Question

Prepare the Income Statement, the Statement of Stockholders Equity, the Classified Balance Sheet, and the Closing Entries using the adjusted trial balance for Stockton Company.

Paragraph Styles Problem Two Prepare the Income Statement, the Statement of Stockholders' Equity, the Classified Balance Sheet, and the Closing Entries using the adjusted trial balance for Stockton Company. Stockton Company Adjusted Trial Balance For the Year ended December 31, 2018 $ 5,030 2,100 700 10,000 13,700 Cash Accounts Receivable Prepaid Expenses Land Equipment Accumulated Depreciation Accounts Payable Notes Payable, Common Stock Retained Earnings Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 1,100 900 4,200 12,000 10,150 9,750 3,500 1,960 775 250 85 $38,100 $38,190

Answer 1

Stockton Company Income Statement Year Ended December 31, 2018 Revenue Fees earned $ 9,750 a 3,500 Expenses Wages expense Rent expense Utilities expense Depreciation expense Miscellaneous expense Net income 775 250 85 $ $ 6,570 3,180 a-b

Stockton Company Statement of Stockholders' Equity Year Ended December 31, 2018 Common Stock Retained Earnings 12,000 $ 10,150 - 3,180 Total Equity 22,150 Beginning Balance Issuance of common stock Add: Net Income Less: Dividends Ending Balance $ $ $ 3,180 12,000 $ 13,330 $ 25,330

• The common stock account balance given in the adjusted trial balance is treated as the beginning balance assuming that no common stock was issued or retired during the year.
• The retained earnings balance of $10,150 given in adjusted trial balance is treated as its beginning balance assuming that there is no other movement in retained earnings account during the year such as stock dividend.

5,030 2,100 700 $ 7,830 10,000 Stockton Company Balance Sheet As on December 31, 2018 Assets Current Assets Cash $ Accounts Receivable $ Prepaid Expenses $ Total Current Assets Property, Plant and Equipment Land $ Equipment $ 13,700 Less: Accumulated Depreciation $ (1,100) $ Total Assets Liabilities and Stockholders' Equity Current Liabilities Accounts Payable $ Notes Payable $ Total Liabilities Stockholders' Equity Common Stock $ Retained Earnings $ Total Stockholders' Equity Total Liabilities and Stockholders' Equity 12,600 $ 22,600 $ 30,430 900 4,200 $ 5,100 12,000 13,330 $ $ 25,330 30,430

• Notes payable should be classified as a long-term liability if it is payable after one year from the balance sheet date. Here, it is assumed that notes payable are due within one year from the balance sheet date and hence classified as a current liability.

Credit Debit 9,750 $ CLOSING ENTRIES Date Account titles | 31-Dec-18 Fees earned Income summary (To close revenue accounts to income summary) $ 9,750 $ 6,570 $ 3,500 1,960 775 31-Dec-18 Income summary Wages expense Rent expense Utilities expense Depreciation expense Miscellaneous expense (To close expense accounts to income summary) 250 85

$ 3,180 $ 3,180 31-Dec-18 Income summary Retained earnings (To close income summary account to retained earnings)