Question

Financial Statements and Closing Entries The adjusted trial balance shown below is for Fine Consulting Service as of December 31. Byran Sharpe made no capital contributions during the year. SHARPE CONSULTING SERVICE Adjusted Trial Balance December 31 Debit Credit Cash $2,900 Accounts Receivable 3,270 Supplies 5,060 Prepaid Insurance 1,500 Equipment 6,400 Accum. Depr. - Equipment $1,080 Accounts Payable 845 Long - Term Notes Payable 7,200 Common Stock 2,800 Retained Earnings 5,205 Dividends 2,900 Service Fees Earned 62,600 Rent Expense 15,500 Salaries Expense 33,400 Supplies Expense 4,200 Insurance Expense 3,250 Depreciation Expense-Equipment 720 Interest Expense 630 Totals $79,730 $79,730 Required a. Prepare an income statement and a statement of stockholders' equity for the year, and a balance sheet as of December 31. b. Prepare closing entries directly to the Income Summary account. Note: Do not use negative signs with your answers, unless otherwise noted (such as Dividends and Accumulated Depreciation - Equipment).

Answer 1

Solution:

Below are the incoem Statement , Statement of Stock Holder Equity, Blance sheet and closing journal entries:

Sharpe Consulting Service Income Statement For Year Ended December 31 Particulars Amount ($) Amount ($) Service Revenue $ 62,600 Less: Rent Expenses 15,500 Salaries Expense 33,400 Supplies Expense 4,200 3,250 720 Insurance Exp Depreciation Expense Interest Expense Total Expenses Net income 630 57,700 4,900 $

Sharpe Consulting Service Statement of Stockholders Equity For Year Ended December 31 Particulars Common Stock Retained Earnings Total Balance January 1 2,800 5,205 8,005 Add:Net income 4,900 4,900 Less:Dividend paid (2,900) (2,900) Balance, December 31 2,800 7,205 10,005

Sharpe Consulting Service Budgeted Balance Sheet As at December 31 Liabilities 2,900 Accounts Payble 3,270 Long Term Loan Payble 5,060 Total liabilities 1,500 6,400 StockHolders Equity Assets Cash Account Receivable Supplies Prepaid insurance Equipment Less: Accumulated Depreciation- Equipment 845 7,200 8,045 (1,080) 5,320 Common Stock 2,800 Retained Earning 7,205 Total stockHolders Equity 10,005 18,050 Total liabilities and Stock Holders Equity 18,050 Total assets

Date Particulars 31-Dec Service Revenue Income summary (to Close Revenue Account) Debit Credit 62,600 62,600 57,700 31-Dec Income summary Rent Expense Salary Expense Supplies expense Insurance Expense Depreciation-Equipment Interest expense (To close Expenses account) 15,500 33,400 4,200 3,250 720 630 4,900 31-Dec Income summary Retained Earnings (To close Income Summary) 4,900 2,900 31-Dec Retained earnings Dividends (To close Dividend account) 2,900