Question

Financial statements and closing entries

Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 20Y8, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows:

Foxy Investigative Services
End-of-Period Spreadsheet
For the Year Ended November 30, 20Y8
	~	Adjusted Trial Balance
Account Title	~	Dr.	Cr.
	~
Cash	~	22,000
Accounts Receivable	~	68,400
Supplies	~	4,400
Prepaid Insurance	~	2,500
Building	~	433,500
Accumulated Depreciation-Building	~		42,800
Accounts Payable	~		11,400
Salaries Payable	~		4,000
Unearned Rent	~		2,000
Common Stock	~		80,000
Retained Earnings	~		293,400
Dividends	~	11,700
Service Fees	~		707,300
Rent Revenue	~		11,700
Salaries Expense	~	525,900
Rent Expense	~	46,800
Supplies Expense	~	11,000
Depreciation Expense-Building	~	7,600
Utilities Expense	~	7,600
Repairs Expense	~	3,000
Insurance Expense	~	2,000
Miscellaneous Expense	~	6,200
	~	1,152,600	1,152,600

	Required:
1.	A. Prepare an income statement for the year ended November 30, 20Y8. 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 statement of stockholders’ equity for the year ended November 30, 20Y8. 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, 20Y8. 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 $33,000 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.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Income Statement

1A. Prepare an income statement for the year ended November 30, 20Y8. 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

1B. Prepare a statement of stockholders’ equity for the year ended November 30, 20Y8. 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

Statement of Stockholders’ Equity

1		Common Stock	Retained Earnings	Total
2
3
4
5

1C. Prepare a balance sheet as of November 30, 20Y8. 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

1	Assets
2
3
4
5
6
7
8
9
10
11
12
13	Liabilities
14
15
16
17
18
19	Stockholders’ Equity
20
21
22
23

2. Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Closing Entries
2
3
4
5
6
7
8
9
10
11
12
13
14

Final Question

3. If Retained Earnings had instead decreased $33,000 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, 20Y8
1	Revenues
2	Service fees	707300
3	Rent revenue	11700
4	Total revenues		719000
5	Expenses
6	Salaries expense	525900
7	Rent expense	46800
8	Supplies expense	11000
9	Depreciation expense-building	7600
10	Utilities expense	7600
11	Repairs expense	3000
12	Insurance expense	2000
13	Miscellaneous expense	6200
14	Total expenses		610100
15	Net income		108900

1B.

Foxy Investigative Services
Statement of Stockholders' Equity
For the Year Ended November 30, 20Y8
1		Common Stock	Retained Earnings	Total
2	Balance, December 1, 20Y7	80000	293400	373400
3	Net income		108900	108900
4	Dividends		-11700	-11700
5	Balance, November 30, 20Y8	80000	390600	470600

1C.

Foxy Investigative Services
Balance Sheet
November 30, 20Y8
1	Assets
2	Current assets
3	Cash	22000
4	Accounts receivable	68400
5	Supplies	4400
6	Prepaid insurance	2500
7	Total current assets		97300
8	Property, plant, and equipment
9	Building	433500
10	Accumulated depreciation-building	-42800
11	Total property, plant, and equipment		390700
12	Total assets		488000
13	Liabilities
14	Current liabilities
15	Accounts payable	11400
16	Salaries payable	4000
17	Unearned rent	2000
18	Total current liabilities		17400
19	Stockholders' Equity
20	Common stock	80000
21	Retained earnings	390600
22	Total stockholders' equity		470600
23	Total liabilities and stockholders' equity		488000

2.

DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Closing entries
2	Service fees		707300				-707300
3	Rent revenue		11700				-11700
4	Income Summary			719000			719000
5	Income Summary		610100				-610100
6	Salaries expense			525900			525900
7	Rent expense			46800			46800
8	Supplies expense			11000			11000
9	Depreciation expense-building			7600			7600
10	Utilities expense			7600			7600
11	Repairs expense			3000			3000
12	Insurance expense			2000			2000
13	Miscellaneous expense			6200			6200
14	Income Summary		108900				-108900
15	Retained earnings			108900			108900
16	Retained earnings		11700				-11700
17	Dividends			11700			11700

Format provided for closing entries is incomplete. Kindly fill as required. For any clarifications write under the comments section.

3.

Foxy Investigative Services
Retained Earnings Statement
For the Year Ended November 30, 20Y8
1	Retained earnings, December 1, 20Y7		293400
2	Net income	-21300
3	Dividends	-11700
4	Change in retained earnings		-33000
5	Retained earnings, November 30, 20Y8		260400

No format provided for requirement 3. Kindly completely as required. For any clarifications write under the comments section.