These financial statement items are for below Corporation at year-end, Salaries

Question

These financial statement items are for below Corporation at year-end,

Salaries and wages payable $ 2,580

Salaries and wages expense 48,700

Utilities expense 22,600

Equipment 21,000

Accounts payable 4,100

Service revenue 64,100

Rent revenue 8,500

Notes payable (due 2014) 1,800

Common stock 16,000

Cash 24,200

Accounts receivable 12,780

Accumulated depreciation 6,000

Dividends 5,000

Depreciation expense 4,000

Retained earnings (beginning of the year) 35,200

Instructions (a) Prepare an adjusted trial balance. Then use adjusted tiral to prepare income statement and a retained earnings statement for the year. Above Corporation did not issue any new stock during the year. (b) Prepare a classified balance sheet at July 31.

Explanation / Answer

Part A)

The adjusted trial balance involves posting of all accounts as per their nature (debit or credit). All expenses and assets are generally posted on the debit side and all income and liabilities are generally posted on the credit side.

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Income statement is prepared to arrive at the net profit/loss earned/incurred by the firm for a particular period. It records all incomes earned and expenses incurred during a particular period.

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Retained earnings statement highlights the value of retained earnings available with the firm at the end of the year. It records adjustments for dividends and net income/loss.

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Part B)

Classified balance sheet is a statement of all assets and liabilities as at the end of a particular period.

Adjusted Trial Balance Account Debit Credit Salaries and wages Payable 2.580 Salaries and wages expense 48,700 Utilities expense 22,600 Equipment 21,000 Accounts payable 4,100 Service revenue 64,100 Rent revenue 8,500 Notes payable 1,800 Common stock ` 16,000 Cash 24,200 Accounts receivable 12,780 Accumulated depreciation 6,000 Dividends 5,000 Depreciation expense 4,000 Retained earnings 35,200 Total $138,280 $138,280

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