Preparing financial statements from the trial balance [20-30 min]
Link Back to Chapter 1 (Income Statement, Statement of Retained Earnings, Balance Sheet). Refer to Problem After completing the trial balance in Problem prepare the following financial statements for Stubbs Environmental Consulting Company:
Requirements
1. Income statement for the month ended October 31, 2012.
2. Statement of retained earnings for the month ended October 31, 2012. The beginning balance of retained earnings was $0.
3. Balance sheet at October 31, 2012.
Recording transactions, using four-column accounts, posting, and preparing a trial balance [45-60 min]
Van Stubbs started an environmental consulting company and during the first month of operations (October 2012), the business completed the following transactions:
a. Stubbs began the business with an investment of $40,000 cash and a building at $26,000. The business issued $66,000 of common stock to Stubbs.
b. Purchased office supplies on account, $2,400.
c. Paid $18,000 for office furniture.
d. Paid employee’s salary, $1,900.
e. Performed consulting services on account, $3,600.
f. Paid $500 of the account payable created in transaction (b).
g. Received a $300 bill for advertising expense that will be paid in the near future.
h. Performed consulting service for cash, $800.
i. Received cash on account, $1,400.
j. Paid the following cash expenses:
(1) Rent on equipment, $700.
(2)Utilities, $500.
k. Paid cash dividends of $2,400.
Requirements
1. Open the following four-column accounts: Cash, Accounts receivable, Office supplies, Office furniture, Building, Accounts payable, Common stock, Dividends, Service revenue, Salary expense, Rent expense, Advertising expense, and Utilities expense.
2. Record each transaction in the journal. Use the letters to identify the transactions.
3. Post to the accounts and keep a running balance for each account.
4. Prepare the trial balance of Stubbs Environmental Consulting Company at October 31, 2012
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