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Adjusted Trial balance                                       &nb

Adjusted Trial balance

                                                    Debits           Credits

Cash                                                 400          

Short-term Investments               210          

Accounts Receivable                     330        

Supplies                                          150

Notes Receivable (Long Term)   120    

Land                                                100

Buildings                                        340

Equipment                                    200

Accumulated Depreciation                                 360

Accounts Payable                                                 350        

Unearned Revenues                                            110        

Notes Payable (Long Term)                                140        

Common Stock                                                       80          

Additional Paid-In Capital                                   130        

Retained Earnings                                                180

Service Revenue                                                   870

Interest Revenue                                                   30

Interest Expense                            40

Wages Expense                            300

Supplies Expense                           60

                                                      _____             _____

                                                        2,250              2,250

Based on the adjusted trial balance shown above:

Prepare the income statement.

Prepare the statement of retained earnings, assuming that the retained earnings was reduced during the year by $70 of dividends that the company paid during the year.

Prepare the balance sheet.

Prepare the closing entry to close the revenues and expenses to the retained earnings account.

Solutions

Expert Solution

Answer:
Requirement 1 Income Statement
Sales Revenue $                      870
Less: Operating Expenses
Wages expenses $                     300
Supplies expenses $                       60 $                      360 ($300+60)
Income from operation $                      510 ($870-360)
Add: Other Income
Interest Expense $                     -40
Interest Revenue $                       30 $                       -10 (-$40+30)
Net Income $                      500 (510-10)
Requirement 2 Statement of retained earning
Beginning retained earning $                     180
Add: Net Income $                     500
Less: Dividend $                     -70
Ending retained earning $                     610 ($180+500-70)
Requirement 3 Balance Sheet
Asset
Cash $                     330 ($400-70)
Short-term Investment $                     210
Accounts receivable $                     330
Supplies $                     150
Notes reveivable (Long-term) $                     120
Land $                     100
Building $                     340
Equipment $                     200
Accumulated Depreciation $                   -360
Total $                 1,420
Liabilities and Stockholder's equity
Accounts payable $                     350
Unearned revenue $                     110
Notes Payable $                     140
Total liabilities $                     600
Stockholder's equity
Common Stock $                       80
Additional Paid-in-capital $                     130
Retained earning $                     610
Total Liabilities and Stockholder's equity $                 1,420
Requirement 4 Closing entries
Account title and explanation Debit Credit
Service Revenue $               870.00
Interest Revenue $                 30.00
Income Summary $                900.00 (870+30)
(To transfer revenue to Income Summary)
Income Summary $               400.00 (400-300-60-40)
Wages Expense $                300.00
Supplies Expense $                  60.00
Interest expense $                  40.00
(To transfer expenses to income summary account)
Income Summary $               500.00 (900-400)
Retained earning $                500.00
(To close income summary account)

ekkarill92 answered 1 year ago
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