Prepare the following January financial statements: a) Income Statement for mont
ID: 2402593 • Letter: P
Question
Prepare the following January financial statements:
a) Income Statement for month ended January 31
b) Statement of Stockholders Equity for month ended January 31
c) Balance Sheet as of January 31
d) Statement of Cash Flows for month ended January 31
e) Record January closing transactions in the General Journal and post to the General Ledger.
f) Prepare a post-closing trial balance as of January 31.
The estimated income taxes for the month is $1,100.
January Transactions 1-Jan Performed car repair services and received cash at the time of sale, $4,990. 2-Jan Paid for the car parts purchased on account last year, $1,170. 4-Jan Paid wages and salaries for $3,190, part of which was accrued in December. 10-Jan Paid the utility bill that was already accrued in December in utilities payable. 16-Jan Collected cash from credit sales made last year, $3,050. 20-Jan Purchased $4,000 of equipment, paid $2,000 cash and issued a note for $2,000. 22-Jan Performed car repair services on account, $4,860. 27-Jan Paid dividends to the company's owners, $400. January Adjusting Entries 31-Jan The estimated depreciation on building and equipment is $700. 31-Jan One month of rent has expired, $1,000. 31-Jan The annual interest rate is 4% on all notes and paid quarterly. It was last paid on Dec 31 of the prior year. Round to the nearest dollar. 31-Jan The supplies remaining at the end of the month was $675. 31-Jan Accrued wages and salaries worked in January that will be paid 2-4, $1,940. 31-JanThe estimated income taxes for the month is $1,100.
Explanation / Answer
SOLUTION:
Solution:
Journal entries:
Date
Description
Debit
Credit
31-Dec
Cash
$4,990
Service Revenue
$4,990
01-Jan
Accounts Payable
$1,170
Cash
$1,170
03-Jan
Salaries and Wages Expense
$370
Salaries and Wages Payable
$2,820
Cash
$3,190
09-Jan
Utilities Payable
$750
Cash
$750
15-Jan
Cash
$3,050
Accounts Receivable
$3,050
19-Jan
Equipment
$4,000
Cash
$2,000
Note Payable
$2,000
21-Jan
Accounts Receivable
$4,860
Service Revenue
$4,860
26-Jan
Dividends
$400
Cash
$400
Adjusting entries:
30-Jan
Depreciation Exp
$700
Accumulated Depreciation
$700
30-Jan
Rent Exp
$1,000
Prepaid Rent
$1,000
30-Jan
Interest Exp
$102
Interest Payable
$102
(((28500+2000)*0.04*(1/12))
30-Jan
Supplies Exp
$315
Supplies
$315
30-Jan
Wages and Salaries Exp
$1,940
Wages and Salaries Payable
$1,940
30-Jan
Income Tax Exp
$1,100
Income Tax Payable
$1,100
Adjusted Trial Balance
Debit
Credit
Cash
$7,330
Accounts Receivable
$4,960
Supplies
$675
Prepaid Rent
$0
Building
$87,000
Equipment
$109,000
Accumulated Depreciation
$41,900
Wages and Salaries Payable
$1,940
Income Tax Payable
$9,340
Accounts Payable
$5,290
Utilities Payable
$0
Interest Payable
$102
Notes Payable
$30,500
Common Stock
$88,200
Retained Earnings
$27,770
Service Revenue
$9,850
Dividends
$400
Interest Expense
$102
Wages and Salaries Expense
$2,310
Depreciation Expense
$700
Rent Expense
$1,000
Income Tax Expense
$1,100
Supplies Expense
$315
TOTAL
$214,892
$214,892
Income Statement
Amount
Service Revenue
$9,850
Minus Expenses:
Rent Exp
$1,000
Interest Exp
$102
Wages and Salaries Exp
$2,310
Depreciation Exp
$700
Income Tax Exp
$1,100
Supplies Exp
$315
Net income or (loss)
$4,323
Statement of Stockholders Equity
Common Stock
Retained Earnings
Total SHE
Beginning balance, Dec 31
$88,200
$27,770
$115,970
Plus: Issue stock
-
-
$0
Plus: Net Income
$0
$4,323
$4,323
Minus: Dividends
$0
-$400
-$400
Ending balance, Jan 31
$88,200
$31,693
$119,893
BALANCE SHEET
Assets:
Liabilities:
Accounts Receivable
$4,960
Wages and Salaries Payable
$1,940
Cash
$7,330
Income Tax Payable
$9,340
Supplies
$675
Interest Payable
$102
Total current assets:
$12,965
Accounts Payable
$5,290
Building
$87,000
Utilities Payable
$0
Equipment
$109,000
Total current liabilities:
$16,672
Minus: Accumulated Depreciation
-$41,900
Notes Payable
$30,500
Total long term assets:
$154,100
Total Liabilities
$47,172
Stockholders Equity:
Retained Earnings
$31,693
Common Stock
$88,200
Total Stockholders' Equity
$119,893
TOTAL ASSETS
$167,065
TOTAL LIABILITIES & EQUITY
$167,065
Cash flow statements
Operating:
Net Income
$4,323
Plus: Depreciation Expense
$700
Plus: Increase in Interest Payable
$102
Plus: Increase in Income Tax Payable
$1,100
Plus: Decrease in Prepaid Rent
$1,000
Plus: Decrease in Supplies
$315
Minus: Increase in Accounts Receivable
-$1,810
Minus: Decrease in Utilities Payable
-$750
Minus: Decrease in Accounts Payable
-$1,170
Minus: Decrease in Wages and Salaries Payable
-$880
Net Cash flow from operatiing activities
$2,930
Investing:
Purchased equipment
-$2,000
Net cash flow from investing activities
-$2,000
Financing:
Plus: Issue stock
$0
Minus: Payment of Dividends
-$400
Net cash flow from financing activities
-$400
Cash beginning, Jan 1
$6,800
Cash ending, Jan 31
$7,330
Cash change
$530
Non-cash activities:
Purchased equipment by issuing a note
$2,000
Jan Closing Entries
30-Jan
Service Revenue
$9,850
Retained Earnings
$9,850
30-Jan
Retained Earnings
$4,425
Wages and Salaries Expense
$2,310
Depreciation Expense
$700
Supplies Expense
$315
Income Tax Expense
$1,100
Rent Expense
$1,000
Interest Expense
$102
30-Jan
Retained Earnings
$400
Dividends
$400
Post-Closing Trial Balance
Debit
Credit
Cash
$7,330
Accounts Receivable
$4,960
Supplies
$675
Prepaid Rent
$0
Building
$87,000
Equipment
$109,000
Wages and Salaries Payable
$1,940
Income Tax Payable
$9,340
Utilities Payable
$0
Accumulated Depreciation
$41,900
Accounts Payable
$5,290
Notes Payable
$30,500
Interest Payable
$102
Common Stock
$88,200
Retained Earnings
$31,693
TOTAL
$208,965
$208,965
?
Date
Description
Debit
Credit
31-Dec
Cash
$4,990
Service Revenue
$4,990
01-Jan
Accounts Payable
$1,170
Cash
$1,170
03-Jan
Salaries and Wages Expense
$370
Salaries and Wages Payable
$2,820
Cash
$3,190
09-Jan
Utilities Payable
$750
Cash
$750
15-Jan
Cash
$3,050
Accounts Receivable
$3,050
19-Jan
Equipment
$4,000
Cash
$2,000
Note Payable
$2,000
21-Jan
Accounts Receivable
$4,860
Service Revenue
$4,860
26-Jan
Dividends
$400
Cash
$400