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 trial balance in Problem, prepare the following financial statements for Sam Mitchell, CPA, P.C.:

Requirements

1. Income statement for the month ended February 29, 2012.
2. Statement of retained earnings for the month ended February 29, 2012. The beginning balance of retained earnings was $0.
3. Balance sheet at February 29, 2012.

Journalizing transactions, posting to accounts in four-column format, and preparing a trial balance [45-60 min]

The trial balance of Sam Mitchell, CPA, P.C., is dated January 31, 2012:

During February, Mitchell or his business completed the following transactions:

Feb 4	Collected $4,000 cash from a client on account.
8	Performed tax services for a client on account, $4,600.
13	Paid business debt on account, $2,400.
18	Purchased office supplies on account, $900.
20	Paid cash dividends of $2,200.
21	Mitchell paid for a deck for his private residence using personal funds, $8,000.
22	Received $2,300 cash for consulting work just completed.
27	Paid office rent, $500.
29	Paid employee salary, $1,600.

Requirements

1. Record the February transactions in the journal. Include an explanation for each entry.
2. Post the transactions to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Open the ledger accounts listed in the trial balance, together with their balances at January 31.
3. Prepare the trial balance of Sam Mitchell, CPA, P.C., at February 29, 2012.