1. Prepare the income statement and the statement of owner\'s equilty classified
ID: 2553543 • Letter: 1
Question
1. Prepare the income statement and the statement of owner's equilty classified balance sheet at December 31, 2017 64,700 8 890 2. Prepare the necessary closing entries at December 31, 2017 3. Use ssets (total a the information in sets at December 31, 2016, were $160,000), (b) debt ratio, (c) profit margin ratio (use total revenus as the denominator), and (d) current ratio. Round ratios to three decimals for parts a and c, and to two the financial statements to calculate these ratios: (a) return on a decimals for parts b and d December 31, 2017, follows. Santo Company's adjusted trial balance on SANTO COMPANY Adjusted Trial Balance December 31, 2017 Debit Credit Account Title s 14,450 5,140 1.200 101 Cash 125 Store supplies 128 Prepaid insurance 167 Equipment 168 Accumulated depreclation-Equipment. 201 Accounts payable 210 Wages payable. 301 P Santo, Capital 302 P.Santo, Withdrawals. 401 Repair fees earned. $ 8,000 1,500 2,700 35,650 54,700 2.000 26.400 623 Wages expense 637 Insurance expense 640 651 Rent expense Store supplies expense $102,550 $102,550 Required epital 1. Prepare an income statement and a statement of owner's equity for the year 2017, and a classified bal ance sheet at December 31, 2017. There are no owner investments in 2017. slance 2. Enter the adjusted trial balance in the first two columns of a six-column table. Use the middle two columns for closing entry information and the last two columns for a post-closing trial balance. Insert an Income Summary account (No. 901) as the last item in the trial balance. 3. Enter closing entry information in the six-column table and prepare journal entries for it. Analysis Component 4. Assume for this part only that a. None of the $600 insurance expense had expired during the year. Instead, assume it is a prepaoyment of the next period's insurance protection b. There are no earned and unpaid wages at the end of the year. (Hint: Reverse the $2.700 wages pay able accrual.) Describe the financial statement changes that would result from these two assumptions.Explanation / Answer
Income Statement
$
Revenue from Operation
54,700
Less
Operation Expenses*
35,760
Net Income
18,940
Statement of Changes inequity
$
P. Santo Capital 1st January 2017
35,650
Add
Net Income
18,940
Less
P Santo withdrawals
15,000
=
Collin O’Brien on December 31st, 2017
39590
The balance sheet as on 31st December 219
$
Current Asset
Cash
14,450
Store Supplies
5,140
Prepaid Insurance
1,200
Total Current Asset
20,790
Non Current Asset
Equipments Net Depreciation
23,000
Total Non Current asset
23,000
Total Asset
43,790
Liability
Current Liability
Accounts Payable
1,500
Wages Payable
2,700
Total current liability
4,200
Total liability
4,200
Equity
39,590
Total liability and Equity
43,790
Note
Operating expense = depreciation expense +Rent expense +wages expense + insurance expense+ Store supplies Expense +Utility Expense
2.
Particular
Dr ($)
Cr ($)
Dr($)
Cr($)
Dr($)
Cr($)
Cash
14,450
14,450
Store Supplies
5,140
5,140
Prepaid Insurance
1,200
1,200
Equipments
31,000
3,1000
Accumulated depreciation
8,000
8,000
Accounts Payable
1,500
1,500
Wages Payable
2,700
2,700
P.S Santo Capital
35,650
39,590
P.S Santo Drawings
15,000
Repair Fee Earned
54,700
Depreciation
2,000
Wages
26,400
Insurance expenses
600
Rent Expenses
3,600
Store supplies
1,200
Utility
1,960
Income Summary
54,700
35,760
102550
102550
51,790
51,790
Closing Entrees
Transferring Revenue to Income Summary
Dr. Revenue a/c 54700
Cr Income Summary a/c 54700
Transferring Operation Expense to income summary
Dr. Income Summary a/c $35,760
Cr Operating Expenses $ 35,760
Transferring Net income to capital a/c
Dr. Income Summary $18,940
Cr P.S Santo Capital 18940
Adjusting Drawings
Dr. P.S Santo Capital $15,000
Cr P.S Santo Drawings $15,000
4. a. The Net profit, as well as current asset, will increase as result.
b. so income will reduce due to charging $27,00 against income, current liability will also reduce.
$
Revenue from Operation
54,700
Less
Operation Expenses*
35,760
Net Income
18,940
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