Question

1a) Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018.

1b) is the Retained Earnings balance of $1,510 the amount that would be reported on the balance sheet as of September 30, 2018?
Required information [The following information applies to the questions displayed below.] Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018. Accounts Payable Accounts Receivable Accumulated Depreciation Cash Common Stock Deferred Revenue Depreciation Expense Equipment Income Tax Expense Interest Revenue Notes Payable (long-term) Notes Payable (short-term) Prepaid Rent Rent Expense Retained Earnings Salaries and Wages Expense Service Revenue Supplies Supplies Expense Travel Expense 310 210 210 310 3,210 310 110 210 510 110 410 1,510 2,210 6,230 510 210 2,610

Answer 1

1a)

210 210 STAR BOOKS CORPORATION Income Statement At September 30, 2018 Debit Credit Accounts payable 610 Accounts Receivable 310 Accumulated Depreciation 910 Cash Common stock Deferred Revenue Depreciation expense 310 Equipment 3210 Income Tax Expense Interest Revenue Notes payable (Long-term) Notes payable (Short-term) Prepaid Rent Rent Expense 410 Retained earnings 1510 Salaries and wages Service revenue 6230 Supplies 5101 Supplies Expense 210 Travel Expense 26101 Total 10510 10510 310

1b)

Retained earning balance on balancesheet is $1790 but not $1510 calculation is as follows:

STAR BOOKS CORPORATION Income Statement At September 30, 2018 Service Revenue Interest Revenue Total Revenue 6230 110 6340 Expenses : Rent Salaries Expenses Supplies Expenses Travel Expenses Depreciation Expenses Income TaxExpenses Total Expenses Net Income 410 2210 210 2610 310 6060 280 STAR BOOKS CORPORATION Retained Earning Statement At September 30, 2018 Retained Earnings (Beginning) Add: Income Retained Earnings (As on 30 September 2018) 1510 280 1790