Question

Kristen Company
Adjusted Trial Balance
July 31, 2014
No.	Account Titles	Debits	Credits
101	Cash	$  9,840
112	Accounts Receivable	8,140
157	Equipment	15,900
167	Accumulated Depreciation—Equip.		$  5,400
201	Accounts Payable		2,220
208	Unearned Rent Revenue		3,800
311	Common Stock		18,000
320	Retained Earnings		20,260
332	Dividends	12,000
404	Service Revenue		64,000
429	Rent Revenue		6,500
711	Depreciation Expense	3,700
720	Salaries and Wages Expense	55,700
732	Utilities Expense	14,900
		$120,180	$120,180

Instructions

a) Prepare the income statement, retained earnings statement and the classified balance sheet.

1) Kristen CO For the QUARTER ended July 31, 2014 Income Statement

2) Kristen CO, Retained earnings statement for the QUARTER ended July 31 2014

3) Kristen CO, Balance Sheet July 31 2014

Please answer and write neatly for thumbs up. Thank you in advance.

Answer 1

Kristen Company Income Statement For the Quarter ended July 31, 2014 For the Qua $ Revenue Service revenue Rent revenue Total revenue 64,000 6,500 $ 70,500 Expenses Depreciation Salaries and wages expense Utilities expense Total expenses Net Loss $ $ $ 3,700 55,700 14,900 $ $ 74,300 (3,800) b a-b

Kristen Company Statement of Retained Earnings For the Quarter ended July 31 2014 Beginning Balance Less: Net loss Less: Dividends Ending Balance 20,260 (3,800) (12,000) 4,460

• The retained earnings balance of $20,260 is treated as its beginning balance assuming that there is no other movement in retained earnings account during the year such as stock dividend.
• Net loss is to be reduced from the retained earnings account.
• Dividend paid is reduced from the retained earnings.
  • The debit balance in dividend account in adjusted trial balance is the dividend paid.
  • Entries are as follows:
  • 
    Debit Credit $ 12,000 When dividend is paid: Dividend Cash (being dividend paid in cash) $ 12,000 $ 12,000 Closing entry for dividend account: Retained earnings Dividend (being dividend adjusted against retained earnings) $ 12,000
    

Kristen Company Balance Sheet As on July 31, 2014 ASSETS Current assets Cash Accounts receivable 9,840 8,140 $ 17,980 Non-current assets Equipment Less: Accumulated depreciation 15,900 (5,400) $ $ 10,500 Total assets $ 28,480 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Current Liabilities Accounts payable Unearned rent revenue 2,220 3,800 $ $ 6,020 Stockholders' equity Common stock Retained earnings $ $ 18,000 4,460 $ 22,460 Total liabilities and stockholders' equity $ 28,480

• Unearned rent revenue is a liability. It is the money received in advance from the tenants. Once the period for which the rent is received in advance is completed, the revenue is recognized. The entry will be:

Debit Credit Unearned rent revenue Rent revenue