Problem 5-3A

Starz Department Store is located near the Towne Shopping Mall. At the end of the company’s
calendar year on December 31, 2014, the following accounts appeared in two of its trial balances.

Unadjusted Adjusted Unadjusted

Accounts Payable $ 79,700 $ 167,827 Interest Revenue

Accounts Receivable 105,127 105,127 Inventory
Accumulated Depr.—Buildings 87,989 109,725 Mortgage Payable
Accumulated Depr.—Equipment 61,864 89,661 Prepaid Insurance
Buildings 606,100 606,100 Property Tax Expense
Cash 49,742 49,742 Property Taxes Payable
Common Stock 234,080 234,080 Retained Earnings
Cost of Goods Sold 862,543 862,543 Salaries and Wages Expense
Depreciation Expense 49,533 Sales Revenue 1,513,160
Dividends 50,160 50,160 Sales Commissions Expense

m
Equipment 229,900 229,900 Sales Commissions Payable

er as
Insurance Expense 15,048 Sales Returns and Allowances

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Interest Expense 6,270 17,974 Utilities Expense

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Interest Payable 11,704

o.
rs e
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Your answer is partially correct.
Prepare a multiple-step income statement. (List other revenues before other expenses.)
o

STARZ DEPARTMENT STORE

Income Statement
aC s

For the Year Ended December 31, 2014

vi y re

Sales Revenue

$
Sales Revenu 1513160
ed d

:
ar stu

Less Sales Returns 16720

Net Sales 1496440

is

Cost of Goods 862543

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Gross Profit 633897

Expenses
sh

$
Depreciation E 49533

Insurance Exp 15048

Property Tax E 10032

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 Salaries and W 225720

Sales Commis 30305

Utilities Expens 25080

Total Expenses 355718

Income from Operations 278179

Other Revenues and Gains

Interest Reven 8360

Other Expenses and Losses

Interest Expen 17974 (10614)

m
er as
$
Net Income / (Loss) 267565

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eH w
o.
SHOW LIST OF ACCOUNTS
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ou urc
SHOW ANSWER

LINK TO TEXT
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LINK TO TEXT
aC s
vi y re

Your answer is partially correct.

Prepare retained earnings statement. (List items that will increase retained earnings first.)
ed d
ar stu

STARZ DEPARTMENT STORE

Retained Earnings Statement
For the Year Ended December 31, 2014
$
Retained Earnings, January 1
is

135014

:
Th

Add Net Income / (Loss) 267565

402579
sh

:
Less Dividends 50160

$
Retained Earnings, December 31 352419

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 SHOW LIST OF ACCOUNTS

SHOW ANSWER

LINK TO TEXT

LINK TO TEXT

Your answer is partially correct.

Prepare a classified balance sheet. $33,440 of the mortgage payable is due for payment next
year. (List current assets in order of liquidity. Property, plant and equipment list in order
of land, buildings and equipment.)

STARZ DEPARTMENT STORE

Balance Sheet
December 31, 2014

m
er as
Assets

co
eH w
Current Assets

o.
$
Cash
rs e 49742
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Accounts Rec 105127

Inventory 156750
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aC s

Prepaid Insura 5016

vi y re

$
Total Current Assets 316635
ed d

Property, Plant and Equipment

ar stu

$
Equipment
229900
is

:
Less Accumulated D 89661 140239
Th

Buildings 606100

:
Less Accumulated D 109725 496375 636614
sh

$
Total Assets 953249

Liabilities and Stockholder's Equity

Current Liabilities

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 Current Liabilities

$
Accounts Pay
167827

Interest Payab 11704

Property Taxe 10032

Sales Commis 8987

Mortgage Paya 167200

$
Total Current Liabilities 365750

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Long-term Liabilities

er as
Notes Payable 0

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eH w
365750

o.
Total Liabilities

rs e
ou urc
Stockholders' Equity

Common Stock 234080

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aC s

Retained Earn 135014

vi y re

369094
Total Stockholders' Equity

$
ed d

Total Liabilities and Stockholders' Equity 734844

ar stu
is

SHOW LIST OF ACCOUNTS

SHOW ANSWER
Th

LINK TO TEXT

LINK TO TEXT
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 Your answer is partially correct.
Journalize the adjusting entries that were made. (Credit account titles are automatically
indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

Dec. 31 Depreciation E 49533

Accumulated D 109725

Accumulated D 89661

(To adjust depreciation on building and

equipment.)

Dec. 31 Insurance Exp 15048

Prepaid Insura 5016

m
er as
(To adjust insurance expense.)

co
eH w
Dec. 31 Interest Expen 17974

o.
Interest Payab 11704

rs e
(To adjust interest expense.)
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Dec. 31 Property Tax E 10032

Property Taxe 10032

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aC s

(To adjust property tax expense.)

vi y re

Dec. 31 Sales Commis 30305

Sales Commis 8987

ed d

(To adjust sales commissions expense.)

ar stu

Dec. 31 Utilities Expens 25080

Utilities Payabl 0
is

(To adjust utilities expense.)

Th

Journalize the closing entries that are necessary. (Credit account titles are automatically
indented when amount is entered. Do not indent manually.)
sh

No
Account Titles and Explanation Debit Credit
.

1. Sales Revenu 1513160

Interest Reven 8360

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 Income Summa 1521520

(To close accounts with credit

balances.)

2. Income Summa 1252955

Sales Returns 16720

Cost of Goods 862543

Salaries and W 225720

Depreciation E 49533

Sales Commis 30305

Insurance Exp 15048

m
er as
Property Tax E 10032

co
eH w
Utilities Expens 25080

o.
Interest Expen 17974

rs e
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(To close accounts with debit
balances.)

3. Income Summa 135014

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Retained Earn 135014

aC s
vi y re

(To close net income / (loss).)

4. Retained Earn 50160

Dividends 50160
ed d

(To close dividends.)

ar stu
is
Th
sh

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