Question

Mackenzie Inc. uses a perpetual inventory system and has prepared the following adjusted trial balance on December 31, 2016:

Mackenzie Inc.

ADJUSTED TRIAL BALANCE

December 31, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	2,800.00
2	Accounts Receivable	2,800.00
3	Allowance for Doubtful Accounts		250.00
4	Inventory	6,700.00
5	Prepaid Insurance	800.00
6	Land	5,900.00
7	Buildings and Equipment	31,300.00
8	Accumulated Depreciation		15,500.00
9	Accounts Payable		3,200.00
10	Salaries Payable		430.00
11	Unearned Rent		360.00
12	Income Taxes Payable		2,625.00
13	Note Payable		4,800.00
14	Interest Payable		750.00
15	Common Stock		9,200.00
16	Retained Earnings		7,320.00
17	Dividends	1,300.00
18	Income Summary
19	Sales Revenue		32,120.00
20	Rent Revenue		1,450.00
21	Cost of Goods Sold	14,630.00
22	Selling Expenses	4,900.00
23	Administrative Expenses	3,500.00
24	Interest Expense	750.00
25	Income Tax Expense	2,625.00
26	Totals	78,005.00	78,005.00

	For classification purposes:
	Note payable is due July 1, 2020
	Interest payable is due July 1, 2020

	Required:
	Prepare in proper form for 2016 the company’s:
	1. income statement
	2. retained earnings statement
	3. ending balance sheet
	4. closing entries in its general journal

CHART OF ACCOUNTSMackenzie Inc.General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
130	Inventory
131	Prepaid Insurance
180	Land
181	Buildings and Equipment
182	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
230	Salaries Payable
232	Unearned Rent
270	Income Taxes Payable
271	Note Payable
272	Interest Payable

	EQUITY
311	Common Stock
331	Retained Earnings
351	Dividends
391	Income Summary

	REVENUE
411	Sales Revenue
421	Rent Revenue

	EXPENSES
510	Cost of Goods Sold
625	Selling Expenses
699	Administrative Expenses
711	Interest Expense
910	Income Tax Expense

Prepare the company’s closing entries on December 31.

PAGE 12

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1		Closing Entries
2
3
4
5
6
7
8
9
10
11
12
13
14

Labels
Contributed Capital
Current Assets
Current Liabilities
Long-term Liabilities
Operating expenses
Other items
Property, Plant, and Equipment
Amount Descriptions
Add: Net income for 2016
Gross profit
Income before income taxes
Income from operations
Less: Dividends for 2016
Less: Net loss for 2016
Net income
Net loss
Retained earnings, December 31, 2016
Retained earnings, January 1, 2016
Total Assets
Total current assets
Total current liabilities
Total Liabilities
Total Liabilities and Shareholders’ Equity
Total long-term liabilities
Total operating expenses
Total property, plant, and equipment
Total Shareholders’ Equity

prepare the company’s income statement for 2016. Additional Instructions

MACKENZIE INC.

Income Statement

For the Year Ended December 31, 2016

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16	Earnings per share (1,500 shares)

Prepare the statement of retained earnings for 2016. Additional Instructions

MACKENZIE INC.

Statement of Retained Earnings

For the Year Ended December 31, 2016

1
2
3
4
5

Refer to the Chart of Accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

“Less:” or “Plus:” will appear automatically, if needed.

Use the minus sign to indicate all negative values. For ex: Less: Accumulated depreciation is entered -### for (###).

Prepare the balance sheet at December 31, 2016. Additional Instructions

MACKENZIE INC.

Balance Sheet

December 31, 2016

1	Assets
2
3
4
5
6
7
8
9
10
11
12
13
14
15	Liabilities
16
17
18
19
20
21
22
23
24
25
26
27	Shareholders’ Equity
28
29
30
31
32

Answer 1