Rae Services, Inc. provides healthcare diagnostics for patients with autoimmune
ID: 2558489 • Letter: R
Question
Rae Services, Inc. provides healthcare diagnostics for patients with autoimmune diseases. At the end of their first year of operations, Rae Services account balances are shown in the adjusted trial balance shown below:
a) Prepare closing entries.
b) Prepare a post-closing Trial Balance
c) Prepare an Income Statement
d) Prepare a Balance Sheet
e) Prepare a Statement of Retained Earnings
Rae Services, Inc.Adjusted Trial Balance
December 31, 2012 Cash 176,000 Accounts receivable 139,000 Supplies 4,500 Prepaid insurance 2,600 Equipment 88,700 Accumulated depreciation--Equipment 3,400 Accounts payable 67,500 Common stock 250,000 Retained earnings 125,000 Dividends 65,000 Service revenue 214,507 Advertising expense 2,500 Depreciation expense--Equipment 3,400 Insurance expense 1,000 Rent expense 9,900 Salaries expense 163,000 Supplies expense 1,425 Utilities expense 3,382 660,407 660,407
Explanation / Answer
Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec-12 Service Revenue 214,507.00 Income Summary 214,507.00 (To record the closing entry for service revenue) 31-Dec-12 Income Summary 184,607.00 Advertising Expense 2,500.00 Depreciation Expense - Equipment 3,400.00 Insurance Expense 1,000.00 Rent Expense 9,900.00 Salaries Expense 163,000.00 Supplies Expense 1,425.00 Utilities Expense 3,382.00 (To record the closing entry for expenses) 31-Dec-12 Income Summary 29,900.00 Retained Earnings 29,900.00 (To record the net income earned) 31-Dec-12 Retained Earnings 65,000.00 Dividends 65,000.00 (To record the closing entry for dividends) Answer b. Rae Services Inc. Post Closing Trial Balance Dec 31, 2012 Particulars Dr. Amt. Cr. Amt. Cash 176,000.00 Accounts Receivable 139,000.00 Supplies 4,500.00 Prepaid Insurance 2,600.00 Equipment 88,700.00 Accumulated Depreciation - Equip 3,400.00 Accounts Payable 67,500.00 Common Stock 250,000.00 Retained Earnings 89,900.00 Total 410,800.00 410,800.00 Answer c. Rae Services Inc. Income Statement Dec 31, 2012 Revenues Service Revenue 214,507.00 Expenses Advertising Expense 2,500.00 Depreciation Expense - Equipment 3,400.00 Insurance Expense 1,000.00 Rent Expense 9,900.00 Salaries Expense 163,000.00 Supplies Expense 1,425.00 Utilities Expense 3,382.00 184,607.00 Net Income 29,900.00 Answer d. Rae Services Inc. Balance Sheet Dec 31, 2012 Assets Current Assets Cash 176000 Accounts Receivable 139000 Supplies 4500 Prepaid Insurance 2600 322,100.00 Property, Plant & Equipment Equipment 88700 Accumulated Depreciation - Equip (3,400.00) 85,300.00 Total Assets 407,400.00 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable 67500 Long Term Liabilities - Total Liabilities 67,500.00 Stockholders' Equiy Common Stock 250,000.00 Retained Earnings 89,900.00 Total Stockholders' Equiy 339,900.00 Total Liabilities & Stockholders' Equiy 407,400.00 Answer e. Rae Services Inc. Statement of Retained Earnings Dec 31, 2012 Beginning Balance Jan 1, 2012 125,000.00 Net Income 29,900.00 Sub-total 154,900.00 Dividends (65,000.00) Ending Balance, Dec 31, 2012 89,900.00
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