During its first month of operation, the Quick Tax Corporation, which specialize

Question

During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $40,000, in exchange for 4,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $2,500 July 5 Paid the premium on a 1-year insurance policy, $3,600 July 7 Purchased supplies on account from Little Company, $700. July 10 Paid employee salaries, $2,800 July 14 Purchased equipment from Lake Company, $9,500. Paid $1,500 down and the balance was placed on account. Payments will be $500.00 per month for 20 months. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $6,500 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $8,250 July 31 Declared and paid cash dividends of $450.

Requirement #7: Prepare the financial statements for the Quick Tax Corporation as of July 31 in the space below. You will only be preparing the income statement, statement of retained earnings, and the balance sheet. The statement of cash flows is a required financial statement, but is not required for this case study. Quick Tax Corporation Quick Tax Corporation Quick Tax Corporation Income Statement Statement of Retained Earnings Balance Sheet For the Month Ending July 31 For the Month Ending July 31 July 31 Revenues: Retained Earnings, July 1 Assets: Revenue Add: Net Income Cash Subtotal Supplies Expenses: Less: Dividends Prepaid Insurance Rent Expense Retained Earnings, July 31 Equipment Salaries Expense Less: Accum. Depr. Insurance Expense Total Assets Supplies Expense Depreciation Expense Liabilities: Income Tax Expense Accounts Payable Total Expenses Income Tax Payable Total Liabilities Net Income Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity

Requirement #6: Prepare an adjusted trial balance in the space below. Quick Tax Corporation Adjusted Trial Balance July 31 0 0

Explanation / Answer

QUICK TAX CORPORATION

ADJUSTED TRIAL BALANCE AS ON 31ST JULY

Insurance premium for

Workiing for Cash balance:

Employees' salaries

Insurance Premium

INCOME STATEMENT FOR THE MONTH ENDED 31ST JULY

QUICK TAX CORPORATION

BALANCE SHEET AS ON 31ST JULY

STATEMENT OF RETAINED EARNINGS FOR THE MONTH ENDED 31ST JULY

Retained earnings as on 1st July

Add: Net Income for July

Less:Dividend paid

Retained earnings as on 31st July

QUICK TAX CORPORATION

ADJUSTED TRIAL BALANCE AS ON 31ST JULY

(IN $) DEBIT CREDIT Common Stock . 40,000 cash 42,700 Revenues 14750 Rent for July 2500

Insurance premium for

the month 300 Supplies 700 Employees' Salaries 2800 Equipment 9500 A/c Payable 7500 Prepaid Insurance Premium 3300 Dividend 450 Total 62,250 62,250

Workiing for Cash balance:

DEBIT CREDIT Common stock 40,000 Revenues 14750

Employees' salaries

2800 Rent 2500 Supplies 700

Insurance Premium

3600 Purchase of Eqpt 2000 Dividend Paid 450 Balance c/d 42,700 Total 54,750 54,750 To Bal b/d 42,700

INCOME STATEMENT FOR THE MONTH ENDED 31ST JULY

INCOME Revenues 14750 Less: Salaries 2800 Rent 2500 Supplies 700 Insurance Premium 300 6300 8450 Less:Dividend 450 Retained Profit 8000

QUICK TAX CORPORATION

BALANCE SHEET AS ON 31ST JULY

(IN $) LIABILITIES ASSETS Common Stock 40,000 Cash 42,700 A/c Payable 7,500 Equipment 9,500 P&L Account 8,000 Prepaid Insurance 3300 55,500 55,500

STATEMENT OF RETAINED EARNINGS FOR THE MONTH ENDED 31ST JULY

(IN $)

Retained earnings as on 1st July

0

Add: Net Income for July

8450 8450

Less:Dividend paid

450

Retained earnings as on 31st July

8000

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