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Preparing Financial Statements and Closing Entries Beneish Company has the following account balances at December 31,...

Preparing Financial Statements and Closing Entries
Beneish Company has the following account balances at December 31, the end of its fiscal year.

Debit Credit
Cash $ 8,000
Accounts receivable 6,500
Equipment 78,000
Accumulated depreciation $14,000
Notes payable 10,000
Common stock 43,000
Retained earnings 20,600
Dividends 8,000
Service fees earned 75,000
Rent expense 18,000
Salaries expense 37,100
Depreciation expense 7,000
Totals $162,600 $162,600


(a) Prepare Beneish Corporation's income statement and statement of stockholders' equity for year-end December 31, and its balance sheet as of December 31. There were no stock issuances or repurchases during the year. (Do not use negative signs with your answers unless otherwise noted.)

Beneish Corporation

Income Statement

For Year Ended December 31
AnswerCashRetained earningsService fees earnedDividendsNotes Payable Answer
Rent expense Answer
Salaries expense Answer
Depreciation expense Answer
Net income Answer

Note: Use a negative sign for any answer that decreases the balance.

Beneish Corporation

Statement of Stockholders' Equity

For Year Ended December 31
Common Stock Retained Earnings Total Stockholders' Equity
Balance at December 31, Beg Answer Answer Answer
Stock issuance Answer Answer Answer
AnswerCashNotes PayableDividendsRetained earningsService fees earned Answer Answer Answer
Net income Answer Answer Answer
Balance at December 31, End Answer Answer Answer

Note: Use a negative sign with your accumulated depreciation answer.

Beneish Corporation

Balance Sheet

December 31
Assets Liabilities
AnswerRetained earningsService fees earnedCashNotes PayableDividends Answer
Accounts receivable Answer
Equipment, gross Answer
Accumulated depreciation Answer
Equipment, net Answer
Total assets Answer
AnswerCashNotes PayableRetained earningsService fees earnedDividends Answer
Total liabilities Answer
Common stock Answer
AnswerCashDividendsNotes payableService fees earnedRetained earnings Answer
Total liabilities and equity Answer


(b) Prepare journal entries to close Beneish's temporary accounts.

GENERAL JOURNAL
Ref. Description Debit Credit
(1) AnswerRetained EarningsService Fees EarnedStock issuanceCashDividends Answer Answer
AnswerRetained EarningsService Fees EarnedStock issuanceCashDividends Answer Answer
To close revenue account.
(2) AnswerDividendsService Fees EarnedRent ExpenseRetained EarningsStock issuance Answer Answer
AnswerDividendsService Fees EarnedRent ExpenseRetained EarningsStock issuance Answer Answer
To close rent expense account.
(3) AnswerRetained EarningsDividendsSalaries ExpenseStock issuanceService Fees Earned Answer Answer
AnswerRetained EarningsDividendsSalaries ExpenseStock issuanceService Fees Earned Answer Answer
To close salaries expense account.
(4) AnswerStock issuanceRetained EarningsService Fees EarnedDepreciation ExpenseDividends Answer Answer
AnswerStock issuanceRetained EarningsService Fees EarnedDepreciation ExpenseDividends Answer Answer
To close depreciation expense account.
(5) AnswerService Fees EarnedCashRetained EarningsStock issuanceDividends Answer Answer
AnswerService Fees EarnedCashRetained EarningsStock issuanceDividends Answer Answer
To close dividend account.


(c) Set up T-accounts for each account and post the closing entries. Note: Only those ledger accounts affected by closing process are shown here.

  • Enter beginning balances in the appropriate answer box.

  • Enter transactions in the T-accounts in the order they appear, using first available answer box on the appropriate side of the T-account.

  • Compute the ending balances.

Retained Earnings
Answer Answer Beg Bal.
Answer Answer
Answer Answer
Answer Answer
Answer Answer End Bal.
Service Fees Earned
Answer Answer Beg Bal.
Answer Answer End Bal.
Rent Expense
Beg Bal. Answer Answer
End Bal. Answer Answer
Depreciation Expense
Beg Bal. Answer Answer
End Bal. Answer Answer
Salaries Expense
Beg Bal. Answer Answer
End Bal. Answer Answer
Dividends
Beg Bal. Answer Answer
End Bal. Answer Answer
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Answer #1

(a)

Beneish Corporation
Income Stament
For Year Ended December 31
Particulars Amount
Service fees earned $           75,000
Rent $         (18,000)
Salaries Expenses $         (37,100)
Depreciation Expenses $           (7,000)
Net Income $           12,900
Beneish Corporation
Statement of Stockholders' Equity
For Year Ended December 31
Particulars Common Stock Retained Eanings Total
Balance at December , Beg $           43,000 $                      20,600 $        63,600
Stock Issuance $                     -   $                               -   $                 -  
Dividend Paid $                     -   $                      (8,000) $        (8,000)
Net Income/ Loss $                     -   $                      12,900 $        12,900
Balance at December , End $           43,000 $                      25,500 $        68,500
Beneish Corporation
Balance Sheet
as at December 31
Assets Liabilities
Cash $              8,000 Notes Payable $        10,000
Accounts receivable $              6,500 Total liabilities $        10,000
Equipment, gross $           78,000 Common stock $        43,000
Accumulated depreciation $         (14,000) Retained Earnings $        25,500
Equipment, net $           64,000
Total assets $           78,500 Total liabilities and equity $        78,500
GENERAL JOURNAL
Ref. Description Debit Credit
1 Services Fees Earned $                      75,000 $                 -  
Retained Earnings $                               -   $        75,000
To close revenue account.
2 Retained Earnings $                      18,000 $                 -  
Rent $                               -   $        18,000
To close rent expense account.
3 Retained Earnings $                      37,100 $                 -  
Salaries Account $                               -   $        37,100
To close salaries expense account.
4 Retained Earnings $                        7,000 $                 -  
Depreciation $                               -   $          7,000
To close depreciation expense account.
5 Retained Earnings $                        8,000 $                 -  
Dividend $                               -   $          8,000
To close dividend account.

c

Retained Earnings
$                                  -   $                      75,000 $        20,600
$                        18,000 $                               -  
$                        37,100 $                               -  
$                           7,000 $                               -  
$                           8,000 $                               -   $        25,500
Service Fees Earned
$                                  -   $                      75,000 $                 -  
$                        75,000 $                               -   $                 -  
Rent Expense
$               -   $                        18,000 $                               -  
$               -   $                                  -   $                      18,000
Depreciation Expense
$               -   $                           7,000 $                               -  
$               -   $                                  -   $                        7,000
Salaries Expense
$               -   $                        37,100 $                               -  
$               -   $                                  -   $                      37,100
Dividends
$               -   $                           8,000
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