Question

QUESTION 32 Sodexo Corporation provides food services to universities. Its account balances are provided below in alphabetical order for the month ended July 31, 2018. Sodexo's Retained Earnings account balance represents the balance as of June 30, 2017. All other account balances are as of July 31, 2018. Accounts Payable 3,100 Accounts Receivable 1,400 Buildings 22,000 Cash 15,600 Commission Revenue 12,700 Common Stock 20,000 Dividends 8,000 Insurance Expense 2,200 Land 35,000 Notes Payable, due 2020 3,300 Rent Expense 2,400 Retained Earnings, June 30, 2017 57,000 Salaries Expense 10,000 Supplies Expense 400 REQUIRED: Prepare the following financial statements for the period ending July 31, 2018 using proper format: a. Income Statement b. Statement of Retained Earnings c. Balance Sheet

Answer 1

Preparing the Financial Statements for the period ending July 31,2018:-

a. Preparing Income Statement:-

Sodexo Corporation

Income Statement

For the Year Ended July 31,2018

Accounts	Amount	Amount
Revenue:-
Commission Revenue	$12,700
Total Revenue		$12,700
Less:- Expenses
Insurance Expense	$2,200
Rent Expense	2,400
Salaries Expense	10,000
Supplies Expense	400
Total Expenses		($15,000)
Net Loss		($2,300)

b. Preparing Statement of Retained Earnings:-

Sodexo Corporation

Statement of Retained Earnings

For the Year Ended December 31,2018

Accounts	Amount
Retained Earnings, June 30,2017	$57,000
Less:- Net Loss	(2,300)
	$54,700
Less:- Dividends	(8,000)
Retained Earnings, July 31,2018	$46,700

c. Preparing Balance Sheet:-

Sodexo Corporation

Balance Sheet

July 31,2018

Accounts	Amount	Amount
Assets:-
Cash	$15,600
Accounts Receivable	1,400
Buildings	22,000
Land	35,000
Total Assets		$74,000
Liabilities and Stockholders Equity:-
Liabilities:-
Accounts Payable	$3,100
Notes Payable, Due 2020	3,300
Total Liabilities		$6,400
Stockholders Equity:-
Common Stock	$20,000
Retained Earnings, July 31,2018	46,700
Total Stockholders Equity		$66,700
Total Liabilities and Stockholders Equity		$73,100

There is a Difference of $900 between Total Debits and Credits. Total of Debits (Accounts Receivable, Buildings, Cash, Dividends, Insurance Expense,Land, Rent Expense, Salaries Expense, Supplies Expense) is $97,000 and Total of Credits (Accounts Payable, Commission Revenue, Common Stock,Notes Payable, Retained Earnings) is $96,100. That's why Balance Sheet also shows the difference of $900 between Total Assets and Total Liabilities and Stockholders Equity.