The unadjusted trial balance of World Enterprises for
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The unadjusted trial balance of World Enterprises for the year ending December 31, 2014, follows: Additional informati
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The unadjusted trial balance of World Enterprises for the year ending December 31, 2014, follows: Additional information: 1. There is $750 of supplies on hand on December 31, 2014. 2. The one-year insurance policy was purchased on March 1, 2014. 3. Depreciation expense for the year is $10,000 for the equipment and $4,500 for the furniture. 4. Accrued interest expense at December 31, 2014, is $675. 5. Unearned revenue of $975 is still unearned at December 31, 2014. On the sales that were earned, cost of goods sold was $1,750. 6. A physical count of merchandise inventory indicates $32,750 on hand on December 31, 2014. 7. Of the mortgage payable, $8,500 is to be paid in 2015. 8. Seok Kim invested $5,000 cash in the business on July 19, 2014. 9. Last year, the company had a gross profit margin of 35%, and profit margin of 10%. Instructions (a) Prepare the adjusting journal entries assuming they are prepared annually. (b) Prepare a multiple-step income statement, statement of owner's equity, and classified balance sheet. (c) Prepare the closing entries. (d) Calculate the gross profit margin and profit margin for 2014. Compare with the 2013 ratios and comment on any trends. Taking It Further Compare the presentation of information in a multiple-step income statement for a service company with one for merchandising company. How would they be similar and how would they be different?
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