Underwater Adventures Has the Following Account Balances on August 31

question 128

Essay

Underwater Adventures has the following account balances on August 31, 2019: $$\begin{array} { l r } \text { Accounts payable } & \$ 8,800 \\\text { Accounts receivable } & 9,600 \\\text { Accumulated amortization - equipment } & 30,300 \\\text { Cash } & 2,200 \\\text { Cost of goods sold } & 341,500 \\\text { Jacobson, capital } & 190,700 \\\text { Jacobson, withdrawals } & 44,000 \\\text { Equipment } & 88,000 \\\text { Interest earned } & 2,000 \\\text { Inventory } & 71,500 \\\text { Operating expenses } & 175,500 \\\text { Sales discounts } & 3,100 \\\text { Sales retarns and allowances } & 14,400 \\\text { Sales revenue } & 520,600 \\\text { Supplies } & 7,100 \\\text { Unearned sales revenue } & 4,500\end{array}$$ The following information as at August 31, 2019 was also available:
a. A physical count of items showed $1,200 of supplies on hand.
b. An inventory count showed inventory on hand of $66,400.
c. The equipment has an estimated useful life of eight years and is expected to have no salvage value.
d. Unearned sales revenue of $1,000 was earned.
Required:
1. Prepare the necessary adjusting journal entries at August 31, 2019. For simplicity all operating expenses are combined into a single operating expense account for financial statement purposes. Use the normal account name for the adjusting journal entries.
2. Prepare a classified balance sheet based on adjusted account balances.

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Definitions:

Competition

Economic rivalry among businesses fighting for the same customers or markets, characterized by the struggle to attract customers, lower costs, and improve products and services.

Market Power

Refers to the ability of a company or firm to raise and maintain prices above the level that would prevail under competition.

Raise Price

The action of increasing the cost at which goods or services are sold, often to reflect increased costs or to improve profit margins.

Broadly Defined

Describes something that is regarded or classified in a very general and inclusive manner.