One client had indicated that they were interested in purchasing $34,500 worth o

Question

One client had indicated that they were interested in purchasing $34,500 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 $34,500 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

67,000

Accounts receivable
24,500


Cash
16,700


Common stock

10,000

Depreciation expense
mp;nbsp;24,350


Cost of goods sold
254,000


Equipment (net of depreciation)
425,000


Insurance
1,400


Inventory
25,000


Long-term debt

145,000

Marketing
4,500


Paid-in capital

90,000

Property taxes
8,900


Rent
18,000


Retained earnings

?

Revenues

456,000

Salaries
67,500


Utilities
6,700






Total
876,550
768,000


Prepare an income statement for the company in good format. 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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