Q2. The December 31 2015 adjusted TB for the Blueboy Cheese Corporation is prese

Question

Q2. The December 31 2015 adjusted TB for the Blueboy Cheese Corporation is presented below
Debits
Credits
Cash
21,000
Account Receivable
300,000
Prepaid Rent
10,000
Inventory
50,000
Office equipment
600,00
Accumulated depreciation- office equipment
250,000
Account payable
60,000
Notes Payable (due within 6 months)
60,000
Salaries payable
8,000
Interest payable
2,000
Equity
400,000
Retained earnings
100,000
Sales Revenue
800,000
Cost of goods sold
480,000
Salaries Expense
120,000
Rent Expense
30,000
Depreciation Expense
60,000
Interest expense
4,000
Advertising Expense
5,000
1,680,000
1,680,000
Required:
Prepare an income statement for the year ended December 31, 2015, and a Balance sheet.
Note: Retained earnings is Net Income that has not been used up from previous years. Add it up to the Equity

Explanation / Answer

SOLUTION

(A)

BLUEBOY CHEESE CORPORATION

Income Statement

For the Year Ended December 31, 2015

(B)

BLUEBOY CHEESE CORPORATION

Balance sheet

At December 31, 2015

Amount ($) Amount ($) Sales revenue 800,000 Cost of goods sold 480,000 Gross profit (loss) 320,000 Operating expenses:   Salaries expense 120,000   Rent expense 30,000   Depreciation expense 60,000   Advertising expense 5,000 Total operating expenses 215,000 Operating income (loss) 105,000 Other expense:   Interest expense 4,000 Net income (loss) 101,000

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