Question

6. (20 points) Preparing financial statements from an adjusted trial balance North Star Inc. Adjusted Trial Balance 31-Dec-18 185,000 Allowance for Doubtl Accounts Inventory (as of 12/31/18) Supplies Equipment 2,400 275,000 355,000 27s… Building Accumulated Deperciatbn- Building 195,000 29,500 Accounts Payable Salaries and Wages Payable $O.10 Common Stock APIC Retained Earnings 145,000 Selling Expenses Administratve Expenses Income Tax Expense 289,300 s 245,000 $ 286,000 75,000 52,049,950 EXCEL >Use of EXCEL is required. Create your own EXCEL file to complete the five requirements (below). Then >into WORD (Refer to example on page 3) Required: 1. 2. 3. 4. 5. Prepare the income Statement (Multiple Step Format) Prepare the Statement of Retained Earnings Prepare the Balance Sheet (Classified Format) Prepare the necessary year-end closing entries Prepare the Year End Trial Balance

Answer 1

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	1. Multistep Income Statement:
	Sales Revenue		$1,285,000
	Less: Cost of Goods Sold		$   289,300
	Gross Margin		$   995,700
	Less: Operating Expense
	Selling Expense	$   245,000
	Administrative Expense	$   286,000
	Total Operating Expense		$   531,000
	Operating Income		$   464,700
	Less: Income Tax Expense		$     75,000
	Net Income		$   389,700
	2. Statement of Retained Earning:
	Retained Earning at the beginning		$     84,000
	Add: Net Income for the period		$   389,700
	Retained Earning, Ending		$   473,700
	3. Balance Sheet:
	Assets
	Current Assets:
	Cash		$   185,000
	Accounts Receivable	$     14,250
	Allowance for doubtufl Accounts	$         -950	$     13,300
	Inventory		$     48,000
	Supplies		$        2,400
	Total Curretn Assets		$   248,700
	Land		$   275,000
	Equipment	$   275,000
	Less: Accumulated Depreciation-Equipment	$ -180,000	$     95,000
	Building	$   355,000
	Less: Accumulated Depreciation-Building	$ -195,000	$   160,000
	Total Assets		$   778,700
	Liabilities
	Current Liabilities:
	Accounts Payable		$     29,500
	Salaries and wages Payable		$        4,500
	Total Current Liabilities		$     34,000
	Mortgage Payable		$   125,000
	Total Liabilities		$   159,000
	Stockholder's Equity
	Common Stock		$        1,000
	Additional paid-in-capital		$   145,000
	Retained Earnings (From Part-2)		$   473,700
	Total Stockholder's Equity		$   619,700
	Total Liabilities and Stockholder's Equity		$   778,700
	4. Closing Entries
Date	Accounts	Debit	Credit
Dec 31 2018	Sales Revenue	$1,285,000
Dec 31 2018	Income Summary		$1,285,000
	(To close revenue account)
Dec 31 2018	Income Summary	$   895,300
Dec 31 2018	Cost of Goods Sold		$   289,300
Dec 31 2018	Selling Expense		$   245,000
Dec 31 2018	Administrative Expense		$   286,000
Dec 31 2018	Income Tax Expense		$     75,000
	(to close expense account)
Dec 31 2018	Income Summary	$   389,700
Dec 31 2018	Retained Earning		$   389,700
	(to close income summary account)
	5. Post Closing Trial Balance
	Account	Debit	Credit
	Cash	$   185,000
	Accounts Receivable	$     14,250
	Allowance for doubtufl Accounts		$           950
	Inventory	$     48,000
	Supplies	$        2,400
	Land	$   275,000
	Equipment	$   275,000
	Accumulated Depreciation-Equipment		$   180,000
	Building	$   355,000
	Accumulated Depreciation-Building		$   195,000
	Accounts Payable		$     29,500
	Salaries and wages Payable		$        4,500
	Mortgage Payable		$   125,000
	Common Stock		$        1,000
	Additional Paid-in-Capital		$   145,000
	Retained Earning (From Part-2)		$   473,700
	Total	$1,154,650	$1,154,650