Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
7th Edition
ISBN: 9781260581256
Author: John Wild
Publisher: McGraw-Hill Education
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Chapter 3, Problem 6PSA

1.

To determine

Introduction:

The income statement contains revenues and expense items and is prepared to determine the net income.

Statement of retained earnings is a part of total stockholders’ equity. This report shows the changes in the retained earnings during the year due to dividend declaration and net operating income or loss.

The balance sheet houses all the assets and liabilities starting with the most liquid to non-liquid assets and liabilities. The asset total must tally with the total of liabilities and equity.

To Prepare:

The income statement, statement of retained earnings and the balance sheet for the year ended December 31, 2019, of TC company.

1.

Expert Solution
Check Mark

Explanation of Solution

The income statement is prepared as follows:

    TC
    Income Statement
    For the Year Ended December 31, 2019
    Particular Amount Amount
    Revenue:
    Professional fees earned$97,000
    Rent income$14,000
    Interest income$2,100
    Dividend income$2,000
    Total revenue 115,100
    Expenses:
    Depreciation expenses − Building $11,000
    Depreciation expense − Equipment $6,000
    Interest expense$5,100
    Wages Expenses$32,000
    Insurance Expenses$10,000
    Rent Expenses$13,400
    Supplies Expenses$7,400
    Postage Expenses$4,200
    Property Taxes Expense$5,000
    Repairs Expense$8,900
    Telephone Expenses$3,200
    Utilities Expense$4,600
    Total expenses$110,800
    Net Income$4,300

The retained earnings statement is prepared as follows:

    TC
    Statement of Retained Earnings
    For the Year Ended December 31, 2019
    Particular Amount
    Balance, January 1$121,400
    Add: net income$4,300
    Less: dividends paid($13,000)
    Balance, December 31$112,700

The balance sheet is prepared as follows:

    TC
    Balance Sheet
    As of December 31, 2019
    Particular Amount Amount
    Assets:
    Current Assets:
    Cash$5,000
    Short-term Investments$23,000
    Supplies$8,100
    Prepaid Insurance$7,000
    Total Current Assets$43,100
    Non-current Assets:
    Land$55,000
    Building$150,000
    Less: Accumulated Depreciation$50,000
    Building, Net$100,000
    Equipment$40,000
    Less: Accumulated Depreciation$20,000
    Equipment, Net$20,000
    Total Non-current Assets$175,000
    Total Assets$218,100
    Liabilities and Equity:
    Current Liabilities:
    Accounts Payable$16,500
    Interest Payable$2,500
    Rent Payable$3,500
    Wages Payable$2,500
    Property Taxes Payable$900
    Unearned Professional Fees$7,500
    Long-term Notes Payable - Current Portion$7,000
    Total Current Liabilities$40,400
    Non-current Liabilities
    Long-term Notes Payable$60,000
    Total Non-current Liabilities$60,000
    Total Liabilities$100,400
    Equity:
    Common Stock$5,000
    Retained Earnings$112,700
    Total Equity$117,700
    Total Liabilities & Equity$218,100

2.

To determine

Introduction:

As the revenue and expense accounts should not have the ending balances, they should be transferred to the temporary account called income summary to determine the net results. Finally, the net result is transferred to retained earnings. If there is profit, the retained earnings go up and if there is a loss, then the retained earnings go down.

To Prepare:

Closing entries as of December 31, 2019 for TC Company.

2.

Expert Solution
Check Mark

Explanation of Solution

    Journal
    DateAccount Titles & ExplanationsAccount No.DebitCredit
    2019
    31-DecProfessional fees earned401$97,000
    Rent earned406$14,000
    Dividends earned407$2,000
    Interest earned409$2,100
    Income summary$115,100
    (To close the revenue accounts)
    31-DecIncome summary$110,800
    Depreciation expense-Building606$11,000
    Depreciation expense-Equipment612$6,000
    Wages expenses623$32,000
    Interest expense633$5,100
    Insurance expense637$10,000
    Rent expense640$13,400
    Supplies expense652$7,400
    Postage expense682$4,200
    Property taxes expense683$5,000
    Repairs Expense684$8,900
    Telephone expense688$3,200
    Utilities expense690$4,600
    (To close the expense accounts)
    31-DecIncome summary$4,300
    Retained earnings318$4,300
    (To close the income summary account)
    31-DecRetained earnings318$13,000
    Dividends319$13,000
    (To close the dividends paid)

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Chapter 3 Solutions

Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card

Ch. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - Prob. 10DQCh. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - Prob. 13DQCh. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 1QSCh. 3 - Prob. 2QSCh. 3 - Prob. 3QSCh. 3 - Prob. 4QSCh. 3 - Prob. 5QSCh. 3 - Prob. 6QSCh. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - Prob. 10QSCh. 3 - Prob. 11QSCh. 3 - Prob. 12QSCh. 3 - Prob. 13QSCh. 3 - Prob. 14QSCh. 3 - Prob. 15QSCh. 3 - Prob. 16QSCh. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - Prob. 21QSCh. 3 - Prob. 22QSCh. 3 - Preparing a classified balance sheet C3 Use the...Ch. 3 - Prob. 24QSCh. 3 - Prob. 25QSCh. 3 - Prob. 26QSCh. 3 - Prob. 27QSCh. 3 - Prob. 28QSCh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Prob. 8ECh. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Preparing unadjusted and adjusted trial balances,...Ch. 3 - Prob. 17ECh. 3 - Prob. 1PSACh. 3 - Prob. 2PSACh. 3 - Prob. 6PSACh. 3 - Prob. 7PSACh. 3 - Prob. 1PSBCh. 3 - Prob. 2PSBCh. 3 - Prob. 3PSBCh. 3 - Preparing financial statements from adjusted trial...Ch. 3 - Prob. 5PSBCh. 3 - Preparing closing entries and financial statements...Ch. 3 - Determining balance sheet classifications C3 In...Ch. 3 - After the success of the company’s first two...Ch. 3 - Prob. 1GLPCh. 3 - Prob. 2GLPCh. 3 - Prob. 3GLPCh. 3 - Prob. 4GLPCh. 3 - Prob. 5GLPCh. 3 - Prob. 1AACh. 3 - Prob. 2AACh. 3 - Prob. 3AACh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 3BTNCh. 3 - Prob. 4BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 6BTN
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