Generally Accepted Accounting Principles and Retained Earnings

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Name:Learning Team
Course:ACC/280
Date:

P4-2A The adjusted trial balance columns of the worksheet for Porter Company are as follows.

(a) Complete the worksheet by extending the balances to the financial statement columns. PORTER COMPANY
Work Sheet (Partial)
For the Year Ended December 31, 2008
Adjusted Trial BalanceIncome StatementBalance Sheet
DebitCreditDebitCreditDebitCredit
Cash$18,800 $18,800
Accounts Receivable16,200 16,200
Prepaid Insurance4,400 4,400
Supplies2,300 2,300
Equipment44,000 44,000
Accum Dep - Equip$20,000 $20,000
Notes Payable20,000 20,000
Accounts Payable8,000 8,000
Salaries Payable2,600 2,600
Common Stock30,000 30,000
Retained Earnings6,000 6,000
Dividends12,000 12,000
Service Revenue77,800 $77,800
Advertising Expense12,000 12,000
Salaries Expense39,000 39,000
Supplies Expense3,700 3,700
Depreciation Expense8,000 8,000
Insurance Expense4,000 4,000
Interest Expense1,000 1,000
Interest Payable1,000 1,000
Totals$165,400 $165,400 $67,700 $77,800 $97,700 $87,600 Net income10,100 10,100
Totals$77,800 $77,800 $97,700 $97,700

P4-2A
"(b) Prepare an income statement and a retained earnings statement for the quarter and a classified balance sheet at March 31. No additional common stock was issued during the quarter ended March 31, 2008."

PORTER COMPANY
Income Statement
For the Year Ended December 31, 2008
Revenues
Service revenue$77,800
Expenses
Advertising Expense$12,000
Salaries Expense39,000
Supplies Expense3,700
Depreciation Expense8,000
Insurance Expense4,000
Interest Expense1,000
Total Expense67,700
Net income$10,100

PORTER COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2008
Retained Earnings Dec 1$6,000
Add: Net income10,100
16,100
Less Dividends12,000
Retained Earnings$4,100

PORTER COMPANY
Balance Sheet
December 31, 2008
Assets
Current Assets
Cash$18,800
Accounts Receivable16,200
Prepaid Insurance4,400
Supplies2,300
Total Current Assets$41,700
Equipment and Property
Equipment$44,000
Less: Accumulated Depreciation20,000 24,000
Total Assets$65,700

Liabilities and Stockholders’ Equity
Current liabilities
Notes Payable$10,000
Accounts Payable8,000
Salaries Payable2,600
Interest Payable1,000
Total Current Liabilities$21,600
Long Term Liabilities
Notes Payable10000
Total Liabilities $31,600
Stockholders' Equity
Common Stock$30,000
Retained Earnings4,100
Total Stockholders' Equity34,100
Total Liabilities and Stockholders' Equity$65,700

Exercise p4-2a Instructions:
(c) Prepare the closing entries. Use J14 for the journal page.

(1)Dec 31Service revenue$77,800
Income Summary$77,800

(2)Dec 31Income Summary67,700
Advertising Expense12,000
Salaries Expense39,000
Supplies Expense3,700
Depreciation Expense8,000
Insurance Expense4,000
Interest Expense1,000

(3)Dec 31Income Summary6,000
Retained Earnings6,000

(4)Dec 31Ratained Earnings12,000...
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