Use the following financial statements and additional inform

Use the following financial statements and additional information.

SANCHEZ INC.
Comparative Balance Sheets
June 30, 2017 and 2016

2017

2016

Assets

Cash

$

101,300

$

48,900

Accounts receivable, net

68,000

53,000

Inventory

69,000

96,000

Prepaid expenses

5,700

7,100

Total current assets

244,000

205,000

Equipment

179,000

166,000

Accum. depreciation—Equipment

(45,000

)

(15,000

)

Total assets

$

378,000

$

356,000

Liabilities and Equity

Accounts payable

$

33,000

$

40,000

Wages payable

7,000

17,000

Income taxes payable

3,600

4,000

Total current liabilities

43,600

61,000

Notes payable (long term)

43,000

85,000

Total liabilities

86,600

146,000

Equity

Common stock, $5 par value

250,000

180,000

Retained earnings

41,400

30,000

Total liabilities and equity

$

378,000

$

356,000

SANCHEZ INC.
Income Statement
For Year Ended June 30, 2017

Sales

$

940,000

Cost of goods sold

575,000

Gross profit

365,000

Operating expenses

Depreciation expense

$

77,000

Other expenses

93,000

Total operating expenses

170,000

195,000

Other gains (losses)

Gain on sale of equipment

5,200

Income before taxes

200,200

Income taxes expense

61,280

Net income

$

138,920

Additional Information

a.   A $43,000 note payable is retired at its $43,000 carrying (book) value in exchange for cash.

b.   The only changes affecting retained earnings are net income and cash dividends paid.

c.   New equipment is acquired for $75,000 cash.

d.   Received cash for the sale of equipment that had cost $62,000, yielding a $5,200 gain.

e.   Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

f.     All purchases and sales of inventory are on credit.

Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year to make a GENERAL JOURNAL.

SANCHEZ INC. Comparative Balance Sheets June 30, 2017 and 2016
	2017			2016
Assets
Cash	$	101,300			$	48,900
Accounts receivable, net		68,000				53,000
Inventory		69,000				96,000
Prepaid expenses		5,700				7,100
Total current assets		244,000				205,000
Equipment		179,000				166,000
Accum. depreciation—Equipment		(45,000	)			(15,000	)
Total assets	$	378,000			$	356,000
Liabilities and Equity
Accounts payable	$	33,000			$	40,000
Wages payable		7,000				17,000
Income taxes payable		3,600				4,000
Total current liabilities		43,600				61,000
Notes payable (long term)		43,000				85,000
Total liabilities		86,600				146,000
Equity
Common stock, $5 par value		250,000				180,000
Retained earnings		41,400				30,000
Total liabilities and equity	$	378,000			$	356,000

Solution

1) Note Payable

Note Payable Dr 43000

Cash Cr 43000

2) Acqutition of Equipment

Equipment Dr 75000

Cash Cr 75000

3) Sale of Equipment

Cash Dr 67200

Equipment Cr 62000

Gain on sale of Equipment Cr 5200

4) Sales

Account Receivable Dr 940000  

Sales     Cr 940000

5) Cost of Goods Sold

Cost of Goods Sold Dr 575000

Accounts Payable Cr 575000

6) Depreciation

Depreciation Dr 77000

Accumulated Depreciation Cr 77000

7) Other Expenses

Other Expense Dr 1400

Prepaid Expense Cr 1400

Wage Payable Dr 10000

Other Expense Cr 10000

P/L Dr 93000

Other Expense Cr 93000

Other Expense account Dr 101600

Cash Cr 101600

8) Income tax

Incometax Payable Dr 400

Income tax Expense Cr 400

P/L Dr 61280

Incometax Expense Cr 61280

Income tax Expense Dr 61680

Cash Cr 61680

9) Retained Earnings

P/L Dr 138920

Retained Earnings Cr 138920

10) Dividend Paid

Shareholders Dr 127520

Cash Cr 127520

11) Common Stock issued

Cash Dr 70000

Common Stock Cr 70000

12) Account Payable

Account Payable Dr 582000

Cash Cr 582000

13) Inventory

Cash Dr 27000

Inventory Cr 27000

14) Account Receivable

Cash Dr 925000

Account Receivable Cr 925000