Se the following financial statements and additional information.
AUSTIN INCORPORATED
Comparative Balance Sheets
June 30, 2019 and 2018
2019 2018
Assets
Cash $ 94,300 $ 39,400
Accounts receivable, net 81,000 63,000
Inventory 68,000 94,000
Prepaid expenses 5,600 7,000
Total current assets 248,900 203,400
Equipment 176,000 163,000
Accumulated depreciation—Equipment (45,000) (15,000)
Total assets $ 379,900 $ 351,400
Liabilities and Equity
Accounts payable $ 31,000 $ 38,000
Wages payable 6,000 16,000
Income taxes payable 4,900 5,400
Total current liabilities 41,900 59,400
Notes payable (long term) 40,000 80,000
Total liabilities 81,900 139,400
Equity
Common stock, $5 par value 240,000 170,000
Retained earnings 58,000 42,000
Total liabilities and equity $ 379,900 $ 351,400
AUSTIN INCORPORATED
Income Statement
For Year Ended June 30, 2019
Sales $ 922,000
Cost of goods sold 564,000
Gross profit 358,000
Operating expenses
Depreciation expense $ 75,000
Other expenses 91,000
Total operating expenses $ 166,000
192,000
Other gains (losses)
Gain on sale of equipment 4,900
Income before taxes 196,900
Income taxes expense 60,270
Net income $ 136,630
Additional Information
A $40,000 note payable is retired at its $40,000 carrying (book) value in exchange for cash.
The only changes affecting retained earnings are net income and cash dividends paid.
New equipment is acquired for $74,000 cash.
Received cash for the sale of equipment that had cost $61,000, yielding a $4,900 gain.
Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
All purchases and sales of inventory are on credit.
Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year. Upon completion, the trial balance tab should agree with the June 30, 2019 balances.
1 Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any.
2 Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any.
3 Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any.
4 Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any.
5 Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any.
6 Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any.
7 Reconstruct the entry to record the retirement of the $40,000 note payable at its $40,000 carrying (book) value in exchange for cash.
8 Reconstruct the entry for the purchase of new equipment.
9 Reconstruct the entry for the issuance of common stock.
10 Close all revenue and gain accounts to income summary.
11 Close all expense accounts to income summary.
12 Close Income Summary to Retained Earnings.
13 Reconstruct the journal entry for cash dividends paid.