3 ACCOUNT 4 Cash 5 Bank 6 Accounts Payable 7 Salaries and wages Payable 8 Retain
ID: 2400262 • Letter: 3
Question
3 ACCOUNT 4 Cash 5 Bank 6 Accounts Payable 7 Salaries and wages Payable 8 Retained Earnings 9 Prepaid Insurance 10 Unearned Service Revenue 11 Allow ance for doubtful accour 12 Land 13 Loss onland 14 Depreciation expense 15 Car Expense 16 Home Expense 17 Eating Expense 18 School Expense 19 Shopping Expense 20 Entertainment Expense 21 Salaries and Wages Expense 22 Insurance expense 23 Uncollectible expense 24 Accumulated depreciation DEBIT CREDIT 44,746.50 510.00 30,064.83 300.00 51,600.00 500.00 2,200.00 2,900.00 2,000.00 500.00 556.81 400.41 123.14 150.00 22.28 229.16 300.00 500.00 1,900.00 500.00 18.200.00 25 Service Revenue 26 COGS 27 Computer Equipment 28 Inventory 29 Accounts Receivable 10,000.00 11,000.00 5,000.00 23,000.00 30 Performed Services 31 Total 32 1,673.47 107.438.30 107.438.30 34 35 3BExplanation / Answer
Before going into the retained earnings, an income statement is required in order to get the net income.
Income statement
Heads
Amount, $
Amount, $
Revenues:
Service revenue
18,200
Performed services
1,673.47
Total Revenues
19,873.47
Less: COGS
10,000
Gross profit
9,873.47
Less: Expenses:
Loss on land
2,000
Depreciation
500
Car
556.81
Salaries
300
Insurance
500
Uncollectible
1,900
Total expenses
5,756.81
Net income
4,116.66
Note: Home, eating, school, shopping, and entertainment expenses should not appear in the income statement, since these are personal expenses.
Assumed the car is used for business purpose; therefore, it is included in the income statement.
Accumulated earning of a firm till the date of present balance sheet is known as retained earnings. It is shown in a statement as below:
Retained earnings statement
Heads
Amount, $
Beginning retained earnings
51,600
Add: Net income during the year
4,116.66
Ending retained earnings
55,716.66
Heads
Amount, $
Amount, $
Revenues:
Service revenue
18,200
Performed services
1,673.47
Total Revenues
19,873.47
Less: COGS
10,000
Gross profit
9,873.47
Less: Expenses:
Loss on land
2,000
Depreciation
500
Car
556.81
Salaries
300
Insurance
500
Uncollectible
1,900
Total expenses
5,756.81
Net income
4,116.66
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.