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The December 31, 2018, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Account...

The December 31, 2018, adjusted trial balance for the Blueboy Cheese Corporation is presented below.

Account TitleDebits Credits

Cash14,600  

Accounts receivable345,000  

Prepaid rent14,500  

Inventory54,000  

Office equipment640,000  

Accumulated depreciation—office equipment  266,000

Accounts payable  78,000

Note payable (due in six months)  72,000

Salaries payable  7,800

Interest payable  2,400

Common stock  400,000

Retained earnings  165,000

Sales revenue  780,000

Cost of goods sold468,000  

Salaries expense117,000  

Rent expense43,500  

Depreciation expense64,000  

Interest expense4,800  

Advertising expense5,800  

Totals1,771,200 1,771,200


Required:
1-a. Prepare an income statement for the year ended December 31, 2018.
1-b. Prepare a classified balance sheet as of December 31, 2018.
2. Prepare the necessary closing entries at December 31, 2018.

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Answer #1

Income statement

sales revenue

780000

less cost of goods sold

468000

gross profit

312000

less expenses

Salaries expense  

117,000

Rent expense  

43,500

Depreciation expense

64000

Advertising expense  

5,800

operating profit

81,700

Interest expense

4800

Net income

76,900

Balance sheet

Current assets

cash

14600

A/R

345000

prepaid rent

14500

Inventory

54000

total of current asset

428100

office equipment net of accumulated depreciation

374000

total of assets

802100

Liabilities and shareholders equity

Liabilities

current liabilities

A/P

78000

notes payable

72000

salaries payable

7800

interest payable

2400

total of liabilities

160200

shareholders equity

common stock

400000

retained earning= 165000+76900

241900

641900

total of liabilities and shareholders equity

802100

Closing entries

sales revenue

780000

income summary

780000

income summary

703100

cost of goods sold

468000

Salaries expense  

117000

Rent expense  

43500

Depreciation expense

64000

Advertising expense  

5800

Interest expense

4800

income summary

76900

retained earning

76900

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