Problem

Link Back to Chapter 1 (Income Statement, Statement of Retained Earnings, Balance Sheet)....

Link Back to Chapter 1 (Income Statement, Statement of Retained Earnings, Balance Sheet). Preparing financial statements from the trial balance [20-30 min]

Refer to Problem After completing the ledger in Problem prepare the following financial statements for Showtime Amusements Company:

Requirements

1. Income statement for the month ended September 30, 2012.
2. Statement of retained earnings for the month ended September 30, 2012. The beginning balance of retained earnings was $0.
3. Balance sheet at September 30, 2012.

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

Review the facts given in P2-27A.

Requirements

1. Journalize each transaction of Showtime as shown for September 1. Explanations are not required.
2. Post the transactions to the T-accounts, 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]

Showtime Amusements Company owns movie theaters. Showtime engaged in the following business transactions in 2012:

Sep 1	Don Cougliato invested $370,000 personal cash in the business by depositing that amount in a bank account titled Showtime Amusements. The business issued common stock to Cougliato.
2	Paid $360,000 cash to purchase a theater building.
5	Borrowed $260,000 from the bank. Cougliato signed a note payable to the bank in the name of Showtime.
10	Purchased theater supplies on account, $1,400.
15	Paid $1,200 on account.
15	Paid property tax expense on theater building, $1,500.
16	Paid employees’ salaries $2,500, and rent on equipment $1,400. Make a single compound entry.
28	Paid cash dividends of $7,000.
30	Received $21,000 cash from service revenue and deposited that amount in the bank.

Requirements

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