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Chapter 4: Q35PSB (page 236)

The adjusted trial balance of Rocket Real Estate Appraisal at June 30, 2018, follows: ROCKET REAL ESTATE APPRAISAL Adjusted Trial Balance June 30, 2018Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Land Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Balance \( 5,000 \) 178,100 \( 178,100 12,800 \) 25,200 71,000 8,000 1,000 2,100 37,000 25,800 5,500 1,600 1,700 18,700 5,000 33,000 48,100 4,100 32,000 600 8,000 2,900 7,100 Utilities Expense Depreciation Expense—Building Total . Requirements 1. Prepare the company’s income statement for the year ended June 30, 2018. 2. Prepare the company’s statement of retained earnings for the year ended June 30, 2018. 3. Prepare the company’s classified balance sheet in report form at June 30, 2018. 4. Journalize the closing entries. 5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries to the T-accounts. 6. Prepare the company’s post-closing trial balance at June 30, 2018.

Short Answer

Expert verified

(1) In income statement, net loss is $6,600.

(2) In statement of retained earnings, ending balance is $600.

(3) In balance sheet, total assets and total liabilities & stockholders’ equity equals $72,400.

(4) Closing entries are mentioned in Step 4.

(5) T accounts are mentioned in Step 5.

(6) In post-closing trial balance, total debits and credits equals $97,600.

Step by step solution

01

Step-by-Step-SolutionStep 1: Income Statement

(1) Income statement is shown as follows:

ROCKET REAL ESTATE APPRAISAL
Income Statement
Year Ended June 30, 2018

Revenues

Service Revenue

$48,100

Expenses

Insurance Expense

$4,100

Salaries Expense

32,000

Supplies Expense

600

Interest Expense

8,000

Utilities Expense

2,900

Depreciation Expense—Building

7,100

Total Expenses

54,700

Net Loss

$(6,600)

02

Statement of Retained Earnings

(2) Statement of retained earnings is shown as follows:

ROCKET REAL ESTATE APPRAISAL
Statement of Retained Earnings
Year Ended June 30, 2018

Retained Earnings, Beginning Balance

$33,000

Net loss for the year

(6,600)

26,400

Dividends

(25,800)

Retained Earnings, November 30, 2018

$600

03

Classified Balance Sheet

(3) Balance Sheet is shown as follows:

ROCKET REAL ESTATE APPRAISAL
Balance Sheet
June 30, 2018
Assets

Current Assets:

Cash

$5,000

Accounts Receivable

5,500

Office Supplies

1,600

Prepaid Insurance

1,700

Total Current Assets

$13,800

Property, Plant, and Equipment:

Land

12,800

Building

$71,000

Less: Accumulated Depreciation- Building

(25,200)

45,800

Total Property, Plant, and Equipment:

58,600

Total Assets

$72,400

Liabilities




Current Liabilities:


Accounts Payable

18,700

Interest Payable

8,000

Salaries Payable

2,100

Unearned revenue

1,000

Total Current Liabilities:

$29,800

Long-term Liabilities


Notes Payable

37,000

Total Liabilities



66,800

Stockholders’ Equity

Common Stock



5,000

Retained Earnings



600

Total Stockholders’ Equity



5,600

Total Liabilities and Stockholders’ Equity



$72,400

04

Closing entries for the period

(4) Closing entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Dec. 31

Service Revenue

$48,100

Income Summary

$85,000

To close revenue.

Dec. 31

Income Summary

$54,700

Insurance Expense

$4,100

Salaries Expense

$32,000

Supplies Expense

$600

Interest Expense

$8,000

Utilities Expense

$2,900

Depreciation Expense—Building

$7,100

To close expenses.

Dec. 31

Retained Earnings

$6,600

Income Summary

$6,600

To close Income Summary

Dec. 31

Retained Earnings

$25,800

Dividends

$25,800

To close Dividends

05

T Accounts

(5) T accounts are shown as follows:

Posting of closing entry is shown as follows:


Retained Earnings

Clos.

$6,600

$33,000

Adj. Bal.

Clos.

$25,800

$600

Bal.


Dividends

Adj. Bal.

