Question

he adjusted trial balance for Tybalt Construction as of December 31, 2019, follows

TYBALT CONSTRUCTION Adjusted Trial Balance December 31, 2019
No.	Account Title	Debit				Credit
101	Cash	$	6,500
104	Short-term investments		23,000
126	Supplies		8,700
128	Prepaid insurance		8,000
167	Equipment		55,000
168	Accumulated depreciation—Equipment					$	27,500
173	Building		156,000
174	Accumulated depreciation—Building						52,000
183	Land		65,110
201	Accounts payable						16,500
203	Interest payable						2,100
208	Rent payable						3,100
210	Wages payable						2,900
213	Property taxes payable						1,400
233	Unearned professional fees						7,200
244	Current portion of long term note payable						8,000
251	Long-term notes payable						60,500
307	Common stock						6,500
318	Retained earnings						124,600
319	Dividends		12,600
401	Professional fees earned						100,000
406	Rent earned						16,000
407	Dividends earned						2,200
409	Interest earned						2,900
606	Depreciation expense—Building		11,440
612	Depreciation expense—Equipment		8,250
623	Wages expense		30,500
633	Interest expense		5,100
637	Insurance expense		8,000
640	Rent expense		10,100
652	Supplies expense		7,200
682	Postage expense		3,100
683	Property taxes expense		3,000
684	Repairs expense		6,100
688	Telephone expense		2,600
690	Utilities expense		3,100
	Totals	$	433,400			$	433,400

O. Tybalt invested $6,500 cash in the business in exchange for common stock during year 2019. The December 31, 2018, credit balance of the Retained Earnings account was $124,600.  
Required:
1a. Prepare the income statement for the calendar-year 2019.
1b. Prepare the statement of retained earnings for the calendar-year 2019.
1c. Prepare the classified balance sheet at December 31, 2019.
2. Prepare the necessary closing entries at December 31, 2019.

Answer 1

Requirement 1a.:

O. Tybalt
Income statement
For the year ended December 31, 2018
Revenues:
Professional fees earned	$ 100,000
Rent earned	$ 16,000
Dividends earned	$ 2,200
Interest earned	$ 2,900
Total revenues		$ 121,100
Expenses:
Depreciation expense - Building	$ 11,440
Depreciation expense - Equipment	$ 8,250
Wages expense	$ 30,500
Interest expense	$ 5,100
Insurance expense	$ 8,000
Rent expense	$ 10,100
Supplies expense	$ 7,200
Postage expense	$ 3,100
Property taxes expense	$ 3,000
Repairs expense	$ 6,100
Telephone expense	$ 2,600
Utilities expense	$ 3,100
Total expenses		$ 98,490
Net income		$ 22,610

Requirement 1b.:

O. Tybalt
Statement of Retained earnings
For the year ended December 31, 2018
Retained earnings beginning balance	$ 124,600
Add: Net income	$ 22,610
(Less): Dividends	($ 12,600)
Retained earnings ending	$ 134,610

Requirement 1c.:

O. Tybalt
Balance sheet
As on December 31, 2018
Assets
Current assets:
Cash	$ 6,500
Short-term investments	$ 23,000
Supplies	$ 8,700
Prepaid insurance	$ 8,000
Total current assets		$ 46,200
Property, plant and equipment:
Equipment	$ 55,000
(Less): Accumulated depreciation—Equipment	($ 27,500)
Building	$ 156,000
(Less): Accumulated depreciation—Building	($ 52,000)
Land	$ 65,110
Total property, plant and equipment		$ 196,610
Total assets		$ 242,810
Liabilities
Current liabilities:
Accounts payable	$ 16,500
Interest payable	$ 2,100
Rent payable	$ 3,100
Wages payable	$ 2,900
Property taxes payable	$ 1,400
Unearned professional fees	$ 7,200
Current portion of long term note payable	$ 8,000
Total current liabilities		$ 41,200
Log-term liabilities:
Long-term notes payable		$ 60,500
Total liabilities		$ 101,700
Equity
Common stock	$ 6,500
Retained earnings	$ 134,610
Total equity		$ 141,110
Total liabilities and equity		$ 242,810

Requirement 2:

CLOSING ENTRIES
Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Professional fees earned	$ 100,000
	Rent earned	$ 16,000
	Dividends earned	$ 2,200
	Interest earned	$ 2,900
	Income Summary		$ 121,100
	[To close revenue accounts]
Dec. 31	Income summary	$ 98,490
	Depreciation expense - Building		$ 11,440
	Depreciation expense - Equipment		$ 8,250
	Wages expense		$ 30,500
	Interest expense		$ 5,100
	Insurance expense		$ 8,000
	Rent expense		$ 10,100
	Supplies expense		$ 7,200
	Postage expense		$ 3,100
	Property taxes expense		$ 3,000
	Repairs expense		$ 6,100
	Telephone expense		$ 2,600
	Utilities expense		$ 3,100
	[To close expense accounts.]
Dec. 31	Income summary [$121,100 - $98,490]	$ 22,610
	Retained earnings		$ 22,610
	[To close Net income to income summary]
Dec. 31	Retained earnings	$ 12,600
	Dividends		$ 12,600
	[To close dividends]