Question

Prepare in good form:

an Income Statement, Statement of Owner’s Equity

2. Classified Balance Sheet,

3. Calculate the Current Ratio and prepare the Closing Entries in a general journal

Question #1 – 35 Marks

The following is the adjusted trial balance for Reid Tax and Accounting Services for the year ended December 31, 2017

Reid Tax and Accounting Services Adjusted Trial Balance December 31, 2017

Account Title Dr Cr
Accounts payable 6,300
Accounts Receivable 9,000
Accumulated Depreciation Building 41,000
Accumulated Depreciation Equipment $4,200
Building    350,000
Cash $98,000
Depreciation expense, building 7,000
Depreciation expense, equipment 800
Insurance expense 5,200
Interest payable 2,000
Land 700,000
Long-term note payable 52,000
Fred Reid, Capital 1,010,000
Fred Reid, Withdrawals 200,500
Office equipment 8,000
Office supplies 3,300
Prepaid Insurance 9,000
Prepaid Rent 15,000
Rent expense 6,000
Salaries expense 89,000
Salaries payable 14,500
Service fees earned 370,800
Totals $1,500,800 $1,500,800

Additional Information:
• A $10,000 installment on the long-term note payable is due within one year.
• Fred Reid invested $40,000 into her business during the year

Required:

1. Prepare in good form, an Income Statement, Statement of Owner’s Equity and a Classified Balance Sheet for the year ended December 31, 2017. – 26 Marks

2. Calculate the Current Ratio at December 31, 2017 – 4 Marks

3. Prepare the Closing Entries at December 31, 2017.in a general journal – 5 Marks

Answer 1