Income Statement
Income Statement
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Income Statement
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The following income statement and information about changes in noncash current assets and current liabilities are reported.
SONAD COMPANY
Income Statement
For Year Ended December 31, 2013
Sales $ 2,445,000
Cost of goods sold $1,198,050
Gross profit $1,246,950
Operating expenses
Salaries expense $334,965
Depreciation expense $58,680
Rent expense $66,015
Amortization expenses–Patent $7,335
Utilities expense $26,895 $493,890
$753,060
Gain on sale of equipment $9,780
Net income $ 762,840
Changes in current asset and current liability accounts for the year that relate to operations follow.
Accounts receivable $45,400 increase
Accounts payable $8,050 decrease
Merchandise inventory $37,250 increase
Salaries payable $3,400 decrease
Required: Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Income Statement
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Brief Exercise 4-6
The income statement for Weeping Willow Golf Club for the month ending July 31 shows Service Revenue $16,400, Salaries and Wages Expense $8,200, Maintenance and Repairs Expense $2,500, and Net Income $5,700.
SHOW LIST OF ACCOUNTS
SHOW ANSWER |
LINK TO TEXT |
Post the entries to the revenue and expense accounts, and complete the closing process for these accounts using the three-column form of account.
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Brief Exercise 4-9
At Creighton Company, the following errors were discovered after the transactions had been journalized and posted.
1. | A collection on account from a customer for $870 was recorded as a debit to Cash $870 and a credit to Service Revenue $870. |
2. | The purchase of store supplies on account for $1,570 was recorded as a debit to Supplies $1,750 and a credit to Accounts Payable $1,750. |
Prepare the correcting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. | Account Titles and Explanation | Debit | Credit | |
1. | ||||
2. | ||||
SHOW LIST OF ACCOUNTS
SHOW SOLUTION TIMEOUT ALERT |
Brief Exercise 4-11
Match each of the following accounts to its proper balance sheet classification.
Accounts | Balance Sheet Classification | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation—buildings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Buildings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Copyrights | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt investments (long-term) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Land | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patents | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise 4-7
Kay Magill Company had the following adjusted trial balance.
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Condition gt requires numbers instead of “null” and “0”
Prepare closing entries at June 30, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Condition gt requires numbers instead of “null” and “0”
Prepare a post-closing trial balance.
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Exercise 4-8
Plevin Company ended its fiscal year on July 31, 2014. The company’s adjusted trial balance as of the end of its fiscal year is as shown below.
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Condition gt requires numbers instead of “null” and “0”
Prepare the closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Condition gt requires numbers instead of “null” and “0”
Post to Owner’s Capital and Income Summary accounts. (Post entries in the order of journal entries presented in the previous part.)
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J15 | |||
July 31 |
J15 | |||
July 31 |
J15 | |||||
Income Summary | No. 350 | ||||
Date | Explanation | Ref | Debit | Credit | Balance |
July 31 |
J15 | |||
July 31 |
J15 | |||
July 31 |
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Condition gt requires numbers instead of “null” and “0”
Prepare a post-closing trial balance at July 31.
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Exercise 4-10
Condition gt requires numbers instead of “null” and “0” Janis Engle has prepared the following list of statements about the accounting cycle. Identify each statement as true or false.
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2. | Reversing entries are a required step in the accounting cycle. |
3. | Correcting entries do not have to be part of the accounting cycle. |
4. | If a worksheet is prepared, some steps of the accounting cycle are incorporated into the worksheet. |
5. | The accounting cycle begins with the analysis of business transactions and ends with the preparation of a post-closing trial balance. |
6. | All steps of the accounting cycle occur daily during the accounting period. |
7. | The step of “post to the ledger accounts” occurs before the step of “journalize the transactions.” |
8. | Closing entries must be prepared before financial statements can be prepared. |