$25,800

$25,800

Clos.

Bal.

0


Income Summary

Clos.

$54,700

$48,100

Clos.

Bal.

$6,600

$6,600

Clos.

Bal.

0

Service Revenue

Clos.

$48,100

$48,100

Adj. Bal.

0

Bal.


Insurance Expense

Adj. Bal.

$4,100

$4,100

Clos.

Bal.

0

Salaries Expense

Adj. Bal.

$32,000

$32,000

Clos.

Bal.

0

Supplies Expense

Adj. Bal.

$600

$600

Clos.

Bal.

0

Interest Expense

Adj. Bal.

$8,000

$8,000

Clos.

Bal.

0

Utilities Expense

Adj. Bal.

$2,900

$2,900

Clos.

Bal.

0

Depreciation Expense—Building

Adj. Bal.

$7,100

$7,100

Clos.

Bal.

0

06

Post-Closing trial balance

(6) Post-closing trial balance is shown as follows:

ROCKET REAL ESTATE APPRAISAL
Post-Closing Trial Balance
June 30, 2018

Balance

Account Title

Debit

Credit

Cash

$5,000

Accounts Receivable

5,500

Office Supplies

1,600

Prepaid Insurance

1,700

Land

12,800

Building

71,000

Accumulated Depreciation—Building

$25,200

Accounts Payable

18,700

Interest Payable

8,000

Salaries Payable

2,100

Unearned Revenue

1,000

Notes Payable (long-term)

37,000

Common Stock

5,000

Retained Earnings

600

Total

$97,600

$97,600

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Most popular questions from this chapter

The unadjusted trial balance and adjustment data of Martha’s Motors at December 31, 2018, follow: Adjustment data at December 31, 2018: a. Depreciation on equipment, \(2,100. b. Accrued Wages Expense, \)1,100. c. Office Supplies on hand, \(500. d. Prepaid Insurance expired during December, \)600. e. Unearned Revenue earned during December, \(4,800. f. Accrued Service Revenue, \)1,300. 2019 transactions: a. On January 4, Martha’s Motors paid wages of \(1,900. Of this, \)1,100 related to the accrued wages recorded on December 31. b. On January 10, Martha’s Motors received \(1,500 for Service Revenue. Of this, \)1,300 is related to the accrued Service Revenue recorded on December 31. Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation—Equipment Accounts Payable Wages Payable Unearned Revenue Common Stock Dividends Service Revenue Depreciation Expense—Equipment Wages Expense Insurance Expense Utilities Expense Balance \( 4,200 \) 93,200 \( 93,200 15,000 \) 34,600 52,400 7,900 3,100 18,500 17,200 1,600 27,200 1,000 2,400 1,300 Supplies Expense Total Requirements 1. Journalize adjusting entries. 2. Journalize reversing entries for the appropriate adjusting entries. 3. Refer to the 2019 data. Journalize the cash payment and the cash receipt that occurred in 2019.

For each account listed, identify the category that it would appear on a classified balance sheet. Use the following categories: Current Assets; Long-term Investments; Property, Plant, and Equipment; Intangible Assets; Current Liabilities; Long-term Liabilities; and Stockholders’ Equity. If the item does not belong on the classified balance sheet, put an X. a. Land (used in operations) b. Accumulated Depreciation—Equipment c. Common Stock d. Service Revenue e. Investment in Starbucks Corporation (to be held long-term) f. Accounts Receivable g. Equipment h. Buildings i. Notes Payable (due in 10 years) j. Unearned Revenue k. Cash l. Accounts Payable m. Prepaid Rent n. Dividends o. Land (held for investment purposes) p. Depreciation Expense.

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

18. Cash

E4-20 Preparing financial statements from the completed worksheet Use your answer from Exercise E4-19 to prepare Data Solution’s financial statements. Requirements 1. Complete the income statement for the month ended November 30, 2018. 2. Complete the statement of retained earnings for the month ended November 30, 2018. Assume beginning Retained Earnings was $0. 3. Complete the classified balance sheet as of November 30, 2018. Use the report form.

What are reversing entries? Are they required by GAAP?
See all solutions

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