Question

Account Name Debit Credit Cash $35,000 Accounts Receivable 5,600 Food Inventory 21,000 62,500 Merchandise Inventory Prepaids 3,400 Computers 30,000 12.000 Accumulated Amortization - Computers Bakery Equipment 90,000 18,000 Accumulated Amortization - Bakery Equipment Furniture and Fixtures 150,000 15,000 Accumulated Amortization - Furniture and Fixtures Accounts Payable Accrued Liabilities Interest Payable Dividend Payable Long-term Loan 220,000 Common Shares Retained Earnings 50,000 22,000 468,500 Food Revenue Internet Revenue 127,000 Merchandise Revenue 103,000 Food Expense 2 40,000

Answer 1

Accounting Entries to be incorporated

1. Prepaid Insurance A/c Dr 3400

To Insurance A/c 3400

(Being current year prepaid booked)

2. Insurance A/c Dr 3400

To Prepaid Insurance A/c 3400

(Being prepaid expense booked)

3. Wages A/c Dr 900

To Wages Payable A/c 900

4. Depreciation A/c Dr 22500

To Acc Computer A/c 6000

To Acc Bakery Equip A/c 9000

To Acc Furni & Fix A/c 7500

5. Sundry Debtors A/c Dr 1089

To Revenue A/c 1088

6. Retained Earnings A/c Dr 5000

To Dividend Payable A/c 5000

7. Interest Expense A/c Dr 17600

To Interest Payable A/c 17600

8. Telephone Expense A/c Dr 400

Electricity Expense A/c Dr 400

To Expense Payable A/c 800   

Income Statement for the year ended December 2015

Food Revenue 468500

Internet Revenue 127000

Merchandise Revenue 103000

Unbilled Revenue 1089

Total Revenue [A] 699589

Prepaid Insurance 3400

Food Expense 240000

Internet Expense 5400

Electricity Expense 65400

Telephone Expense 20400

Salary Expense 200000

Insurance Expense 5600

Supplies 8000

Rent Expense 60000

Wages 900

Interest Expense 17600

Depreciation 22500

Total Expenses [B] 697800

Retained Earnings [A-B] 1789

Statement of Retained Earnings

Opening Balance 22000

Add: Current Year Profit 1789

Less: Dividend Payable (5000)

Closing Balance =22000+1789-5000=18789

Balance Sheet as at December 2015

Common Shares 50000

Retained Earnings 18789

Accounts Payable 18000

Loan 220000

Interest Payable 17600

Dividend Payable 5000

Telephone Expense Payable 400

Electricity Expense Payable 400

Wages Payable 900

Total Equities & Liabilities 331089

Cash 35000

Accounts Receivable 6689

Food Inventory 21000

Merchandise Inventory 62500

Prepaid Insurance 3400

Computer less Depreciation 12000

Bakery Equipment less Depreciation 63000

Furniture & Fixtures less Depreciation 127500

Total Assets 331089