Question

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Answer 1

	1-A.
	FOXY INVESTIGATIVE SERVICES
	Income Statement for the year ended November 30,2018
	Description	Amount	Amount
	Revenues
	Service Fees	$714,800
	Rent Revenue	$12,000
	Total Revenue		$726,800
	Expenses
	Salaries Expense	$526,000
	Rent Expense	$48,000
	Supplies Expense	$11,000
	Depreciation Expenses - Building	$7,000
	Utilities Expense	$7,300
	Repairs Expense	$2,800
	Insurance Expense	$2,000
	Miscellaneous Expense	$5,800
	Total Expense		$609,900
	Net Income		$116,900
	1-B.
	FOXY INVESTIGATIVE SERVICES
	Statement of Owners' Equity for the year ended November 30,2018
	Description	Owners' Equity	Retained Earnings
	Beginning Balance	$80,000	$293,600
	Restatements during the year
	Adjustments during the year
	Balance after adjustments & restatements	$80,000	$293,600
	Net Income		$116,900
	Dividends paid		($12,000)
	Ending Balance on Nov 30,2018	$80,000	$398,500
	1-C.
	FOXY INVESTIGATIVE SERVICES
	Balance Sheet for the year ended November 30, 2018
	Description	Amount	Amount
	Current Assets
	Cash	$28,000
	Account Receivable	$71,000
	Supplies	$4,700
	Prepaid Insurance	$2,500
	Total Current Assets		$106,200
	Non-Current Assets
	Building	$432,500
	Less: Accumulated Depreciation	($44,200)
	Total Non-Current Assets		$388,300
	Total Assets		$494,500
	Current Liabilities
	Account Payable	$11,700
	Salaries Payable	$2,500
	Unearned Rent	$1,800
	Total Current Liabilities		$16,000
	Non-Current Liabilities
	Total Non-Current Liabilities
	Total Liabilities		$16,000
	Owners' Equity
	Common Stock	$80,000
Retained Earnings	$398,500
Total Owners' Equity		$478,500
Total Liabilities & Owners' Equity		$494,500
2
FOXY INVESTIGATIVE SERVICES
Closing entries for the year ended November 30,2018
Date	Account Title and Explanation	Debit	Credit
Nov-30	Service Fees	$714,800
	Rent Revenue	$12,000
	Income Summary		$726,800
	(being the revenue accounts closed and the balances transferred to the
	income summary account)
Nov-30	Income Summary	$609,900
	Salaries Expense		$526,000
	Rent Expense		$48,000
	Supplies Expense		$11,000
	Depreciation Expenses - Building		$7,000
	Utilities Expense		$7,300
	Repairs Expense		$2,800
	Insurance Expense		$2,000
	Miscellaneous Expense		$5,800
	(being the expense accounts closed and the balances transferred to the
	income summary account)
Nov-30	Income Summary	$12,000
	Dividends		$12,000
	(being the dividend account closed and the balances transferred to the
	income summary account)
Nov-30	Income Summary	$104,900
	Retained Earnings		$104,900
	(being the income summary account closed and the excess of revenue
	over expenses transferred to the retained earning account)
3
	If Retained Earnings had decreased $ 34,000 after closing entries and
	dividend
	Opening Retained Earnings		$293,600
	Decrease in Retained Earnings		$34,000
	Closing Retained Earnings		$259,600
	Opening Retained Earnings + Net Income - Dividends = Closing Retained Earnings
	Closing Retained Earnings = $ 293,600 + Net Income - $ 12,000
	$ 259,600 = $ 293,600 + Net Income - $ 12,000
	Net Income = $ 259,600 - $ 293,600 + $ 12,000
	Net Income = - $ 22,000
	If the Retained Earnings had decreaed $ 34,000, the Company would have
	suffered as Net Loss of $ 22,000