Nybrostrand Company 31-Dec-11 Income Statement correct error
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We are using the same company as in the first module. However, you need to consider some additional information.
One client had indicated that they were interested in purchasing $42,500 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase.
The bookkeeper may have made a mistake when computing cost of good sold. She included total production costs for 2011 and did not adjust ending inventory for the $42,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.
Nybrostrand Company
31-Dec-11
Trial Balance (accounts in alphabetical order)
Debit
Credit
Accounts payable
78,000
Accounts receivable
36,500
Cash
16,700
Common stock
10,000
Depreciation expense
24,350
Cost of goods sold
317,000
Equipment (net of depreciation)
395,000
Insurance
1,400
Inventory
34,000
Long-term debt
127,000
Marketing
4,500
Paid-in capital
50,000
Property taxes
16,900
Rent
28,000
Retained earnings
?
Revenues
586,000
Salaries
78,500
Utilities
6,700
Total
959,550
851,000
Prepare an income statement for the company in good format. Always include the name of the company and the priod covered in the title. Don't forget dollar signs where appropriate. You do not need to include the balance sheet. Consequently, you will not need all the accounts listed above. How does the income or loss compare to the original income statement? Explain the importance of the matching concept.
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Solution Summary
Your tutorial is attached. You don't need to fixed ending inventory because the count would have brought this to the attention of the firm and recording the count would put ending inventory and cost of goods sold in the correct amounts.
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