Question

The adjusted trial balance for Tybalt Construction as of December 31, 2019, follows. TYBALT CONSTRUCTION Adjusted Trial Balance December 31, 2019 Debit Account Title Credit No. $ 6,000 101 Cash 104 Short-term investments 24,000 126 Supplies 128 Prepaid insurance 167 Equipment 9,000 8,800 55,000 $ 27,500 168 Accumulated depreciation-Equipment 173 Building 174 Accumulated depreciation-Building 180,000 60,000 183 Land 59,050 201 Accounts payable 203 Interest payable 208 Rent payable 16,500 2,200 3,400 210 Wages payable 213 Property taxes payable 233 Unearned professional fees 244 Current portion of long term note payable 251 Long-term notes payable 307 Common stock 2,700 700 7,900 8,500 62,500 6,000 318 Retained earnings 123,100 319 Dividends 10,500 401 Professional fees earned 105,000 406 Rent earned 17,000 407 Dividends earned 409 Interest earned 2,300 2,700 606 Depreciation expense-Building 612 Depreciation expense-Equipment 623 Wages expense 633 Interest expense 13,200 8,250 25,000 3,800 637 Insurance expense 7,100 640 Rent expense 652 Supplies expense 682 Postage expense 683 Property taxes expense 684 Repairs expense 688 Telephone expense 690 Utilities expense 10,000 6,800 3,100 3,800 8,900 1,700 4,000 $448,000 $448,000 Totals O. Tybalt invested $6,000 cash in the business in exchange for common stock during year 2019. The December 31, 2018, credit balance of the Retained Earnings account was $123,100. Required: 1a. Prepare the income statement for the calendar-year 2019. 1b. Prepare the statement of retained earnings for the calendar-year 2019. 1c. Prepare the classified balance sheet at December 31, 2019. 2. Prepare the necessary closing entries at December 31, 2019.

Answer 1

Prepare Income Statement as follows:

TYBALT CONSTRUCTION
Income Statement
For the Year ended December 31, 2019
Revenue:
Professional fees	$105,000
Rent	$17,000
Dividends	$2,300
Interest	$2,700
Total Revenue		$127,000
Less: Operating Expense
Depreciation Expense - Building	$13,200
Depreciation Expense - Equipment	$8,250
Wage Expense	$25,000
Interest Expense	$3,800
Insurance expense	$7,100
Rent expense	$10,000
Supplies Expense	$6,800
Postage Expense	$3,100
Property tax expense	$3,800
Repair expense	$8,900
Telephone expense	$1,700
Utilities Expense	$4,000
Total Expense		$95,650
Net Income/Loss		$31,350

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Prepare statement of retained earnings as follows:

TYBALT CONSTRUCTION
Statement of Retained Earnings
Beginning Retained Earnings	$123,100
Add: Net Income/(Loss)	$31,350
Less: Dividends	($10,500)
Ending Balance	$143,950

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Prepare Balance sheet as follows:

TYBALT CONSTRUCTION
Balance Sheet
December 31, 2019
Assets
Current Assets:
Cash		$6,000
Short-term investments		$24,000
Supplies		$9,000
Prepaid Insurance		$8,800
Total Current Assets		$47,800
Non-Current Assets:
Property, Plant, Equipment	$55,000
Less: Accumulated Depreciation - PPE	($27,500)	$27,500
Building	$180,000
Less: Accumulated Depreciation - Building	($60,000)	$120,000
Land		$59,050
Total Non-current Assets		$206,550
Total Assets		$254,350
Liabilities
Current liabilities:
Account Payable		$16,500
Interest Payable		$2,200
Rent payable		$3,400
Wages payable		$2,700
Property taxes payable		$700
Unearned professional fees		$7,900
Current portion of long term note payable		$8,500
Total Current liabilities		$41,900
Non-current liabilities:
Long-term notes payable		$62,500
Total liabilities
Stockholder's Equity
Common stock		$6,000
Retained Earnings		$143,950
Total Liabilities & Stockholder's Equity		$254,350

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Prepare closing entries as follows:

Credit Date Account Titles Dec. 31 Professional fees Rent Dividends Interest Income Summary (To close revenue accounts) Debit $105,000 $17,000 $2.300 $2.700 $127.000 $95.650 Dec. 31 Income Summary Depreciation Expense - Building Depreciation Expense - Equipment Wage Expense Interest Expense Insurance expense Rent expense Supplies Expense Postage Expense Property tax expense Repair expense Telephone expense Utilities Expense (To close expense accounts) $13,200 $8,250 $25.000 $3.800 $7.100 $10,000 $6,800 $3,100 $3.800 $8.900 $1,700 $4.000

$31.350 Dec. 31 Income summary ($127,000 - $95,650) Retained Earnings (To transfer of income) $31,350 $10.500 Dec. 31 Retained Earnings Dividends (To record distribution of dividends) $10.500