Question

Prepare the financial statements below using data in the attached adjusted trial balance.

North Star Inc.
Adjusted Trial Balance
31-Dec-18
	Debit	Credit
Cash	185,000
Accounts Receivable	14,250
Allowance for Doubtful Accounts		950
Inventory as of 12/31/18	48,000
Supplies	2,400
Equipment	275,000
Accumulated Depreciation - Equipment		180,000
Building	355,000
Accumulated Depreciation - Building		195,000
Land	275,000
Accounts Payable		29,500
Salaries and Wages Payable		4,500
Mortgage Payable		125,000
Common Stock $0.10		1,000
APIC		145,000
Retained Earnings		84,000
Sales Revenue		1,285,000
COGS	289,300
Selling Expenses	245,000
Admin Expenses	286,000
Income Tax Expenses	75,000
	2,049,950	2,049,950

Required:

Prepare the Income Statement (Multiple Step Format)

Prepare the Statement of Retained Earnings

Prepare the Balance Sheet (Classified Format)

Prepare the necessary year-end closing entries

Prepare the Year End Trial Balance

Answer 1

ans a	Income statement
	Revenue
	Sales revenue		1,285,000
	Cost of good sold		289300
	Gross profit		995,700
	Selling & administrative expenses
	Selling Expenses	245000
	Admin Expenses	286000
	total Selling & administrative expenses		531000
	Income before taxes		464,700
	Income tax expense		75,000
	Net Income		389,700
ans b	Statement of Retained Eranings
	Beginning Balance	$84,000
	Add: net Income	389,700
	Ending balance	$473,700
	Balance Sheet
	Assets
	Current Assets
	Cash			$185,000
	Accounts Receivable		14250
	Allowance for Doubtful Accounts		950	13300
	Inventory as of 12/31/18			48000
	Supplies			2400
	Total Current Assets			$248,700
	Property Plant & equipment
	Land		275000
	Equipment	275000
	Accumulated Depreciation - Equipment	180000	95000
	Building	355000
	Accumulated Depreciation - Building	195000	160000
	Total Property Plant & equipment			530000
	Total Assets			$778,700
	Liabilities & shareholder equity
	Current Liabilities
	Accounts Payable			29500
	Salaries and Wages Payable			4500
	Total Current Liabilities			34000
	Mortgage Payable			125000
	Total liabilities			159,000
	Shareholder equity
	Common Stock $0.10		1000
	APIC		145000
	Retained earnings		473,700
	Total Shareholder equity			619,700
	Total Liabilities & shareholder equity			778,700
ans d	Closing Entries
	Sales Revenue	1285000
	Income summary		1285000
	Income summary	895300
	COGS		289300
	Selling Expenses		245000
	Admin Expenses		286000
	Income Tax Expenses		75000
	Income summary	389,700
	Retained Eranings		389,700
ans e	Post Closing Trial Balance
	31-Dec-18
		Debit	Credit
	Cash	$185,000
	Accounts Receivable	14250
	Allowance for Doubtful Accounts		950
	Inventory as of 12/31/18	48000
	Supplies	2400
	Equipment	275000
	Accumulated Depreciation - Equipment		180000
	Building	355000
	Accumulated Depreciation - Building		195000
	Land	275000
	Accounts Payable		29500
	Salaries and Wages Payable		4500
	Mortgage Payable		125000
	Common Stock $0.10		1000
	APIC		145000
	Retained Earnings		473,700
	Total	$1,154,650	$1,154,650

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