Question

The adjusted trial balance for Tybalt Construction as of December 31, 2018, follows.

TYBALT CONSTRUCTION Adjusted Trial Balance December 31, 2018
No.	Account Title	Debit				Credit
101	Cash	$	7,500
104	Short-term investments		22,000
126	Supplies		9,200
128	Prepaid insurance		8,600
167	Equipment		55,000
168	Accumulated depreciation—Equipment					$	27,500
173	Building		162,000
174	Accumulated depreciation—Building						54,000
183	Land		64,470
201	Accounts payable						16,000
203	Interest payable						2,000
208	Rent payable						3,200
210	Wages payable						2,700
213	Property taxes payable						900
233	Unearned professional fees						7,100
251	Long-term notes payable						69,500
307	Common stock						7,500
318	Retained earnings, December 31, 2017						123,300
319	Dividends		12,600
401	Professional fees earned						103,000
406	Rent earned						17,500
407	Dividends earned						2,200
409	Interest earned						2,800
606	Depreciation expense—Building		11,880
612	Depreciation expense—Equipment		8,250
623	Wages expense		27,500
633	Interest expense		3,500
637	Insurance expense		9,400
640	Rent expense		12,300
652	Supplies expense		5,700
682	Postage expense		2,200
683	Property taxes expense		3,700
684	Repairs expense		6,900
688	Telephone expense		2,800
690	Utilities expense		3,700
	Totals	$	439,200			$	439,200

The December 31, 2017, credit balance of the Retained Earnings account was $123,300. Tybalt Construction is required to make a $7,000 payment on its long-term notes payable during 2019.

Required:
1a. Prepare the income statement for the calendar-year 2018.
1b. Prepare the statement of retained earnings for the calendar-year 2018.
1c. Prepare the classified balance sheet at December 31, 2018.
2. Prepare the necessary closing entries at December 31, 2018.
3. Use the information in the financial statements to compute the following ratios:

Answer 1

Answer-1-a-

Prepare Income Statement as follows:

TYBALT CONSTRUCTION
Income Statement
For the Year ended December 31, 2018
Revenue:
Professional fees	$103,000
Rent	$17,500
Dividends	$2,200
Interest	$2,800
Total Revenue		$125,500
Less: Operating Expense
Depreciation Expense - Building	$11,880
Depreciation Expense - Equipment	$8,250
Wage Expense	$27,500
Interest Expense	$3,500
Insurance expense	$9,400
Rent expense	$12,300
Supplies Expense	$5,700
Postage Expense	$2,200
Property tax expense	$3,700
Repair expense	$6,900
Telephone expense	$2,800
Utilities Expense	$3,700
Total Expense		$97,830
Net Income/Loss		$27,670

____________________________________________________________________

1-b-Prepare statement of retained earnings as follows:

TYBALT CONSTRUCTION
Statement of Retained Earnings
Beginning Retained Earnings	$123,300
Add: Net Income/(Loss)	$27,670
Less: Dividends	($12,600)
Ending Balance	$138,370

______________________________________________________________________

1-c-Prepare Balance sheet as follows:

TYBALT CONSTRUCTION
Balance Sheet
December 31, 2018
Assets
Current Assets:
Cash		$7,500
Short-term investments		$22,000
Supplies		$9,200
Prepaid Insurance		$8,600
Total Current Assets		$47,300
Non-Current Assets:
Property, Plant, Equipment	$55,000
Less: Accumulated Depreciation - PPE	($27,500)	$27,500
Building	$162,000
Less: Accumulated Depreciation - Building	($54,000)	$108,000
Land		$64,470
Total Non-current Assets		$199,970
Total Assets		$247,270
Liabilities
Current liabilities:
Account Payable		$16,000
Interest Payable		$2,000
Rent payable		$3,200
Wages payable		$2,700
Property taxes payable		$900
Unearned professional fees		$7,100
Current portion of long term note payable		$7,000
Total Current liabilities		$38,900
Non-current liabilities:
Long-term notes payable ($69,500-$7,000)		$62,500
Total liabilities		$101,400
Stockholder's Equity
Common stock		$7,500
Retained Earnings		$138,370
Total Liabilities & Stockholder's Equity		$247,270

2- Closing Entries

Date	General Journal	Debit	Credit
Dec. 31	Professional fees	103,000
	Rent	17,500
	Dividends	2,200
	Interest	2,800
	Income Summary		125,500
	(To close revenue accounts)
Dec. 31	Income Summary	97,830
	Depreciation expense-Building		11880
	Depreciation expense-Equipment		8,250
	Wages expense		27,500
	Interest expense		3,500
	Insurance expense		9,400
	Rent expense		12,300
	Supplies expense		5,700
	Postage expense		2,200
	Property taxes expense		3,700
	Repairs expense		6,900
	Telephone expense		2,800
	Utilities expense		3,700
	(To close expense accounts)
Dec. 31	Income Summary	27,670
	Retained earnings		27,670
	(To close income summary)
Dec. 31	Retained earnings	12,600
	Dividends		12,600
	(To close withdrawals account)

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