Finders Investigative Services is an investigative services firm that is owned a
ID: 2419346 • Letter: F
Question
Finders Investigative Services is an investigative services firm that is owned and operated by Stacy Tanner. On June 30, 2016, the end of the fiscal year , the accountant for Finders Investigative Services prepared an end-of-period spreadsheet, a part of which follows:
Finders Investigative Services End-of-Period Spreadsheet For the Year Ended June 30, 2016 ~ Adjusted Trial Balance Account Title ~ Dr. Cr. ~ Cash ~ 28,000.00 Accounts Receivable ~ 69,600.00 Supplies ~ 4,600.00 Prepaid Insurance ~ 2,500.00 Building ~ 439,500.00 Accumulated Depreciation-Building ~ 44,200.00 Accounts Payable ~ 11,700.00 Salaries Payable ~ 3,000.00 Unearned Rent ~ 2,000.00 Stacy Tanner, Capital ~ 373,800.00 Stacy Tanner, Drawing ~ 12,000.00 Service Fees ~ 718,000.00 Rent Revenue ~ 12,000.00 Salaries Expense ~ 522,100.00 Rent Expense ~ 48,000.00 Supplies Expense ~ 10,800.00 Depreciation Expense-Building ~ 8,750.00 Utilities Expense ~ 7,150.00 Repairs Expense ~ 3,000.00 Insurance Expense ~ 2,500.00 Miscellaneous Expense ~ 6,200.00 ~ 1,164,700.00 1,164,700.00 Required: 1. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet. * 2. Journalize the entries that were required to close the accounts at June 30. * 3. If Stacy Tanner, Capital has instead decreased $30,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss? * Be sure to read the instructions for each financial statement carefully. Refer to the chart of accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.
Explanation / Answer
Income Statement of Finders Investigative Services for the year ended June 30,2016
Less:Cost of Sales
Notes:
1)Distribution Cost includes Supplies Expenses.
2)Administrative Cost includes Salaries Expense,Rent Expense,Depreciation Expenses for Buidling,Utilities Expenses,Repairs Expenses,Insurance Expenses.
3)Other Expenses includes Miscellaneous Expenses.
Statement of Owner's Equity of Finder's Investigative Services for the year ended June 30th,2016:
Add: Additional Contributions
Balance Sheet of Finders Investigative Services for the year ended June30th, 2016:
Sundry Creditors
(Accounts Payable)
Journal Entries to close the accounts at June 30th, 2016:
To Close the books of accounts
1)Debit all the revenue accounts and credit the income summary account, thereby clearing out the balances in the revenue accounts.
2) Credit all expense accounts and debit the income summary account, thereby clearing out the balances in all expenses accounts.
3)Close the income summary account to the retained earnings account.If there was a profit then entry is debit income summary account and credit retained earnings account. If there was a loss in the period then entry is debit retained earnings account and credit income summary account.
Entries:
1) Revenue a/c Dr 730000.00
To Income Summary a/c 730000.00
2) Income Summary a/c Dr 608500.00
To Distribution Cost a/c 10800.00
To Administrative Expenses a/c 591500.00
To Other Expenses a/c 6200.00
3) Income Summary a/c Dr 121500.00
To Retained Earnings a/c 121500.00
III. Capital a/c Dr 30000
To Profit and Loss a/c 300000
Revenue:Service Fees 718000.00Less:Cost of Sales
0.00 Gross Profit 718000.00 Other Income : Rent Revenue 12000.00 Distribution Cost (10800.00) Administrative Expenses (591500.00) Other Expenses (6200.00) Finance Charges 0.00 (596500.00) Profit before tax 121500.00 Income Tax 0.00 Net Profit 121500.00Related Questions
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