Question

2. a. Using the following information for Morton, Inc. prepare an annual: Multiple-step income statement Retained earnings statement Classified balance sheet (3 points) Morton, Inc. Adjusted Trial Balance December 31. 2020 Credit Debit $ 2,150 7.000 600 750 25,000 Cash Accounts Receivable Supplies Prepaid Insurance Office Equipment Accumulated Depreciation-Office Equipment... Accounts Payable Unearned Service Revenue. Salaries Payable Utilities Payable Common Stock Dividends... Retained Earnings Sales Sales Returns and Allowances Cost of Goods Sold. Insurance Expense Salaries Expense Rent Expense Utilities Expense. $ 200 4.500 1,500 2.000 150 11.750 1,500 5.000 56.800 250 36.000 1.000 5.000 2,500 150 $81.900 $81.900

Answer 1

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Morton
Answer 1
Income Statement	Amount $
Sales	56,800.00
Less: Sales returns and allowances	(250.00)
Net Sales	56,550.00
Less: Cost of goods sold	36,000.00
Gross profit	20,550.00
Less: Operating Expenses
Insurance Expense	1,000.00
Salaries Expense	5,000.00
Rent Expense	2,500.00
Utilities Expense	150.00
Total Expense	8,650.00
Net Income	11,900.00
Answer 2
Statement of Retained Earnings	Amount $
Retained Earnings- Opening Balance	5,000.00
Add: Net Income	11,900.00
Less: Dividends	1,500.00
Retained Earnings- Closing balance	15,400.00

Answer 3
Balance Sheet	Amount $	Amount $
Assets
Current Assets
Cash	2,150.00
Accounts receivable	7,000.00
Supplies	600.00
Prepaid Insurance	750.00
Total Current Assets		10,500.00
Plant Property & Equipment
Office Equipment	25,000.00
Accumulated Depreciation- Office Equipment	(200.00)	24,800.00
Total Plant Property & Equipment		24,800.00
Total Assets		35,300.00
Liabilities & Stockholder's Equity	Amount $	Amount $
Liabilities
Current Liabilities
Accounts Payable	4,500.00
Unearned service revenue	1,500.00
Salaries payable	2,000.00
Utilities payable	150.00
Total Current Liabilities		8,150.00
Total Liabilities		8,150.00
Stockholder's Equity
Common Stock	11,750.00
Retained Earnings	15,400.00
Total Stockholder's Equity		27,150.00
Total Liabilities & Stockholder's Equity		35,300.00

Answer 4

Closing entries

In closing entries all income and expense are closed to Income Summary account. Then Income Summary and dividend account is closed to Retained Earnings account.

Entry 1
Account	Debit $	Credit $
Sales	56,800.00
Income Summary		56,800.00
Entry 2
Income Summary	44,900.00
Sales returns and allowances		250.00
Cost of goods sold		36,000.00
Insurance Expense		1,000.00
Salaries Expense		5,000.00
Rent Expense		2,500.00
Utilities Expense		150.00
Entry 3
Income Summary	11,900.00
Retained Earnings		11,900.00
Entry 4
Retained Earnings	1,500.00
Dividends		1,500.00