Question

The December 31, 2021, adjusted trial balance for the Blueboy Cheese Corporation is presented below.

Account Title	Debits		Credits
Cash	14,600
Accounts receivable	345,000
Prepaid rent	14,500
Inventory	54,000
Office equipment	640,000
Accumulated depreciation			266,000
Accounts payable			78,000
Notes payable (due in six months)			72,000
Salaries payable			7,800
Interest payable			2,400
Common stock			400,000
Retained earnings			165,000
Sales revenue			780,000
Cost of goods sold	468,000
Salaries expense	117,000
Rent expense	43,500
Depreciation expense	64,000
Interest expense	4,800
Advertising expense	5,800
Totals	1,771,200		1,771,200

Required:
1-a. Prepare an income statement for the year ended December 31, 2021.
1-b. Prepare a classified balance sheet as of December 31, 2021.
2. Prepare the necessary closing entries at December 31, 2021.

Answer 1

Answer:

Income Statement
Particulars	Amount
Sales Revenue	780000
Less: Cost of Goods Sold	468000
Gross Profit	312000
Less: Salaries	117000
Less: Rent Expense	43500
Depreciation Expense	64000
Interest Expense	4800
Advertising Expense	5800
Net Income	76900

Statement of Retained earnings For the Year Ended Dec 31, 2021
Begining balance	165000
Add: Net Income	76900
Less: Dividends	-
Ending Balance	241900

Blue boy cheese corporation Balance sheet As on dec 31,2021
Assets
Current Assets
Cash		14600
Accounts receivable		345000
Prepaid rent		14500
Inventory		54000
Total current assets		428100
Fixed assets
Office equipment	640000
Accumulated depreciation	(266000)	374000
Total Asstes		802100
Liabilities & Shareholders Equity
Current liabilities
Accounts payable		78000
Notes payable (due in six months)		72000
Salaries payable		7800
Interest payable		2400
Total current liabilities		160200
Shareholders equity
Common stock	400000
Retained earnings	241900
Total shareholders equity		641900
Total liabilities & shareholders equity		802100

Journal entries
Date	Particulars	Debit ($)	Credit ($)
31-Dec	sales revenue	780000
	Income summary		780000
31-Dec	income summary	703100
	Cost of goods sold		468000
	Salaries expense		117000
	Rent expense		43500
	Depreciation expense		64000
	Advertising expense		5800
	Interest expense		4800
31-Dec	Income summary	76900
	Retained earnings		76900