Question

Create financial statements by properly employing prescribed methods in accordance with generally accepted accounting principles: A. Step Eight: Prepare the financial statements. Note that you must use your adjusted trial balance to prepare the income statement, statement of owner’s equity, and balance sheet. You must complete these statements in this order, as there are interdependencies among them.

Adjusting entries Debit Credit Peyton Approved Trial Balance 2018 Unadjusted trial balance Debit Credit 32,236.75 18,500.00 175.65 1,500.00 2,400.00 6,000.00 17,400.00 400.00 250.00 550.00 600.00 7,700.00 10,000.00 150.00 5,000.00 480.00 16,000.00 Account Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Baking Equipment Accumulated Depreciation Office Supplies Accounts Receivable Notes Payable Interest Payable Accounts Payable Wages Payable Common Stock Dividends Bakery Sales Merchandise Sales Baking Supplies Expense Rent Expense Interest Expense Insurance Expense Depreciation Expense Misc. Expense Office Supplies Expense Business License Expense Advertising Expense Wages Expense Telephone Expense COGS (FIFO) Adjusted trial balance Debit Credit 32,236.75 1,100.00 175.65 1,500.00 2,000.00 6,000.00 250.00 50.00 7,700.00 10,000.00 150.00 5,000.00 480.00 16,000.00 10.000.00 55,000.00 221.00 17,400.00 4,500.00 150.00 400.00 250.00 250.00 550.00 375.00 200.00 1,956.00 150.00 157.60 10.000.00 55,000.00 221.00 17,400.00 4,500.00 150.00 400.00 250.00 250.00 550.00 375.00 200.00 1,956.00 150.00 157.60 Total: (FIFO) 86,701.00 86,701.00 18,750.00 18,750.00 87,101.00 87,101.00

Answer 1

PEYTON APPROVED Statement of Retained Earnings For Qtr Ending September 30, 2018 Retained Earnings - Beginning Balance Add: Net Income $28,882.40 Less: Dividends $10,000.00 Net Increase in Retained Earnings Retained Earnings - Ending Balance $0.00 [Ref: Income Statement] $55,221.00 $18,882.40 $18,882.40 PEYTON APPROVED Income Statement For Qtr Ending September 30, 2018 Revenues: Bakery Sales $55,000.00 Merchandise Sales $221.00 Total Revenues Operating Expenses: Baking Supplies Expense $17,400.00 Rent Expense $4,500.00 Insurance Expense $400.00 Depreciation Expense $250.00 Misc. Expense $250.00 Office Supplies Expense $550.00 Business License Expense $375.00 Advertising Expense $200.00 Wages Expense $1,956.00 Telephone Expense $150.00 COGS (FIFO) $157.60 Total Operating Expenses Operating Income Interest Expense Net Income $26,188.60 $29,032.40 $ 150.00 $28,882.40

Assets Current Assets: Cash Accounts Receivable Baking Supplies Office Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Total Current Assets Plant, Property & Equipment: Baking Equipment Less: Accumulated Depreciation Plant, Property & Equipment, Net Total Assets $32,236.75 $7,700.00 $1,100.00 $50.00 $175.65 $1,500.00 $2,000.00 $5,630.00 PEYTON APPROVED Balance Sheet September 30, 2018 Liabilities & Shareholders' Equity Current Liabilities: Accounts Payable $5,000.00 Wages Payable $480.00 Interest Payable $150.00 Total Current Liabilities Long-Term Liabilities: Note Payable Total Liabilities $44,762.40 Shareholders' Equity: Common Stock $16,000.00 Retained Earnings $18,882.40 Total Shareholders' Equity $5,750.00 $50,512.40 Total Liabilities & Shareholders' equity $10,000.00 $15,630.00 $6,000.00 $250.00 [Ref: Statement of Ret. Earnings] $34,882.40 $50,512.40