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Horngren'S Financial And Managerial Accounting
Found in: Page 236

Short Answer

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.

(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.

See the step by step solution

Step by Step Solution

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)

Step 2: 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

Step 3: 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

Step 4: 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

Step 5: 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

Step 6: 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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