Question

Instructions Using the information in the adjusted trial balance, do the following. (a) Prepare an income statement and a retained earnings statement for the 2 months ended December 31, 2017, and a classified statement of financial position at December 31, 2017. The note payable has a stated interest rate of 6%, and the principal and interest are due on November 16, 2019. (b) Mei-ling has decided that her year-end will be December 31, 2017. Prepare closing entries as of December 31, 2017. (c) Prepare a post-closing trial balance

Answer 1

MATCHA CREATIONS Income Statement For the 2 months Ended December31,2017 4515 Service Revenue Less Expenses Salaries and Wages expense Utilities expense Advertising expense Supplies expense Depreciation expense Insurance expense Interest expense Total expenses Net Income 1006 125 165 1025 40 110 15 2486 2029 MATCHA CREATIONS Income Statement For the 2 months Ended December31, 2017 Beginning Balance of Retained Earnings Add Net Income 2029 Less Dividend -500 1529 Ending Balance of Retained Earnings 1529

MATCHA CREATIONS Classified Balance Sheet As on 2 months Ended December31, 2017 Assets Cash 1180 Accounts Receivable 875 Supplies 350 Prepaid Insurance 1210 Total Current Assets 3615 Equipment 1200 Accumulated Depreciation - Equipment -40 1160 Total Assets 4775 Liabilities & Owner's Equity Accounts Payable Salaries & Wages Payable Unearned Service Revenue Interest Payable Total Current Liabilities Notes Payable Total Liabilities Shareholder's Equity Share Capital - Ordinary Retained Earnings Total Liabilities & Shareholder's Equity 446 2000 2446 800 1529 2329 4775

Closing Entries Debit Credit 90 Date Account Title & Explanation 31-Dec Service Revenue Income Summary 4515 4515 2486 31-Dec Income Summary Salaries and Wages expense Utilities expense Advertising expense Supplies expense Depreciation expense Insurance expense Interest expense 1006 125 165 1025 40 110 15 100 201 2029 31-Dec Income Summary Retained Earnings 2029 102 103 104 105 500 31-Dec Retained Earnings Dividend 106 500 107

108 109 110 111 112 875 113 114 116 117 118 119 120 121 MATCHA CREATIONS Post Closing Trial Balance For the 2 months Ended December31, 2017 Cash 1180 Accounts Receivable Supplies 350 Prepaid Insurance 1210 Equipment 1200 Accumulated Depreciation - Equipment Accounts Payable Salaries & Wages Payable Unearned Service Revenue 300 Interest Payable 15 Notes Payable 2000 Share Capital - Ordinary 800 Retained Earnings 1529 Total 4815 4815 123 124 125