Question

Answer all questions

Beacons Company maintains and repairs warning lights, such as those found on radio towers and lighthouses, Beacons Company prepared the following end-of-period spreadsheet at December 31, 2045, the end of the fiscal year: F G AWN- BTC D E Beacons Company End-of-Period Spreadsheet For the Year Ended December 31, 2045 Unadjusted Trial Balance Adjustments Dr. Cr. Dr. Cr. Adjusted Trial Balance Dr. Cr. 6 Account Title 9,100 10.800 38,900 4,200 2,730 98,000 400,000 3,150 2,180 10.800 48,000 1,050 550 98,000 400,000 205,300 12,000 217,300 101,000 101,000 4,800 85,100 15,700 5,000 8 Cash 9 Accounts Receivable 10 Prepaid Insurance 11 Supplies 12 Land 13 Building 14 Accum. Depr.-Building 15 Equipment 16 Accum. Depr.-Equipment 17 Accounts Payable 18 Salaries & Wages Payable 19 Uneamed Rent 20 Common Stock 21 Retained Earnings 22 Dividends 23 Fees Eamed 24 Rent Revenue 25 Salaries & Wages Expense 26 Advertising Expense 27 Utilities Expense 28 Depr. Exp.-Building 29 Repairs Expense 30 Depr. Exp.-Equipment 31 Insurance Expense 32 Supplies Expense 33 Misc. Expense 89,900 15,700 5,000 1,000 75,000 128,100 1,100 2,100 75,000 128.100 10,000 10,000 363,700 9,100 1.100 372,800 1,100 5,000 158, 100 21,700 16,400 12,000 8,850 163,100 21,700 16,400 12,000 8,850 4,800 3,150 2,180 4,320 905.900 4,800 3,150 2,180 4,320 875,000 875,000 37,330 37,330 905.900 35 Instructions 1. Prepare an income statement for the year ended December 31, 2045, 2. Prepare a statement of stockholders' equity for the year ended December 31, 2015. During the year, common stock of $25,000 was issued. 3. Prepare a balance sheet as of December 31, 2045.

Answer 1

Beacons Company Income Statement Year Ended December 31, 2045 $ $ 372,800 1,100 $ 373,900 $ $ Revenue Fees earned Rent revenue Total revenue Expenses Salaries and wages expense Advertising expense Utilities expense Depreciation expense - building Depreciation expense - equipment Repairs expense Insurance expense Supplies expense Misc. expense Total expenses Net income 163,100 21,700 16,400 12,000 4,800 8,850 3,150 2,180 4,320 $ b $ $ 236,500 137,400 a-b

Beginning Balance Issuance of common stock Add: Net Income Less: Dividends Ending Balance Beacons Company Statement of Changes in Stockholders' Equity Year ended December 31, 2045 Common Stock Retained Earnings 50,000 $ 128,100 $ 25,000 - $ 137,400 $ $ (10,000) $ 75,000 $ 255,500 $ Total Equity 178,100 25,000 137,400 (10,000) 330,500

• Common stock beginning balance = Ending balance - Issue during the year = $75,000 - $25,000 = $50,000
• Retained earnings balance of $128,000 in the trial balance is taken as beginning balance assuming there is no movement in retained earnings during the year.
• Dividends are to be reduced from the retained earnings account.

Beacons Company Balance Sheet As on December 31, 2015 $ 60,400 Assets Current Assets Cash $ 10,800 Accounts Receivable $ 48,000 Prepaid Insurance $ 1,050 Supplies $ 550 Total Current Assets Fixed Assets Land $ 98,000 Buildings $ 400,000 Less: Accumulated Depreciation - Building $ (217,300) $ 182,700 Equipment $ 101,000 Less: Accumulated Depreciation - Equipment $ (89,900) $ 11,100 Total Fixed Assets Total Assets Liabilities and Stockholders' Equity Current Liabilities Accounts Payable $ 15,700 Salaries and wages payable $ 5,000 Unearned rent $ 1,000 Total Liabilities Stockholders' Equity Common Stock $ 75,000 Retained Earnings $ 255,500 Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 291,800 $ 352,200 $ 21,700 $ 330,500 $ 352,200

• Unearned revenue is a current liability. It is income received in advance. It is recognized as revenue when the recognition criteria are met.