Question

Carlson & Chan Sports Mgt Incorporated Trial Balance July 31, 2020 Debit Credit $ 345,567 56,788 12,500 2,250 2,000 345,670 $ 35,400 1,450,000 245,000 345,050 179,748 105 120 130 140 145 170 171 175 176 190 195 210 215 230 270 310 320 320 405 505 510 520 530 545 550 560 565 570 575 Cash Accounts Receivable Supplies Inventory Prepaid Insurance Prepaid Rent Future & Fixtures Accumulated Depreciation - F&F Building Accumulated Depreciation - Building Land Trademarks Salaries Payable Accounts Payable Unearned Service Revenue Mortgage Payable (See note 2) Common Stock Retained Earnings Dividends Sports Consulting Fee Revenue Wages Expense Rent Expense Subcontractor Expense Supplies Expense Repairs & Maintenance Expense Insurance Expense Office Expense Postage & Shipping Expense Travel & Entertainment Expense Rent Expense 15,950 17,567 150,000 756,790 140,000 150,000 56,000 1,545,544 75,000 24,000 24,000 7,670 35,600 14,500 45,670 4,560 5,678 24,000 $ 3,056,251 $ 3,056,251

   

Assignment: Prepare in proper form:

1. The Balance Sheet
2. The Statement of Retained Earnings
3. The Income Statement
4. Calculate the Current Ratio
5. Calculate Working Capital

Answer 1

	NOTE:
	Notes 1 & 2 are missing in the question. Hence, solution is given without the effect of
	those notes.
A]	INCOME STATEMENT
	Revenues:
	Sports consulting fee		$        1,545,544
	Expenses:
	Wages expense	$             75,000
	Rent expense	$             24,000
	Subcontractor expense	$             24,000
	Supplies expense	$               7,670
	Repairs & maintenance expense	$             35,600
	Insurance expense	$             14,500
	Office expense	$             45,670
	Postage and shipping expense	$               4,560
	Travel and entertainment expense	$               5,678
	Rent expense	$             24,000
	Total operating expenses		$            260,678
	Income before tax		$ 1,284,866
B]	STATEMENT OF RETAINED EARNINGS
	Beginning balance		$ 150,000
	Add: Net income for the year		$ 1,284,866
	Less: Cash dividends		$            (56,000)
	Ending balance		$        1,378,866
C]	BALANCE SHEET
	Assets
	Current assets:
	Cash		$ 345,567
	Accounts receivable		$ 56,788
	Supplies inventory		$ 12,500
	Prepaid rent		$                 2,000
	Prepaid insurance		$                 2,250
	Total current assets			$        419,105
	Non-current assets:
	PP&E:
	Furniture and fixtures	$           345,670
	Accumulated depreciation-F&F	$             35,400	$            310,270
	Building	$ 1,450,000
	Accumulated depreciation-Building	$           245,000	$ 1,205,000
	Land		$            345,050
	Total PP&E		$ 1,860,320
	Intangible assets:
	Trade marks		$            179,748
	Total non-current assets			$    2,040,068
	Total assets			$    2,459,173
	Total liabilities and Stockholders' Equity
	Current liabilities:
	Salaries payable		$              15,950
	Accounts payable		$              17,567
	Unearned service revenue		$            150,000
	Mortgage payabe-Current portion [Details--Note 2 not seen]		$                        -
	Total current liabilities			$        183,517
	Non-current liabilities-Mortgage payable			$        756,790
	Total liabilities			$        940,307
	Stockholders' Equity
	Common stock		$            140,000
	Retained earnings		$ 1,378,866
	Total stockholders' equity			$    1,518,866
	Total liabilities and stockholders' equity			$    2,459,173
D]	Current ratio = Current assets/Current liabilities = 419105/183517 =	2.28
E]	Working capital = Current assets-Current liabilities = 419105-183517 =	$           235,588