Question

Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 2018, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows:

	Required:
Foxy Investigative Services
End-of-Period Spreadsheet
For the Year Ended November 30, 2018
	~	Adjusted Trial Balance
Account Title	~	Dr.		Cr.
	~
Cash	~	27,500
Accounts Receivable	~	71,800
Supplies	~	3,550
Prepaid Insurance	~	750
Building	~	330,500
Accumulated Depreciation-Building	~			184,100
Accounts Payable	~			16,100
Salaries Payable	~			6,600
Unearned Rent	~			1,500
Common Stock	~			40,000
Retained Earnings	~			70,300
Dividends	~	30,000
Service Fees	~			675,500
Rent Revenue	~			9,000
Salaries Expense	~	435,000
Rent Expense	~	55,000
Supplies Expense	~	11,850
Depreciation Expense-Building	~	10,000
Utilities Expense	~	8,800
Repairs Expense	~	4,250
Insurance Expense	~	3,000
Miscellaneous Expense	~	11,100
	~	1,003,100		1,003,100
1.	A. Prepare an income statement for the year ended November 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles. B. Prepare a retained earnings statement for the year ended November 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. C. Prepare a balance sheet as of November 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2.	Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.
3.	If Retained Earnings had instead decreased $46,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss.
CHART OF ACCOUNTS
Foxy Investigative Services
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 17 Building 18 Accumulated Depreciation-Building LIABILITIES 21 Accounts Payable 22 Salaries Payable 23 Unearned Rent EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary	REVENUE 41 Service Fees 42 Rent Revenue EXPENSES 51 Salaries Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense-Building 55 Utilities Expense 56 Repairs Expense 57 Insurance Expense 59 Miscellaneous Expense

LabelsCurrent assetsCurrent liabilitiesExpensesFor the Year Ended November 30, 2018November 30, 2018Property, plant, and equipmentRevenuesAmount DescriptionsChange in retained earningsDividendsNet incomeNet lossRetained earnings, December 1, 2017Retained earnings, November 30, 2018Total assetsTotal current assetsTotal expensesTotal liabilitiesTotal liabilities and stockholders’ equityTotal property, plant, and equipmentTotal revenuesTotal stockholders’ equity

1A. Prepare an income statement for the year ended November 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles.

Foxy Investigative Services

Income Statement

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1B. Prepare a retained earnings statement for the year ended November 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.

Foxy Investigative Services

Retained Earnings Statement

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1C. Prepare a balance sheet as of November 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Foxy Investigative Services

Balance Sheet

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13	Liabilities
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19	Stockholders’ Equity
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2. Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Closing Entries
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3. If Retained Earnings had instead decreased $46,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss.

Answer 1

1A.	Foxy Investigative Services
	Income Statement
	For the Year Ended November 30, 2018
	1	Revenues
	2	Service fees	675500
	3	Rent revenue	9000
	4	Total revenues		684500
	5	Expenses
	6	Salaries expense	435000
	7	Rent expense	55000
	8	Supplies expense	11850
	9	Depreciation expense-building	10000
	10	Utilities expense	8800
	11	Repairs expense	4250
	12	Insurance expense	3000
	13	Miscellaneous expense	11100
	14	Total expenses		539000
	15	Net income		145500
1B.	Foxy Investigative Services
	Retained Earnings Statement
	For the Year Ended November 30, 2018
	1	Retained earnings, December 1, 2017		70300
	2	Net income	145500
	3	Dividends	-30000
	4	Change in retained earnings		115500
	5	Retained earnings, November 30, 2018		185800
1C.	Foxy Investigative Services
	Balance Sheet
	November 30, 2018
	1	Assets
	2	Current assets
	3	Cash	27500
	4	Accounts receivable	71800
	5	Supplies	3550
	6	Prepaid insurance	750
	7	Total current assets		103600
	8	Property, plant, and equipment
	9	Building	330500
	10	Accumulated depreciation-building	-184100
	11	Total property, plant, and equipment		146400
	12	Total assets		250000
	13	Liabilities
	14	Current liabilities
	15	Accounts payable	16100
	16	Salaries payable	6600
	17	Unearned rent	1500
	18	Total current liabilities		24200
	19	Stockholders' Equity
	20	Common stock	40000
	21	Retained earnings	185800
	22	Total stockholders' equity		225800
	23	Total liabilities and stockholders' equity		250000

2.

DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Closing entries
2	Service fees		675500				-675500
3	Rent revenue		9000				-9000
4	Income Summary			684500			684500
5	Income Summary		539000				-539000
6	Salaries expense			435000			435000
7	Rent expense			55000			55000
8	Supplies expense			11850			11850
9	Depreciation expense-building			10000			10000
10	Utilities expense			8800			8800
11	Repairs expense			4250			4250
12	Insurance expense			3000			3000
13	Miscellaneous expense			11100			11100
14	Income Summary		145500				-145500
15	Retained earnings			145500			145500
16	Retained earnings		30000				-30000
17	Dividends			30000			30000

3. Net loss $16000

Foxy Investigative Services
Retained Earnings Statement
For the Year Ended November 30, 2018
1	Retained earnings, December 1, 2017		70300
2	Net income	-16000
3	Dividends	-30000
4	Change in retained earnings		-46000
5	Retained earnings, November 30, 2018		24300