Question

Instructions Using the information in the adjusted trial balance, do the following (a) Prepare an income statement and a retained earnings statement for the 2 months ended December 31, 2017, and a classified statement of financial position at December 31, 2017. The note payable has a stated interest rate of 6%, and the principal and interest are due on November 16, 2019. (b) Mei-ling has decided that her year end will be December 31, 2017. Prepare closing entries as of December 31, 2017 (c) Prepare a post-closing trial balance. MC4 Mei-ling had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Mei-ling prepared the following adjusted trial balance. Credit 875 NTS 40 75 300 MATCHA CREATIONS Adjusted Trial Balance December 31, 2017 Debit Cash NT$1,180 Accounts Receivable Supplies 350 Prepaid Insurance 1.210 Equipment 1.200 Accumulated Depreciation Equipment Accounts Payable Salaries and Wages Payable Unearned Service Revenue Notes Payable Interest Payable Share Capital-Ordinary Dividends 500 Service Revenue Salaries and Wages Expense 1,006 Utilities Expense 125 Advertising Expense 165 Supplies Expense 1,025 Depreciation Expense Insurance Expense Interest Expense NTS7,801 2,000 800 4,515 110 NT$7,801

Answer 1

a.

Income Statement
Service Revenue		$     4,515
Salaries and Wages Expense	$     1,006
Utilities Expense	$        125
Advertising Expense	$        165
Supplies Expense	$     1,025
Depreciation Expense	$           40
Insurance Expense	$        110
Interest Expense	$           15
		$     2,486
Net Income		$     2,029

Statement of Retained Earnings
Beginning Balance	$            -
Add : Net Income	$     2,029
Less : Dividend	$        500
Ending balance	$     1,529

Balance Sheet
Assets
Current Assets
Cash	$     1,180
Accounts Receivable	$        875
Supplies	$        350
Prepaid Insurance	$     1,210
Total Current Assets		$     3,615
Equipment	$     1,200
Less : Accumulated Depreciation	$         -40
Total Property, Plant and Equipment		$     1,160
Total Assets		$     4,775
Liabilities & Owner's Equity
Current Liabilities
Accounts Payable	$           75
Salaries and Wages Payable	$           56
Unearned Service Revenue	$        300
Total Current Liabilities		$        431
Non-Current Liabilities
Notes Payable	$     2,000
Interest Payable	$           15
Total Non-Current Liabilities		$     2,015
Total Liabilities		$     2,446
Owner's Equity
Share Capital	$        800
Retained Earnings	$     1,529
Total Owner's Equity		$     2,329
Total Liabilities & Owner's Equity		$     4,775

b.

Account Titles	Debit	Credit
Service Revenue	4515
Income Summary		4515
(TO close revenue accounts)
Income Summary	$     2,486
Salaries and Wages Expense		$     1,006
Utilities Expense		$        125
Advertising Expense		$        165
Supplies Expense		$     1,025
Depreciation Expense		$           40
Insurance Expense		$        110
Interest Expense		$           15
(To close expense accounts)
Income Summary	$     2,029
Retained Earnings		$     2,029
(To close income summary)
Retained Earnings	$        500
Dividends		$        500

c.

Account Titles	Debit	Credit
Cash	$     1,180
Accounts Receivable	$        875
Supplies	$        350
Prepaid Insurance	$     1,210
Equipment	$     1,200
Accumulated Depreciation		40
Accounts Payable		$           75
Salaries and Wages Payable		$           56
Unearned Service Revenue		$        300
Notes Payable		$     2,000
Interest Payable		$           15
Share Capital		$        800
Retained Earnings		$     1,529
Total	$     4,815	$     4,815