Question

In: Accounting

In 2019, Michael Knight organized Knight Realty. At December 31, 2019, the end of the current...

In 2019, Michael Knight organized Knight Realty. At December 31, 2019, the end of the current fiscal year, the trial balance of Knight Realty is as follows:

Knight Realty
Unadjusted Trial Balance
December 31, 2019
Account Title Debit Credit
Cash $      3,425
Accounts Receivable 7,000
Supplies 1,270
Prepaid Insurance 620
Office Equipment 51,650
Accumulated Depreciation-Office Equipment $      9,700
Accounts Payable             925
Unearned Fees 1,250
Michael Knight, Capital 29,000
Michael Knight, Drawing 5,200
Fees Earned 59,125
Wages Expense 22,415
Rent Expense 4,200
Utilities Expense 2,715
Miscellaneous Expense 1,505
$  100,000 $  100,000

Data needed to determine year-end adjustments are as follows:

a. Supplies on hand at December 31, 2019, are $380.
b. Insurance premiums expired during the year are $315.
c. Depreciation of equipment during the year is $4,950.
d. Wages accrued but not yet paid at December 31, 2019, are $440.
e. Accrued fees earned but not yet recorded at December 31, 2019, are $1,000.
f. Unearned fees on December 31, 2019, are $750.
Required:
3. Prepare an income statement, statement of owner's equity, and statement of financial
position (balance sheet)

Solutions

Expert Solution

Income Statement
Revenue
Fees Earned $             60,625
Total Revenue $             60,625
Expenses
Wages Expense $             22,855
Rent Expense $                4,200
Utilities Expense $                2,715
Supplies Expense $                   890
Insurance Expense $                   315
Depreciation Expense $                4,950
Miscellaneous Expense $                1,505
Total Expenses $             37,430
Net Income $             23,195
Statement of Owner's Equity
Beginning Balance, Capital $             29,000
Add: Net Income $             23,195
$             52,195
Less : Drawings $                5,200
Ending Balance, Capital $             46,995
Balance Sheet
Assets
Current Assets
Cash $                3,425
Accounts Receivable $                8,000
Supplies $                   380
Prepaid Insurance $                   305
Total Current Assets $             12,110
Office Equipment $             51,650
   Less : Accumulated Depreciation $            -14,650
Total Property Plant and Equipment $             37,000
Total Assets $             49,110
Liabilities & Stockholder's Equity
Current Liabilities
Accounts Payable $                   925
Wages Payable $                   440
Unearned Rent $                   750
Total Current Liabilities $                2,115
Long term Debt $                      -  
Owner's Equity
Michael Knight, Capital $             46,995
Total Owner's Equity $             46,995
Total Liabilities & Owner's Equity $             49,110

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