Question

Ricky’s Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$	6,200		Accounts Payable	$	10,400
Accounts Receivable		33,250		Deferred Revenue (deposits)		4,000
Supplies		1,700		Notes Payable (long-term)		60,750
Equipment		12,200		Common Stock		7,000
Land		8,500		Retained Earnings		3,800
Building		24,100

Following are the January transactions:

1. Received a $715 deposit from a customer who wanted her piano rebuilt in February.
2. Rented a part of the building to a bicycle repair shop; $445 rent received for January.
3. Delivered five rebuilt pianos to customers who paid $12,800 in cash.
4. Delivered two rebuilt pianos to customers for $7,300 charged on account.
5. Received $5,200 from customers as payment on their accounts.
6. Received an electric and gas utility bill for $365 for January services to be paid in February.
7. Ordered $1,145 in supplies.
8. Paid $2,100 on account in January.
9. Paid $11,200 in wages to employees in January for work done this month.
10. Received and paid cash for the supplies in (g).

1. 5-a. Prepare an income statement for the month ended and at January 31.

   5-b. Prepare a statement of retained earnings for the month ended and at January 31.

   5-c. Prepare a classified balance sheet for the month ended and at January 31.

Answer 1

Answer:

5a)

Income Statement For the year ended January 31, second year
Revenues
Service revenue (12800+7300)	20100
Rent revenue	445
Total revenues		20545
Expenses
Gas utility expense	365
Wages expense	11200
Total expense		11565
Net Income		8980

5b)

Statement of Retained Earnings For the Year ended January 31, second year
Retained earnings balance Deecember 31, 2017	3800
Add: Net Income	8980
Retained earnings balance, December 31 2018	12780

5c)

Balance Sheet As of January 31, Second year
Assets
Current Assets
Cash (6200+715+445+12800+5200-2100-11200)	12060
Accounts receivable (33250+7300-5200)	35350
Supplies (1700+1145)	2845
Total Current Assets		50255
Long term Assets
Equipment	12200
Land	8500
Building	24100	44800
Total Assets		95055
Liabilities
Current Liabilities
Accounts payable (10400-2100+365+1145)	9810
Deferred revenue (4000+715)	4715
Total Current liabilities		14525
Long Term Liabilities
Notes payable (long term)		60750
Total liabilities		75275
Stockholder equity
Common stock	7000
Retained earnings	12780
Total Stockholders equity		19780
Total liabilities and Stockholders equity		95055