Superior Hardwood Company distributes hardwood products to s

Superior Hardwood Company distributes hardwood products to small furniture manufacturers. The adjusted trial balance data given below is from the firm’s worksheet for the year ended December 31, 2019.

Required:

Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expenses.

Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period.

Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than a year.

Analyze:
What is the current ratio for this business?

ACCOUNTS	Debit	Credit
Cash	$	23,900
Petty Cash Fund		600
Notes Receivable, due 2020		11,600
Accounts Receivable		94,000
Allowance for Doubtful Accounts				$	5,800
Merchandise Inventory		232,000
Warehouse Supplies		2,840
Office Supplies		1,400
Prepaid Insurance		9,600
Land		44,000
Building		176,000
Accumulated Depreciation—Building					52,800
Warehouse Equipment		36,000
Accumulated Depreciation—Warehouse Equipment					16,800
Delivery Equipment		50,000
Accumulated Depreciation—Delivery Equipment					19,200
Office Equipment		24,000
Accumulated Depreciation—Office Equipment					11,400
Notes Payable, due 2020					20,000
Accounts Payable					38,800
Interest Payable					560
Mortgage Payable					60,000
Loans Payable, Long-term					16,000
Charles Ronie, Capital (Jan. 1)					449,760
Charles Ronie, Drawing		126,800
Income Summary		242,000			232,000
Sales					1,681,000
Sales Returns and Allowances		18,000
Interest Income					1,560
Purchases		765,000
Freight In		13,600
Purchases Returns and Allowances					8,240
Purchases Discounts					10,960
Warehouse Wages Expense		197,600
Warehouse Supplies Expense		6,900
Depreciation Expense—Warehouse Equipment		5,600
Salaries Expense—Sales		267,200
Travel and Entertainment Expense		21,300
Delivery Wages Expense		60,130
Depreciation Expense—Delivery Equipment		9,600
Salaries Expense—Office		70,400
Office Supplies Expense		3,800
Insurance Expense		6,000
Utilities Expense		9,090
Telephone Expense		6,320
Payroll Taxes Expense		58,000
Property Taxes Expense		5,400
Uncollectible Accounts Expense		5,600
Depreciation Expense—Building		8,800
Depreciation Expense—Office Equipment		3,800
Interest Expense		8,000
Totals	$	2,624,880		$	2,624,880

its Net sales of goods sold 2018 erence livered cost of purchases on sales and admir strative oxpenses

Solution

1.

2.

3.

Analyze:

Current ratio = Current assets/Current liabilities = $370140/$59360 = 6.24

SUPERIOR HARDWOOD COMPANY
Income Statement
For the Year Ended December 31, 2019
Operating revenue
Sales				1681000
Less: Sales returns and allowances				18000
Net sales				1663000
Cost of goods sold
Merchandise inventory, January 1, 2019			242000
Purchases		765000
Freight in		13600
Delivered cost of purchases		778600
Purchases discounts	10960
Purchases returns and allowances	8240	19200
Net delivered cost of purchases			759400
Total merchandise available for sale			1001400
Merchandise inventory, December 31, 2019			232000
Cost of goods sold				769400
Gross profit on sales				893600
Operating expenses
Warehouse expenses
Warehouse wages expense		197600
Warehouse supplies expense		6900
Depreciation expense-warehouse equipment		5600
Total warehouse expenses			210100
Selling expenses
Salaries expense-sales		267200
Travel and entertainment expense		21300
Delivery wages expense		60130
Depreciation expense-delivery equipment		9600
Total selling expenses			358230
General and administrative expenses
Salaries expense-office		70400
Office supplies expense		3800
Insurance expense		6000
Utilities expense		9090
Telephone expense		6320
Payroll taxes expense		58000
Property taxes expense		5400
Uncollectible accounts expense		5600
Depreciation expense-building		8800
Depreciation expense-office equipment		3800
Total general and administrative expenses			177210
Total operating expenses				745540
Income from operations				148060
Other income
Interest income			1560
Other expenses
Interest expense			8000
Net nonoperating expense				6440
Net income for year				141620