Problem 3-5B Preparing financial statements from the adjusted
Debit Credit
Cash......................................... $ 58,000
Accounts receivable ............................ 120,000
Interest receivable.............................. 7,000
Notes receivable (due in 90 days} ................. 210,000
Office supplies................................. 22,000
Trucks........................................134,000
Equipment.................................... 270,000
Accumulated depreciation-Equipment............. 200,000
Land......................................... 100,000
Accounts payable .............................. 134.000
Interest payable................................ 20,000
Salaries payable ............................... 28,000
Unearned delivery fees.......................... 120,000
Long-term notes payable ........................ 200,000
L. Horace, Capital .............................. 125,000
L Horace. Withdrawals.......................... 50,000
Delivery fees earned............................ 611,8O0
Interest earned ................................ 34,000
Depreciation expense—Trucks.................... 29,000
Depreciation expense—Equipment ................ 48,000
Salaries expense............................... 74,000
Wages expense................................ 300,000
Interest expense ............................... 15,000
Office supplies expense ......................... 31,000
Advertising expense ............................ 27,200
Repairs expense—Trucks ........................ 35,600 -
Totals......................................... $1,530,800 $1,530,800
Required
1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31; (6) the statement of owner's equity for the year ended December 31 [Note: L. Horace, Capital at Dec. 31 of year was S125:000]; and (c) the
2. Compute the profit margin for the year (use total revenues as the denominator).
Introduction:
Income statement gives a picture of the financial performance of the company during the year and it forms a part of the financial statements.
Owner's equity is a statement which provides the owner's capital balance by determining the amount of investment, income transferred, and drawings.
The balance sheet is the financial statement which helps the investors to know te overall picture of the company showing the summarized assets, liabilities, and equity held by the shareholders during the year.
To Prepare:
The financial statement i.e. income statement, statement of owner's equity and balance sheet as of December, 31.
Answer to Problem 5BPSB
The financial statement refers to the income statement, owner's equity and balance sheet which are drawn here.
Explanation of Solution
Adjusted trial balances are given.
Hence:
(a) Income Statement is as follows:
Speedy Courier | ||
Income Statement | ||
For Year Ended December 31 | ||
Particulars | Amount | Amount |
Revenue: | ||
Delivery fees earned | ||
Interest earned | ||
Total revenues (A) | ||
Expenses: | ||
Depreciation expense-Trucks | ||
Depreciation expense-Equipment | ||
Salaries expense | ||
Wages expense | ||
Interest expense | ||
Office supplies expense | ||
Advertising expense | ||
Repair expense-Automobiles | ||
Total Expenses(B) | ||
Net income (A-B) |
(b) Statement of owner's equity is as follows:
Speedy Courier | |
Statement of Owner's Equity | |
For Year Ended December 31 | |
Particulars | Amount |
Owner's equity, December 31 of the prior year | |
Add: Net Income | |
Less: Withdrawals | |
Owner's equity, December 31 of the current year |
(c) Balance Sheet is as follows:
Speedy Courier | ||
Balance Sheet | ||
as on December 31 | ||
Assets | Amount | Amount |
Cash | ||
Account receivable | ||
Interest receivable | ||
Notes receivable | ||
Office supplies | ||
Automobiles | ||
Accumulated depreciation-Automobiles | ||
Office equipment | ||
Accumulated depreciation-Office equipment | ||
Land | ||
Total assets | ||
Liabilities & Equity | ||
Liabilities | ||
Account payable | ||
Interest payable | ||
Salaries payable | ||
Unearned consulting fees | ||
Long-term notes payable | ||
Total Liabilities | ||
Owner's equity | ||
Total liabilities and equity |
Conclusion:
Thus, these are the income statement, owner's equity statement, and balance sheet of Speedy Courier.
Introduction:
Profit Margin is the ratio which is a useful measure to calculate the company's operating results. In other words, it is a ratio of its net income to its net sales.
To calculate:
The profit margin for the year.
Answer to Problem 5BPSB
The profit margin of Speedy Courier for the year ended on December 31 :
Explanation of Solution
Adjusted trial balances are given
Hence, the ratio of Profit margin is computed as follows:
- Profit Margin = Net Income
Total Revenue
=
=
Conclusion:
Thus, the profit margin of Speedy Courier is
Want to see more full solutions like this?
