Question

Question 2:

On September 30, 2017, the Radison Avenue Incorporated post-closing trial balance was as follows. The company adjusts its accounts monthly.

Account	Debit	Credit
Cash	16,500
Accounts Receivable	14,200
Supplies	3,300
Equipment	17,900
Accumulated Depreciation – Equipment		4,550
Accounts Payable		3,200
Salaries Payable		1,800
Unearned Revenue		850
Common Shares		9,100
Retained Earnings		32,400
	$51,900	$51,900

During October, the following transactions were completed:

Paid $2,300 to employees for salaries due, of which $1,800 is for September salaries payable and $500 for October

Issued common shares for $4,800

Received $11,200 cash from customers in payment of accounts

Received $12,700 cash for services performed in October Purchased supplies on account, $675

Paid creditors $3,200 of accounts payable due

Paid October rent, $550

Paid salaries, $2,150

Performed services on account, $3,200

Paid a cash dividend, $600

Received $1,350 from customers for services to be provided in the future

Adjustment data for the month:

1. Accrued salaries payable are $1,100

2. Unearned revenue of $850 was earned during the month

3. Income tax payable is estimated to be $600

Required:

In good format, and making whatever assumption you feel appropriate, prepare an accrual-based Income Statement and Statement of Financial Position (Balance Sheet) for the month ending October 2017.

Answer 1

Accrual-based Income Statement and Statement of Financial Position (Balance Sheet) for the month ending October 2017.

Radison Avenue
Income Statement
For the Month Ended Oct 31, 2017
Particulars	Amount ($)	Amount ($)
Service Revenue		16,750
Less:
Salaries Expense	3,750
Rent Expense	550
Total Operating Expenses		4,300
Operating Income		12,450
Income tax expense		600
Net income		11,850

Radison Avenue
Statement of Retained earnings
For the Month Ended Oct 31, 2017
Particulars	Amount ($)	Amount ($)
Opening balance		32,400
Add:
Net income	11,850
Less:
Dividend	600
Closing balance		43,650

Radison Avenue
Balance Sheet
As at Oct 31, 2017
Particulars	Amount ($)	Amount ($)
ASSETS
Current Assets:
Cash	37,750
Account Receivable	6,200
Supplies	3,975
Total Current Assets		47,925
Equipment	17,900
Less: Accumulated dep	4,550	13,350
Total Assets		61,275
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities :
Current Liabilities
Accounts Payable	675
Salaries payable	1,100
Income tax payable	600
Unearned Revenue	1,350
Total Current Liabilities		3,725
Total Stockholders' Equity
Common Stock	13,900
Retained earnings	43,650
Total Stockholders' Equity		57,550
Total Liabilities and stockholders’ equity		61,275

Working Notes:

Trial Balance for October 31, 2017 is as prepared below:

Account	Debit	Credit	1	2	3	4	5	6	7	8	9	10	11	12	13	14	Total	Debit	Credit
Cash	16,500		-2300	4,800	11,200	12,700		-3,200	-550	-2,150		-600	1,350				37,750	37,750
Accounts Receivable	14,200				-11,200						3,200						6,200	6,200
Supplies	3,300						675										3,975	3,975
Equipment	17,900																17,900	17,900
Accumulated Depreciation – Equipment		4,550															4,550		4,550
Accounts Payable		3,200					675	-3,200									675		675
Salaries Payable		1,800	-1,800											1,100			1,100		1,100
Income tax payable																600	600		600
Unearned Revenue		850											1,350		-850		1,350		1,350
Common Shares		9,100		4,800													13,900		13,900
Retained Earnings		32,400															32,400		32,400
Service Revenue						12,700					3,200				850		16,750		16,750
Rent Expense									550								550	550
Salaries Expense			500							2,150				1,100			3,750	3,750
Dividend												600					600	600
Income tax expense																600	600	600
	51,900	51,900																71,325	71,325