Question

M2. SERVICE COMPANY FINANCIAL STATEMENTS Note: For a problem using the sole proprietorship form of business organization, download PFS from the website for this book found at cengagebrain.com. The ledger of Skitch Corp. showed the following balances after adjustment on June 30, 2012, the end of the current fiscal year: Accounts payable $ 55,600 General expenses $112,350 Accounts receivable 103,890 Interest expense 6,750 Accumulated 26,250 depreciation-equipment Notes payable 46,335 Cash 80,370 Prepaid insurance 10,125 Common stock 300,000 Retained earnings, July 1, 0 Salaries expense 621,450 2011 Dividends 18,000 Sales 943,500 Equipment 280,000 Advertising expense 138,750 The president of Skitch has asked you to develop a financial statement worksheet (file name FFS) that includes a single-step income statement, a statement of retained earnings, and a balance sheet. This worksheet will allow the financial statements to be prepared quickly by entering account balances in the appropriate cells on the worksheet. Use the information provided as input for your worksheet. Review the Model-Building Problem Checklist on page 154 to ensure that your worksheet is complete. Print the worksheet when done. Check figure: Total assets, $448,135. To test your model, use the following data for the year ended June 30, 2013: Accounts payable $ 67,050 General expenses $ 108,150 Accounts receivable 92,700 Interest expense 9,000 Accumulated 52,500 depreciation equipment Notes payable 44,085 Cash 72,400 Prepaid insurance 10,800 Common stock 300,000 Retained earnings, July 1, 46,200 Salaries expense 659,835 2012 Dividends 0 Sales 892,500 Equipment 320,000 Advertising expense 129,450 Print the worksheet when done. Check figure: Total assets, $443,400. CHART (optional) Utilizing the test data worksheet, prepare a pie chart depicting the percentage of each expense to total expenses. Print the chart when done.

Answer 1

Income Statement DR CR $ $ $ $ $ Skitch Corp. Work Sheet For the Year Ending June 31, 2013 Adjusted Trial Balance DR CR 72,400 92,700 10,800 3,20,000 $ 52,500 $ 67,050 $ 44,085 $ 46,200 $ 3,00,000 Accounts Cash Accounts receivable Prepaid insurance Equipment Accumulated depretiation - equipment Accounts payable Notes payable Retained earnings Common stock Dividends Sales General expences Salaries expence Advertizing expence Interest expence $ $ $ Balance Sheet DR CR 72,400 92,700 10,800 3,20,000 $ 52,500 $ 67,050 $ 44,085 $ 46,200 $ 3,00,000 $ $ 8,92,500 8,92,500 $ $ $ S $ $ $ $ 1,08,150 6,59,835 1,29,450 9,000 14,02,335 $ $ $ 1,08,150 6,59,835 1,29,450 9,000 9,06,435 $ $ 9,06,435 $ 5,09,835 $ 14,02,335 $ $ $ Net income 8,92,500 $ (13,935) $ 8,78,565 4,95,900 $ 13,935 $ 5,09,835 $ 5,09,835 Skitch Corp. Income Statement For the Year Ending June 31, 2013 $ 8,92,500 $ $ Sales Expences: General expences Salaries expence Advertizing expence Interest expence Total expences Net income 1,08,150 6,59,835 1,29,450 9,000 $ $ $ 9,06,435 (13,935) $

Skitch Corp. Statement of Owner's Equity For the Year Ending June 31, 2013 $ Skitch Corp., beginning capital Common stock Net income $ $ $ $ $ 46,200 3,00,000 (13,935) 3,32,265 Dividends Skitch Corp., ending capital June 31, 2013 3,32,265 Skitch Corp. Balance Sheet June 31, 2013 LIABILITIES $ $ $ 67,050 44,085 1,11,135 ASSETS Current assets Cash Accounts receivable Prepaid insurance Total current assets Prorerty, Plant & Equipment Equipment Less: Accum. depretiation - Equipment $ Total assets $ $ $ $ Accounts payable 72,400 Notes payable 92,700 Total liabilities 10,800 1,75,900 Skitch Corp., capital OWNER'S EQUITY $ 3,32,265 3,20,000 52,500 $ $ 2,67,500 4,43,400 Total liabillities and Owner's Equity $ 4,43,400