In: Accounting
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.
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) |