Question

Below is the adjusted trial balance for ARO Corporation. Complete the following in good form:

1. Income Statement

2. Statement of Retained Earnings

3. Balance Sheet

4. Closing journal entries.

ARO Corporation

Adjusted Trial Balance

December 31

Cas	$18,200
Accounts receivable	34,200
Office Supplies	2,100
Shipping Supplies	3,475
Prepaid Insurance	5,000
Shipping equipment	45,000
Accumulated depreciation		11,080
accounts payable		16,200
Wages payable		4,120
Unearned shipping fees		20,000
Common stock		10,000
Retained earnings		27,875
Dividends	15,000
Shipping fees earned		115,000
Rent expense	8,000
Wages expense	62,000
Supplies expense	2,500
Depreciation expense	4,050
Interest expense	1,000
Utilities expense	3,750
Totals	$204,275	$204,275

Answer 1

Ans. 1 ARO CORPORATION Income Statement For the Year Ended December 31 Amount Amount $115,000 $115,000 Particulars Revenues: Shipping fees earned Total revenue (a) Less: Expenses: Rent expense Wages expense Supplies expense Depreciation expense Interest expense Utilities expense Total expenses (b) Net Income (a - b) $8,000 $62,000 $2,500 $4,050 $1,000 $3,750 $81,300 $33,700 *Net income is the excess of total revenues on expenses. Ans. 2 ARO CORPORATION Retained Earnings Statement For the Year Ended December 31 Particulars Beginning balance of Retained earnings Add: Net income Less: Dividends Ending balance of Retained earnings Amount $27,875 $33,700 $15,000 $46,575 *Net Income is added and dividends are subtracted from beginning balance of retained earnings.

Ans. 3 $62,975 ARO CORPORATION Balance Sheet For the Year Ended December 31 Assets: Cash $18,200 Accounts receivables $34,200 Office supplies $2,100 Shipping supplies $3,475 Prepaid insurance $5,000 Total current assets Shipping equipment $45,000 Less: Accumulated depreciation -$11,080 Total Assets Liabilities and Stockholder's Equity: Liabilities: Accounts payable $16,200 Wages payable $4,120 Unearned shipping fees $20,000 Total Liabilities Stockholder's equity: Common stock $10,000 Retained earnings $46,575 Total Stockholder's Equity Total Liabilities and Stockholder's Equity $33,920 $96,895 $40,320 $56,575 $96,895

Ans. 4
Date	Account Titles and Explanations	Debit	Credit
31-Dec	Shipping fees earned	$115,000
	Income summary		$115,000
	(To close revenue accounts)
31-Dec	Income summary	$81,300
	Rent expense		$8,000
	Wages expense		$62,000
	Supplies expense		$2,500
	Depreciation expense		$4,050
	Interest expense		$1,000
	Utilities expense		$3,750
	(To close expenses accounts)
31-Dec	Income summary	$33,700
	Retained earnings		$33,700
	(To close net income)
31-Dec	Retained earnings	$15,000
	Dividends		$15,000
	(To close the dividends account)