Let’s Analyze:

1. Worksheet

Erlinda Ruiz Company

Worksheet
For the Year Ended December 31, 2020
Trial Balance Adjustments Income Statement Balance Sheet
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 72,000 72,000
Accounts Receivable 136,000 136,000
Merchandise Inventory 598,000 598,000 723,000 723,000
Prepaid Advertising 75,000 25,000 50,000
Office Supplies 42,000 17,000 25,000
Land 400,000 400,000
Office Building 1,600,000 1,600,000
Accu. Depreciation-Off.
Bldg. 100,000 15,000 115,000
Office Equipment 570,000 570,000
Accu. Depreciation-Off.
Equipt. 150,000 20,000 170,000
Accounts Payable 74,000 74,000
Mortgage Payable 1,100,000 1,100,000
Notes Payable due in 2 yrs. 200,000 200,000
Salaries Payable 21,000 21,000
Ruiz, Capital 1,510,000 1,510,000
Ruiz, Withdrawals 200,000 200,000
Sales 4,600,000 4,600,000
Sales Discounts 161,000 161,000
Sales Returns and Allow. 187,000 187,000
Purchases 2,643,000 2,643,000
Transportation In 72,000 72,000
Purchases Discounts 172,000 172,000
Purchases Rets. & Allow. 133,000 133,000
Depreciation Expense-
Equipment 20,000 20,000
Depreciation Expense-
Building 15,000 15,000
Advertising Expense 25,000 25,000
Insurance Expense 25,000 25,000
Interest Expense 208,000 208,000
Salaries Expense 862,000 21,000 883,000
Travel Expense 188,000 188,000
Office Supplies Expense 17,000 17,000
Interest Expense
8,039,000 8,039,000 98,000 98,000 5,042,000 5,628,000 3,776,000 3,190,000

Profit 586,000 586,000

5,628,000 5,628,000 3,776,000 3,776,000
 2. Financial Statements

Erlinda Ruiz Company Erlinda Ruiz Company

Income Statement Statement of Changes in Equity
For the Year Ended December 31, 2020 For the Year Ended December 31, 2020

Net Sales Ruiz, Owners Equity 01/01/20 P 1,510,000

Gross Sales P 4,600,000 Add: Profit 586,000
Less: Sales Returns and Allow. P 187,000 Total 2,096,000
Sales Discounts 161,000 (348,000) Less: Withdrawals (200,000)
Net Sales P 4,252,000 Sousa, Owner's Equity 12/31/20 P 1,896,000
Cost of Sales
Merchandise Inventory, 01/01/20 598,000
Purchases 2,643,000
Less: Purchases Returns and Allow. (133,000) Erlinda Ruiz Company
Purchases Discounts (172,000) Statement of Financial Position
Net Cost of Purchases 2,338,000 December 31, 2020
Transportation In 72,000
Assets
Net Cost of Purchases 2,410,000
Current Assets
Goods Available for Sale 3,008,000 Cash 72,000
Less: Merchandise Inventory, 12/31/20 (723,000) Accounts Receivable 136,000
Cost of Sales (2,285,000) Merchandise Inventory 723,000
Office Supplies 25,000
Gross Profit P 1,967,000 Prepaid Advertising 50,000
Operating Expenses Total Current Assets P 1,006,000
Depreciation Expense-Equipment 20,000 Property and Equipment (Net)
Depreciation Expense-Building 15,000 Land 400,000
Advertising Expense 25,000 Office Building 570,000
Insurance Expense 25,000 Less: Accu. Depreciation-Off. Bldg. 170,000 740,000
Office Equipment 1,600,000
Salaries Expense 883,000
Less: Accu. Depreciation-Off. Equipt. 115,000 1,715,000
Travel Expense 188,000
Total Property and Equipment 2,285,000
Office Supplies Expense 17,000
Operating Expenses (1,173,000) Total Assets P 3,291,000
Operating Profit 794,000
Finance Costs (208,000) Liabilities
Net Income P 586,000 Current Liabilities
Accounts Payable 74,000
Total Current Liabilities 21,000 95,000
Non-Current Liabilities
Notes Payable due in 2 yrs. 200,000
Mortgage Payable 1,100,000 1,300,000
Total Liabilities P 1,395,000

Owner's Equity
Ruiz, Capital, 12/31/20 1,896,000
Total Liabilities and Owner's Equity P 3,291,000
3. Adjusting and Closing Entries

Adjusting Entries Closing Entries

Dec. 31 Merchandise Inventory, Dec. 31 723,000

a. Office Supplies Expense 17,000 Sales 4,600,000
Office Supplies 17,000 Purchases Returns & Allow. 133,000
Purchases Discounts 172,000
b. Advertising Expense 25,000 Income Summary 5,628,000
Prepaid Advertising 25,000
Dec. 31 Income Summary 5,042,000
c. Salaries Expense 21,000 Merchandise Inventory, 1/1 598,000
Salaries Payable 21,000 Sales Returns & Allow. 187,000
Sales Discounts 161,000
d. Depreciation Expense-Building 15,000 Purchases 2,643,000
Depreciation Expense-Equipment 20,000 Transportation In 72,000
Accumulated Depreciation Expense-Building 15,000 Salaries Expense 883,000
Accumulated Depreciation Expense-Equipment 20,000 Office Supplies Expense 17,000
Insurance Expense 25,000

Depreciation Expense-Office Building 15,000

Depreciation Expense-Office Equipment 20,000

Travel Expense 188,000
Advertising Expense 25,000
Interest Expense 208,000

Dec. 31 Income Summary 586,000

Sousa, Capital 586,000

Dec. 31 Sousa, Capital 200,000

Sousa, Withdrawals 200,000