The trial balance of Fugazy Investment Advisers at December 31, 2012, follows:
Adjustment data at December 31, 2012:
a. Unearned service revenue earned during the year, $500.
b. Supplies on hand, $1,000.
c. Depreciation for the year, $6,000.
d. Accrued salary expense, $1,000.
e. Accrued service revenue, $4,000.
1. Enter the account data in the Trial Balance columns of a worksheet, and complete the worksheet through the Adjusted Trial Balance. Key each adjusting entry by the letter corresponding to the data given. Leave a blank line under Service revenue.
2. Prepare the income statement, the statement of owner's equity, and the classified balance sheet in account format.
3. Prepare closing journal entries from the worksheet.
4. Did the company have a good or a bad year during 2012? Give the reason for your answer. (Challenge)
Solution is provided in a separate Excel file attached.It contains following sheets in sequence.
1 Work sheet showing Un-adjusted Trial Balance, Adj Trial balance through Income statement and Balance sheet.
2 Adjusting entries
3 Statements- Income statement, Owners equity and Balance sheet in Account form as desired by you.
4 Closing ...
The solution prepares a worksheet, financial statements and closing entries.
Prepare worksheet, income statement and closing entries
The trial balance of the Mario Company was prepared from the record of the
company on November 30, 20X2, the close of its fiscal year.
November 30, 20X2
Accounts Receivable 16,300
Allowance for Doubtful Accounts $200
Unexpired Insurance 660
Supplies on Hand 265
Accumulated Depreciation—Building 6,000
Office Equipment 6,800
Accumulated Depreciation—Office Equipment 2,100
Accounts Payable 11,400
Mortgage Payable 9,000
Capital Stock 40,000
Retained Earnings 2,200
Sales Returns and Allowances 600
Sales Discounts 2,700
Purchase Returns and Allowances 1,200
Purchase Discounts 2,300
Salaries Expense 23,000
Travel Expense 5,200
Office Expense 1,300
Professional Fee Expense 2,500
Telephone Expense 1,200
Building Repair Expense 800
a. The Allowance for Doubtful Accounts should be increased by $400.
b. Merchandise Inventory at November 30, 20X2, was $16,200.
c. Unexpired Insurance on November 30, 20X2, amounted to $440.
d. Supplies on Hand November 30, 20X2, $120.
e. Building depreciation is calculated at 5% per year.
f. Office depreciation is calculated at 10% per year.
g. Salaries accrued at November 30, 20X2, are $400.
REQUIRED: 1. Prepare a work sheet. (The adjusted trial balance columns are to be omitted.)
2. Prepare an income statement for the year. 3. Prepare closing entries