Question

Preparing Financial Statements and Closing Entries Beneish Company has the following account balances at December 31, the end of its fiscal year.

Debit Credit Cash $ 8,000

Accounts receivable 6,500

Equipment 78,000

Accumulated depreciation $14,000

Notes payable 10,000

Common stock 43,000

Retained earnings 20,600

Dividends 8,000

Service fees earned 75,000

Rent expense 18,000

Salaries expense 37,100

Depreciation expense 7,000

Totals $162,600 $162,600

(a) Prepare Beneish Corporation's income statement and statement of stockholders' equity for year-end December 31, and its balance sheet as of December 31. The company paid cash dividends of $8,000 and there were no stock issuances or repurchases during the year. (Do not use negative signs with your answers unless otherwise noted.)

Beneish Corporation Income Statement For Year Ended December 31

Answer $ ________

Rent expense _________

Salaries expense _________

Depreciation expense ______

Net income $ ______

Beneish Corporation

Statement of Stockholders' Equity       

For Year Ended December 31         

   Common Stock    Retained Earnings    Total Stockholders' Equity

Balance at December 31, Beg    $ __________    $ _________    $ ____________

Stock issuance     $ __________    $ _________    $ ____________

_______??    $ __________    $ _________    $ ____________

(Enter as a negative number)

Net income     $ __________    $ _________    $ ____________

Balance at December 31, End    $ __________    $ _________    $ ____________

Beneish Corporation

Balance Sheet

December 31

   Assets    Liabilities

___________?    $_______________ Notes Payable    $__________

Accounts receivable ______________

Equipment, gross _____________ Total Liabilities ________________

Accumulated depreciation    Common Stock ____________________

(Enter as a negative number) ____________    ___________ ?? _________________

Equipment, net ______________ Total Liabilities & equity _____________

Total assets $ ______________

(b) Prepare journal entries to close Beneish's temporary accounts.

GENERAL JOURNAL

Ref. Description Debit Credit (1) Answer Answer Answer Answer Answer Answer To close revenue account. (2) Answer Answer Answer Answer Answer Answer To close rent expense account. (3) Answer Answer Answer Answer Answer Answer To close salaries expense account. (4) Answer Answer Answer Answer Answer Answer To close depreciation expense account. (5) Answer Answer Answer Answer Answer Answer To close dividend account.

(c) Set up T-accounts for each account and post the closing entries. Note: Only those ledger accounts affected by closing process are shown here.

Enter beginning balances in the appropriate answer box.

Enter transactions in the T-accounts in the order they appear, using first available answer box on the appropriate side of the T-account.

Compute the ending balances.

Retained Earnings Answer Answer Beg Bal. Answer Answer Answer Answer Answer Answer Answer Answer End Bal. Service Fees Earned Answer Answer Beg Bal. Answer Answer End Bal. Rent Expense Beg Bal. Answer Answer End Bal. Answer Answer Depreciation Expense Beg Bal. Answer Answer End Bal. Answer Answer Salaries Expense Beg Bal. Answer Answer End Bal. Answer Answer Dividends Beg Bal. Answer Answer End Bal. Answer Answer

Answer 1

(a)   income statement

Service fees earned =75,000

Less: Rent expense =18,000

Less: Salaries expense =37,100

Less: Depreciation expense = 7,000

Net income = $12900

statement of stockholders' equity for year-end December 31

   Common Stock    Retained Earnings    Total Stockholders' equity

Equity Balance at December 31, Beg. 43000 20600 63600

Stock issuance 0 0 0

Dividend 0   (8,000) (8000)

Net income 0 $12900   $12900

Balance at December 31, End 43000 25500 68500

     Balance sheet as of December 31.

Assets Liabilities

Cash 8,000    Notes Payable 10,000

Accounts receivable   6,500

Equipment, gross 78,000     Total Liabilities 10000

Accumulated depreciation $14,000 Common Stock 43,000

Equipment, net 64000 Retained Earnings 25500   

Total assets $78500 Total Liabilities & equity $78500

(b)

Ref	Accounts title	Dr.	Cr.
1	Service fees earned	75000
	To Retained Earnings		75000
2	Retained Earning	62100
	To Rent expense		18,000
	To Salaries expense		37,100
	To Depreciation expense		7,000
3	Retained Earnings	8,000
	To Dividends		8,000

(c) Retained earnings

To Rent expense (2)	18,000	By Balance b/d	20600
To Salaries expense (2)	37,100	By Service fees earned (1)	75000
To Depreciation expense (2)	7,000
To Dividends (3)	8000
To Balance c/d	25500

  Service fees earned   

To Retained Earnings (1)

75000

By Balance b/d

75000

Rent expense

To Balance b/d

18000

By Retained Earning (2)

18000

Salaries expense

To Balance b/d

37,100

By Retained Earning (2)

37,100

  Depreciation expense

To Balance b/d

7,000

By Retained Earning (2)

7,000

Dividends

To Balance b/d

8000

By Retained Earning (3)

8000