Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 20Y8, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows: Foxy Investigative Services End-of-Period Spreadsheet For the Year Ended November 30, 20Y8 ~ Adjusted Trial Balance Account Title ~ Dr. Cr. ~ Cash ~ 21,000 Accounts Receivable ~ 70,600 Supplies ~ 4,700 Prepaid Insurance ~ 2,500 Building ~ 438,500 Accumulated Depreciation-Building ~ 43,800 Accounts Payable ~ 11,700 Salaries Payable ~ 3,400 Unearned Rent ~ 1,900 Common Stock ~ 80,000 Retained Earnings ~ 295,000 Dividends ~ 12,000 Service Fees ~ 711,800 Rent Revenue ~ 12,000 Salaries Expense ~ 524,300 Rent Expense ~ 48,000 Supplies Expense ~ 10,800 Depreciation Expense-Building ~ 7,800 Utilities Expense ~ 7,200 Repairs Expense ~ 2,900 Insurance Expense ~ 2,800 Miscellaneous Expense ~ 6,500 ~ 1,159,600 1,159,600 Required: 1. A. Prepare an income statement for the year ended November 30, 20Y8. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles. B. Prepare a statement of stockholders’ equity for the year ended November 30, 20Y8. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. C. Prepare a balance sheet as of November 30, 20Y8. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 2. Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles. 3. If Retained Earnings had instead decreased $37,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss. CHART OF ACCOUNTS Foxy Investigative Services General Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 17 Building 18 Accumulated Depreciation-Building LIABILITIES 21 Accounts Payable 22 Salaries Payable 23 Unearned Rent EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends REVENUE 41 Service Fees 42 Rent Revenue EXPENSES 51 Salaries Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense-Building 55 Utilities Expense 56 Repairs Expense 57 Insurance Expense 59 Miscellaneous Expense Labels Current assets Current liabilities Expenses For the Year Ended November 30, 20Y8 November 30, 20Y8 Property, plant, and equipment Revenues Amount Descriptions Balances, December 1, 20Y7 Balances, November 30, 20Y8 Dividends Net income Net loss Total assets Total current assets Total expenses Total liabilities Total liabilities and stockholders’ equity Total property, plant, and equipment Total revenues Total stockholders’ equity 1A. Prepare an income statement for the year ended November 30, 20Y8. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles. Foxy Investigative Services Income Statement 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1B. Prepare a statement of stockholders’ equity for the year ended November 30, 20Y8. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. Foxy Investigative Services Statement of Stockholders’ Equity 1 Common Stock Retained Earnings Total 2 3 4 5
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Foxy Investigative Services | |||
End-of-Period Spreadsheet | |||
For the Year Ended November 30, 20Y8 | |||
~ | Adjusted |
||
Account Title | ~ | Dr. | Cr. |
~ | |||
Cash | ~ | 21,000 | |
~ | 70,600 | ||
Supplies | ~ | 4,700 | |
Prepaid Insurance | ~ | 2,500 | |
Building | ~ | 438,500 | |
~ | 43,800 | ||
Accounts Payable | ~ | 11,700 | |
Salaries Payable | ~ | 3,400 | |
Unearned Rent | ~ | 1,900 | |
Common Stock | ~ | 80,000 | |
~ | 295,000 | ||
Dividends | ~ | 12,000 | |
Service Fees | ~ | 711,800 | |
Rent Revenue | ~ | 12,000 | |
Salaries Expense | ~ | 524,300 | |
Rent Expense | ~ | 48,000 | |
Supplies Expense | ~ | 10,800 | |
Depreciation Expense-Building | ~ | 7,800 | |
Utilities Expense | ~ | 7,200 | |
Repairs Expense | ~ | 2,900 | |
Insurance Expense | ~ | 2,800 | |
Miscellaneous Expense | ~ | 6,500 | |
~ | 1,159,600 | 1,159,600 | |
Required: | |||||||
1. |
|
||||||
2. | Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles. | ||||||
3. | If Retained Earnings had instead decreased $37,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss. |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foxy Investigative Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Labels | |
Current assets | |
Current liabilities | |
Expenses | |
For the Year Ended November 30, 20Y8 | |
November 30, 20Y8 | |
Property, plant, and equipment | |
Revenues | |
Amount Descriptions | |
Balances, December 1, 20Y7 | |
Balances, November 30, 20Y8 | |
Dividends | |
Net income | |
Net loss | |
Total assets | |
Total current assets | |
Total expenses | |
Total liabilities | |
Total liabilities and stockholders’ equity | |
Total property, plant, and equipment | |
Total revenues | |
Total stockholders’ equity |
Foxy Investigative Services
|
Income Statement
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
|
6
|
|
|
|
7
|
|
|
|
8
|
|
|
|
9
|
|
|
|
10
|
|
|
|
11
|
|
|
|
12
|
|
|
|
13
|
|
|
|
14
|
|
|
|
15
|
|
|
|
Foxy Investigative Services
|
Statement of Stockholders’ Equity
|
|
1
|
|
Common Stock
|
Retained Earnings
|
Total
|
2
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images