Problem

Preparing financial statements from the trial balance [20-30 min]Link Back to Chapter 1 (I...

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 ledger in Problem prepare the following financial statements for Party Time Amusements Company:

Requirements

1. Income statement for the month ended August 31, 2012.
2. Statement of retained earnings for the month ended August 31, 2012. The beginning balance of retained earnings was $0.
3. Balance sheet at August 31, 2012

Analyzing and journalizing transactions, posting, and preparing a trial balance [40-50 min]

Review the facts given in P2-44B.

Requirements

1. Journalize each transaction of Party Time as shown for August 1. Explanations are not required.
2. Post the transactions to the T-awccounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal, as shown in the chapter.

Identifying common accounts and normal account balances [10-15 min]Party Time Amusements Company owns movie theaters. Party Time engaged in the following business transactions in 2012:

Aug1	Daniel Smith invested $400,000 personal cash in the business by depositing that amount in a bank account titled Party Time Amusements. The business issued common stock to Smith.
2	Paid $350,000 cash to purchase a theater building.
5	Borrowed $200,000 from the bank. Smith signed a note payable to the bank in the name of Party Time.
10	Purchased theater supplies on account, $1,300.
15	Paid $1,000 on account.
15	Paid property tax expense on theater building, $1,200.
16	Paid employees’ salaries $2,700, and rent on equipment $1,700. Make a single compound entry.
28	Paid cash dividends of $8,000.
31	Received $25,000 cash from service revenue and deposited that amount in the bank.

Requirements

1. Create the list of accounts that Party Time Amusements will use to record these transactions.
2. Identify the account type and normal balance of each account identified in Requirement 1.