Chapter 3 Solutions
FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS
- 1. Prepare a November 30 balance sheet in proper form for Green Bay Delivery Service from the following alphabetical list of the accounts at November 30: Accounts receivable.......................$10,000Accounts payable................................18,000Building..............................................28,000Cash..................................................8,000Notes payable.....................................45,000Office equipment...................................12,000R. Perkins, Capital................................?Trucks...............................................55,000arrow_forwardPrepare a November 30 balance sheet in proper form for Green Bay Delivery Service from the following alphabetical list of the accounts at November 30: Accounts receivable....................... $10,000Accounts payable................................ 18,000Building.............................................. 28,000Cash.................................................. 8,000Notes payable..................................... 45,000Office equipment................................... 12,000R. Perkins, Capital................................ 50,000Trucks............................................... 55,000[Hint: Please follow the balance sheet format. You need to re-organize the order of the account. Remember to include the heading (name of company...etc)]arrow_forwardACCOUNT NAME NORMAL BALANCE Cash in Bank ............................................$46,540 Accounts Receivable.............................................20,340 Inventory ...............................................................23,785 Prepaid Expenses...................................................6,300 Equipment-ALL....................................................38,000 Accum Depreciation –Equipment...........................3,600 Accounts Payable..................................................16,385 HST on Sales..........................................................4,180 HSTon Purchases..................................................2,670 Long Term LoanPayable..................................29,500 Capital, Your ACTUAL name..................................????? Capital Additional Investments..................................0 Drawings, Your ACTUAL name.............................12,000 SalesRevenue....................................................109,800…arrow_forward
- Below are recorded transactions of Yellow Jacket Corporation for August. Debit Credit1. Equipment........................................................ 8,800 Cash.............................................................. 8,8002. Accounts Receivable..................................... 3,200 Service Revenue....................................... 3,2003. Salaries Expense............................................ 1,900 Cash.............................................................. 1,9004. Cash................................................................... 1,500 Deferred Revenue.................................... 1,5005. Dividends.......................................................... 900…arrow_forwardart A Sammy accounts for VAT on an invoice basis. The following details have been extracted from the business records kept for the January/February 2020 VAT period Invoices issued VAT inclusive............................................. €145,684 Credit notes issued VAT inclusive ..................................... €363 Money collected from debtors ............................................ €200,618 If the VAT rate applicable to sales is 23%, the VAT due on sales for the January/February 2020 VAT period amounts to?arrow_forwardFill in the blaknks: A debit entry of 150 to .................. blank........... and a credit entry to .........blank............... A debit entry of ................. blank.......... to ................. blank.......... and a credit entry to suppl The adjusting entries would include:A ................. blank..........entry of 400 to ................. blank.......... and a ................. blank.......... entry of 400 to b................. blank.......... The closing entries would involve a debit entry of ................. blank.......... to service revenue and a debit entry of 3600 to ................. blank..........arrow_forward
- Prepare the suitable accounts and find out the missing figure if any.Opening balance of debtors ..14,00,000Opening balance of bills receivable.................. 7,00,000Closing balance of bills receivable............... 3,50,000Cheque dishonoured....... 27,000Cash received from debtors............................ 10,75,000Cheque received and deposited in the bank............ 8,25,000Discount allowed............. 37,500Irrecoverable amount......... 17,500Returns inwards....... 28,000Bills receivable received from customers........ 1,05,000Bills receivable matured....... 2,80,000Bills discounted.......... 65,000Bills endorsed to creditors...... 70,000arrow_forwardThe post-closing trial balance of Beamer Manufacturing Co. onApril 30 is reproduced as follows:Beamer Manufacturing Co.Post-Closing Trial BalanceApril 30, 2011 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,000Finished Goods .................................. 120,000Work in Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000Building . . . ...................................... 480,000Accumulated Depreciation—Building ............. $ 72,000Factory Equipment . . ............................ 220,000Accumulated Depreciation—Factory Equipment . . . 66,000Office Equipment ................................ 60,000Accumulated Depreciation—Office Equipment . . . . 36,000Accounts Payable . . .............................. 95,000Capital Stock…arrow_forwardAccounts Debit Credit Cash..... P 5,040 Home Office Current . P 21,000 Purchases from outsiders . Shipments from Home Office. Accounts receivable .... Expenses ..... Interest expense.. Gain on sale of equipment.. Sales .... 25,000 56,216 15,360 7,500 684 8,800 80,000 P109.800 P109.800 10. Using the same information above, determine the branch current account in the Home Office books on January 1, 2022. * 11. Using the same information above, shipments to Branch account in the Home Office books on January 1, 2022.arrow_forward
- question General ledger Debit Credit Balance 01.11.20 50,000 31.12.20 Rental Revenue 6000 56,000 31.12.20 Rental Revenue 1800 57,800 01.01.21 Rental Revenue 6,000 51,800 Kindly show me the T Accounts for the above general ledger.arrow_forwardProblem 7 Denver Company provided the following information relating to current operations: Accounts receivable, January 1 Accounts receivable collected Cash sales Inventory, January 1 Inventory, December 31 Purchases Gross margin on sales What is the balance of accounts receivable on December 31? a. 13,500,000 b. 8,500,000 c. 9,500,000 d. 9,000,000. 5,000,000 5,000,000 1,000,000 3,000,000 1,500,000 4,000,000 2,000,000arrow_forwardUse the following items taken from the financial statements of the Postal Service for the year ending December 31, 2018 to answer questions: Accounts payable ..............................................................$10,000 Accounts receivable ............................................................11,000 Accumulated depreciation – equipment ..........................28,000 Advertising expense ............................................................21,000 Cash ......................................................................................14,000 Owner’s capital (1/1/18) ...................................................105,000 Owner’s drawings ...............................................................14,000 Depreciation expense ........................................................12,000 Insurance expense ...............................................................3,000 Note payable, due 6/30/19…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education