The Olive Finger Gardener is a retail store that sells plants, soil, and decorative pots. On October 31, 2018, the firm’s general ledger contained…
The Olive Finger Gardener is a retail store that sells plants, soil, and decorative pots. On October 31, 2018, the firm’s general ledger contained the accounts and balances that appear below.
ACCOUNTS AND BALANCES
Cash $5,800 Dr. Accounts Receivable 2,700 Dr. Allowance for Doubtful Accounts 53 Cr. Merchandise Inventory 11,400 Dr. Supplies 1,210 Dr. Prepaid Advertising 1,080 Dr. Store Equipment 8,160 Dr. Accumulated Depreciation—Store Equipment 1,510 Cr. Office Equipment 1,660 Dr. Accumulated Depreciation—Office Equipment 290 Cr. Accounts Payable 2,635 Cr. Social Security Tax Payable 440 Cr. Medicare Tax Payable 97 Cr. Federal Unemployment Tax Payable State Unemployment Tax Payable Salaries Payable Beth Argo, Capital 26,087 Cr. Beth Argo, Drawing 20,100 Dr. Sales 90,548 Cr. Sales Returns and Allowances 1,110 Dr. Purchases 46,700 Dr. Purchases Returns and Allowances 440 Cr. Rent Expense 6,100 Dr. Telephone Expense 600 Dr. Salaries Expense 14,200 Dr. Payroll Taxes Expense 1,280 Dr. Income Summary Supplies Expense Advertising Expense Depreciation Expense—Store Equipment Depreciation Expense—Office Equipment Uncollectible Accounts Expense
a.-b. Merchandise inventory on October 31, 2018, is $12,421.
- During 2018, the firm had net credit sales of $36,000; the firm estimates that 0.5 percent of these sales will result in uncollectible accounts.
- On December 31, 2018, an inventory of the supplies showed that items costing $280 were on hand.
- On October 1, 2018, the firm signed a six-month advertising contract for $1,080 with a local newspaper and paid the full amount in advance.
- On January 2, 2018, the firm purchased store equipment for $8,160. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $610.
- On January 2, 2017, the firm purchased office equipment for $1,660. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $210.
- On December 31, 2018, the firm owed salaries of $1,840 that will not be paid until 2020.
- On December 31, 2018, the firm owed the employer’s social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $1,840 of accrued wages.
- On December 31, 2018, the firm owed federal unemployment tax (assume 0.6 percent) and state unemployment tax (assume 5.4 percent) on the entire $1,840 of accrued wages.
- Create the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended October 31, 2018.
- Enter the adjustments above in the Adjustments section of the worksheet.
- Complete the worksheet.
By what amount were the assets of the business affected by adjustments?