Question

Prepare an income statement and a balance sheet using the journal entries below.

Date	Particulars	Debit ($)	Credit ($)
Jan 1	Cash	260,000
	Office Equipment	90,000
	Common Stock		350,000
Jan 1	Land	20,000
	Building	120,000
	Cash		50,000
	Notes Payable		90,000
Jan 1	Insurance Expense	2,400
	Cash		2,400
Jan 3	Office Supplies	3,600
	Accounts Payable		3,600
Jan 5	Petty Cash	400
	Cash		400
Jan 7	Advertising Expense	1,800
	Cash		1,800
Jan 10	Accounts Receivable	12,000
	Consulting Revenue		12,000
Jan 12	Cash	10,000
	Accounts Receivable	8,500
	Consulting Revenue		18,500
Jan 15	Payroll Expenses	8,000
	Cash		8,000
Jan 18	Cash	15,000
	Unearned Consulting Revenue		15,000
Jan 19	Accounts Payable	2,500
	Cash		2,500
Jan 20	Cash	8,000
	Accounts Receivable		8,000
Jan 24	Cash	5,000
	Consulting Revenue		5,000
Jan 25	Cash	4,000
	Accounts Receivable		4,000
Jan 30	Telephone Expenses	375
	Accounts Payable		375
Jan 31	Payroll Expenses	8,000
	Cash		8,000
Jan 31	Utility Expenses [260+280]	640
	Accounts Payable		640
Jan 31	Postage Expenses	24
	Supplies Expenses	38
	Miscellaneous Expenses	22
	Cash Over and Short	3
	Petty Cash		87
Jan 31	Petty Cash	87
	Cash		87
Jan 31	Retained Earnings	3,500
	Dividends		3,500
	Dividends	3,500
	Cash		3,500

Adjusting Entries:

S.No.	Date	Particulars	Debit ($)	Credit ($)
a.	Jan 31	Supplies Expenses [3,600-2,100]	1,500
		Office Supplies		1,500
b.	Jan 31	Repairs Expense	280
		Accounts Payable		280
c.	Jan 31	Deprecition Expense - Building	4,000
		Accumulated Depreciation - Building		4,000
d.	Jan 31	Depreciation Expense - Office Equipment	9,000
		Accumulated Depreciation - Office Equipment		9,000
e.	Jan 31	Interest Expense [90,000 * 5% * 1/12]	375
		Interest Payable		375
	Jan 31	Prepaid Insurance [2,400 * 11/12]	2,200
		Insurance Expense		2,200
	Jan 31	Prepaid Advertising [1,800 / 3] *2	1,200
		Advertising Expense		1,200
	Jan 31	Consulting Revenue	35,500
		Income Summary		2,443
		Insurance Expense		200
		Supplies Expense		1,500
		Advertising Expense		600
		Payroll Expenses		16,000
		Telephone Expenses		375
		Utility Expenses		640
		Postage Expenses		24
		Supplies Expenses		38
		Miscellaneous Expenses		22
		Cash Over and Short		3
		Repair Expense		280
		Depreciation Expense - Building		4,000
		Depreciation Expense - Office Equipment		9,000
		Interest Expense		375

Net Income = 14,347

Answer 1

Calculation works:

Company Name
Income Statement
For the Month ended Jan 31
Consulting Revenue		$ 35,500
Less: Expense
Insurance Expense	$        200
Supplies Expense	$    1,500
Advertising Expense	$        600
Payroll Expenses	$ 16,000
Telephone Expenses	$        375
Utility Expenses	$        640
Postage Expenses	$          24
Supplies Expenses	$          38
Miscellaneous Expenses	$          22
Cash Over and Short	$             3
Repair Expense	$        280
Depreciation Expense - Building	$    4,000
Depreciation Expense - Office Equipment	$    9,000
Interest Expense	$        375
Total Expense		$ 33,057
Net Income		$    2,443

Company Name
Balance Sheet
Jan 31
Current assets:
Cash		$ 225,313
Petty Cash		$          400
Accounts receivable		$      8,500
Supplies		$      2,100
Prepaid insurance		$      2,200
Prepaid Advertising		$      1,200
Total Current Assets			$ 239,713
Property, plant and equipment:
Land		$    20,000
Buildings (740000+210000)	$ 120,000
Accumulated depreciation-Buildings	$    (4,000)	$ 116,000
Equipment (360000+295000)	$    90,000
Accumulated depreciation-Equipment	$    (9,000)	$    81,000
Total Property, plant and equipment			$ 217,000
Total assets			$ 456,713
Liabilities
Current liabilities:
Accounts payable		$      2,395
Interest payable		$          375
Unearned consulting revenue		$    15,000
Total current liabilities			$    17,770
Long-term liabilities:
Notes payable			$    90,000
Total liabilities			$ 107,770
Stockholders' Equity
Common Stock		$ 350,000
Retained earnings		$    (1,057)
Total stockholders' equity			$ 348,943
Total liabilities and stockholders' equity			$ 456,713