Question

1. The completed financial statement columns of the worksheet for Blossom Company are shown as follows:

Blossom Company Worksheet For the Year Ended December 31, 2020
				Income Statement				Balance Sheet
Account No.		Account Titles		Dr.		Cr.		Dr.		Cr.
101		Cash						9,000
112		Accounts Receivable						10,600
130		Prepaid Insurance						2,800
157		Equipment						24,100
158		Accumulated Depreciation—Equip.								4,300
201		Accounts Payable								8,900
212		Salaries and Wages Payable								2,300
301		Owner’s Capital								20,000
306		Owner’s Drawings						10,300
400		Service Revenue				60,100
622		Maintenance and Repairs Expense		1,800
711		Depreciation Expense		3,200
722		Insurance Expense		2,000
726		Salaries and Wages Expense		30,200
732		Utilities Expense		1,600
		Totals		38,800		60,100		56,800		35,500
		Net Income		21,300						21,300
				60,100		60,100		56,800		56,800

a. Prepare an income statement. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

b. Prepare owner’s equity statement. (List items that increase owner's equity first.)

c. Prepare a classified balance sheet. (List Current Assets in order of liquidity.)

d. Prepare the closing entries. L. Blossom did not make any additional investments during the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

e. Post the closing entries and balance the accounts. (Post entries in the order of journal entries presented in the previous part.)

f. Prepare a post-closing trial balance.

Answer 1

a) Income statement for the year ended December 31, 2020 is prepared as follows:-

Blossom Company

  Income Statement

For The Year Ended December 31, 2020 (Amounts in $)

Service Revenue (A)	60,100
Expenses:
Maintenance and repairs expense	1,800
Depreciation expense	3,200
Insurance expense	2,000
Salaries and wages expense	30,200
Utilities expense	1,600
Total expenses (B)	38,800
Net Income (A-B)	21,300

b) Blossom Company

Owner's Equity Statement

As on December 31, 2020 (Amounts in $)

Owner's Capital Beginning balance	20,000
Add: Net Income for 2020	21,300
Less: Owner's Drawings	(10,300)
Owner's Equity ending balance	31,000

c) Blossom Company

Balance Sheet

As on December 31, 2020 (Amounts in $)

Assets
Current Assets
Cash	9,000
Accounts Receivable	10,600
Prepaid Insurance	2,800
Total Current Assets (i)	22,400
Fixed Assets
Equipment	24,100
Less: Accumulated Depreciation-Equipment	(4,300)
Equipment, net (ii)	19,800
Total Assets [(i)+(ii)]	42,200
Liabilities and Owner's Equity
Current Liabilities
Accounts Payable	8,900
Salaries and Wages Payable	2,300
Total Current Liabilities (iii)	11,200
Owner's Equity
Owner's Capital (from part b) (iv)	31,000
Total Liabilities and Owner's Equity [(iii)+(iv)]	42,200

d) Closing journal entries are shown as follows:-

Journal Entries (Amounts in $)

Date	Account Titles	Debit	Credit
Dec 31, 2020	Service Revenue	60,100
	Income Summary		60,100
	(To close the revenue accounts)
Dec 31, 2020	Income Summary	38,800
	Maintenance and repairs expense		1,800
	Depreciation expense		3,200
	Insurance expense		2,000
	Salaries and wages expense		30,200
	Utilities expense		1,600
	(To close the expenses account)
Dec 31, 2020	Income Summary (60,100-38,800)	21,300
	Owner's Capital		21,300
	(To close the income summary account)
Dec 31, 2020	Owner's Equity	10,300
	Owner's Drawings		10,300
	(To close the drawings account)