Question

The December 31, 2021, adjusted trial balance for the Blueboy Cheese Corporation is presented below.

Account Title	Debits		Credits
Cash	11,900
Accounts receivable	350,000
Prepaid rent	15,000
Inventory	55,000
Office equipment	650,000
Accumulated depreciation			270,000
Accounts payable			80,000
Notes payable (due in six months)			75,000
Salaries payable			7,900
Interest payable			2,500
Common stock			400,000
Retained earnings			170,000
Sales revenue			790,000
Cost of goods sold	474,000
Salaries expense	118,500
Rent expense	45,000
Depreciation expense	65,000
Interest expense	5,000
Advertising expense	6,000
Totals	1,795,400		1,795,400

Required:
1-a. Prepare an income statement for the year ended December 31, 2021.
1-b. Prepare a classified balance sheet as of December 31, 2021.
2. Prepare the necessary closing entries at December 31, 2021.

Answer 1

Ans 1-a.
Blueboy Cheese Corporation
Income Statement for the Year ended
Dec 31,2021
Particulars	Amt $	Amt $
Sales Revenue		790,000
Cost of Goods Sold		474,000
Gross Profit		316,000
Operating Expenses
Salaries Expense	118,500
Rent Expenses	45,000
Depreciation Expenses	65,000
Advertising Expenses	6,000
Total Operating Expenses		234,500
EBIT		81,500
Interest Expense		5,000
Net Income		76,500

Ans 1-b.
Blueboy Cheese Corporation
Balance Sheet As on Dec31,2021.
Assets	Amt $	Liabilities & Equity	Amt $
Current Assets		Current Liabilities
Cash	11,900	Accounts Payable	80,000
Accounts Receivable	350,000	Salaries Payable	7,900
Inventory	55,000	Interest Payable	2,500
Prepaid Rent	15,000	Notes Payable	75,000
Total Current Assets	431,900	Total Current Liabilities	165,400
Fixed Assets		Equity
Office Equipment	650,000	Common Stock	400,000
Accumulated Depreciation	(270,000)	Retained Earning	246,500
Net Fixed Assets	380,000	Total Equity	646,500
Total Assets	811,900	Liabilities & Equity	811,900

Ans 2.
Closing Entries
Account	Dr $	Cr $
Sales Revenue	790,000
Income Summary		790,000
Cost of Goods Sold		474,000
Salaries Expense		118,500
Rent Expenses		45,000
Depreciation Expenses		65,000
Advertising Expenses		6,000
Interest Expense		5,000
Income Summary	713,500
Income Summary	76,500
Retained Earning		76,500