Made payments of $220 for miscellaneous expenses Paid wages to employees during the year totaling $155. The beginning balance in Wages Payable is the amount of wages employees earned in December 2017, which were paid in January 2018 st years with semi-annual interest payments at an annual rate of Made a semi-annual interest payment of $6 to the bank on September 30, 2018 (see part 7) Dividends of $60 were declared on December 15, 2018. The dividends will be paid to common 8. 9. stockholders on January 8, 2019 Other information as of December 31, 2018 * Inventories on hand at December 31, 2018 were $160 * Depreciation expense for the year was $24 °Wages of $19 were earned by employees during December 2018 but will be paid in January 2012 The next semi-annual interest payment will be made on March 31, 2019 * You may ignore income taxes Require Prepare the 2018 Income Statement and Balance Sheet for Honeydukes Sweet Shop. Use the t-accounts provided to show the effect of each transaction and any adjusting entries. Beginning balances are provided. You should add accounts as needed. You may choose to write out journal entries, but they are not required. Use the space provided on page 3 for vour income statement and balance sheet See next page for Honeydukes Sweet Shop t-accounts (January 1, 2018 balances shown)

Solution

2018 Income Statement and Balance Sheet is prepared by using the closing balance of general ledger as shown below:

Income Statement

Balance Sheet

Cash		Rent Revenue
Particulars	Amount	Particulars	Amount		Particulars	Amount	Particulars	Amount
Opening	53	3	1,352		Income summary	1,800	1	1,800
1	1,200	5	220			1,800		1,800
4	604	6	155				Closing balance	0
7	150	8	6
	2,007		1,733		Miscellaneous expenses
Closing balance	274				Particulars	Amount	Particulars	Amount
					5	220	Income summary	220
Account Receivable			220		220
Particulars	Amount	Particulars	Amount		Closing balance	0
Opening	14	4	604
1	600				Wages Expense
	614		604		Particulars	Amount	Particulars	Amount
Closing balance	10				6	139	Income summary	158
					c.	19
Inventory			158		158
Particulars	Amount	Particulars	Amount		Closing balance	0
Opening	157	a.	1,337
2	1,340				Loan payable
	1,497		1,337		Particulars	Amount	Particulars	Amount
Closing balance	160						7	150
						0		150
PP&E				Closing balance	150
Particulars	Amount	Particulars	Amount
Opening	250				Interest Expense
	250		0		Particulars	Amount	Particulars	Amount
Closing balance	250				8	6	Income summary	9
					d. (150*8%*3/12)	3
Accumulated dep			9		9
Particulars	Amount	Particulars	Amount		Closing balance	0
		Opening	60		Dividend payable
		b.	24		Particulars	Amount	Particulars	Amount
		Closing balance	84				9	60
						0		60
Accounts payable				Closing balance	60
Particulars	Amount	Particulars	Amount
3	1,352	Opening	55		Dividend Expense
		2	1,340		Particulars	Amount	Particulars	Amount
	1,352		1,395		9	60	Retained Earnings	60
		Closing balance	43			60		60
Wages payable		Closing balance	0
Particulars	Amount	Particulars	Amount
6	16	Opening	16		Supplies Expense
		c.	19		Particulars	Amount	Particulars	Amount
	16		35		a.	1,337	Income summary	1,337
		Closing balance	19			1,337		1,337
Common Stock		Closing balance	0
Particulars	Amount	Particulars	Amount
		Opening	200		Depreciation exp
			200		Particulars	Amount	Particulars	Amount
		Closing balance	200		b	24	Income summary	24
						24		24
Retained earnings		Closing balance	0
Particulars	Amount	Particulars	Amount
Dividend Expense	60	Opening	143		Interest Payable
		Retained Earnings	52		Particulars	Amount	Particulars	Amount
	60		195				d.	3
		Closing balance	135			0		3
							Closing balance	3