Nybrostrand Company 31-Dec-11 Prepare an income statement
Not what you're looking for?
-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.
The submission should be 2 to 4 pages and need to include answers to all the questions listed above.
Purchase this Solution
Solution Summary
Your tutorial is 442 words and includes comparative income statements (in Excel) and an example of poor matched and correct matching.
Solution Preview
REPORT
CLIENT ISSUES
1. Sale recorded for an order.
A sale does not occur when you get an order. Since this has not occurred, the sale needs to be corrected. This reduces sales by $42,500.
Failure to record ending inventory.
2. The bookkeeper did not remove ending inventory from cost of goods sold.
When the physical count occurred, the inventory in the books not include items found in the count and so the adjustment resulting from the count would actual fix the error. The entry for "finding" inventory during the count is:
DEBIT: Inventory $35,500
CREDIT: COGS $35,500
So, the error was fixed through the count. No adjustment is needed.
Revised Income Statement
The revised income statement with the order that was not a sale ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Learning Lean
This quiz will help you understand the basic concepts of Lean.