Here is an example of financial statements in good format. You can use a Word table to make life a lot easier. With a Word table, you can easily adjust the column with and right align the number columns.
Titles are 3 lines.
All numbers over 999 must have commas. Ex. 345,675,345.
Numbers need to be right aligned.
Center the heading.
$ sign on top number in each column and the totals on all statements.
Double underline the number of the statement total.
Indent your line titles only two spaces.
You need to use columns to sort numbers as appropriate – examples are in your text. Expenses need to be in an inside column.
Underline a number that is to be added or deducted. Example:
2,450
3,450
5,900
We don’t use a minus sign or parenthesis for a deduction unless it would otherwise be confusing for a knowledgeable financial statement reader.
No total line if there is only one item in the category.
Format so the account titles each fit on one line.
No inside column if there is just one item.
No a
eviations anywhere except for the month in the date column of journal entries.
Salem Corporation
Income Statement
Year Ended December 31, 2021
Revenues:
Service revenue
$ 680
Expenses:
Salary expense
$240
Rent expense
150
Supplies expense
40
Depreciation expense
50
Total expenses
480
Net income
$200
Salem Corporation
Balance Sheet
December 31, 2021
Assets
Cash
$ 400
Accounts receivable
250
Supplies
80
Prepaid rent
120
Equipment
$ 600
Accumulated depreciation
50
550
Total assets
$ 1,400
Liabilities and Shareholder’s Equity
Liabilities
Accounts payable
$ 260
Salaries payable
70
Unearned revenue
190
Notes payable
500
Total liabilities
1,020
Shareholder’s Equity
Common stock
$100
Retained earnings
280
Total Shareholder’s Equity
380
Total liabilities and shareholder’s equity
$ 1,400
Netlock Security Inc
Statement of Changes in Equity
Year Ended June 30, 2021
Common Shares
Retained Earnings
Totals
Closing Entries
date
account title
debit
credit
June 30, 2017
Security Revenue
449,000
Salaries Expense
33,000
Interest Expense
1,250
Depreciation Expense
21,400
Supplies Expense
4,700
Repairs Expense
17,000
Insurance Expense
9,333
Rent Expense
60,000
Income tax expense
7,000
Retained earnings
56,817
Retained earnings
10,000
Dividends
10,000
Assignment 2
#1 (14 marks – 28 minutes) The following account balances relate to the Desjardins Company’s December 31, 2017 year-end financial statements:
Retained earnings, Jan. 1, Year 7
$ 26,000
Cash
56,000
Income tax expense
24,000
Consulting revenue
250,000
Note payable
55,000
Repairs expense
10,000
Utilities expense
15,000
Supplies expense
14,000
Supplies
4,000
Salaries expense
100,000
Accumulated depreciation, equipment
5,000
Interest expense
6,000
Equipment
65,000
Dividends – Common
25,000
Common shares, Jan, 1, Year 7
1,000
Accounts receivable
18,000
Accounts payable
3,000
Depreciation expense
3,000
Notes:
• There were no common shares issued or repurchased during the year.
• The cu
ent portion of the Bank Loan payable was $4,000.
All accounts have a normal balance.
Required: a.) Prepare an income statement for the year ended December 31, XXXXXXXXXXmarks)
.) Prepare a statement of changes in equity for the year ended December 31, XXXXXXXXXXmarks)
c.) Prepare a Balance Sheet as at December 31, XXXXXXXXXXmarks) d.) Compute the company’s debt ratio. (1 mark)
#2 (6 marks – 12 minutes)
The following transactions occu
ed for Mary’s Consulting in the company’s first month – January, 2018 – record journal entries for each transaction.
January 1 Mary deposited $2,000 in to the company’s bank account in exchange she received 100 common shares in the company.
January 5 The company purchased $500 of office furniture on account. Payment is due on Fe
uary 5. January 8 The company did consulting work for a client. Billed $3,000. Received half of the money, with the other half due in one week.
January 10 Paid employee’s wages of $200.
January 13 Collected the amount due from January 8.
January 15 Paid the bill from January 5.
#3 (7 marks – 14 minutes) (V1) Fred’s Security has the following transactions and items requiring December 31, 2017 adjustments. Prepare journal entries as necessary.
a.) i.) The company purchased a 12-month insurance policy for $2,000 cash on March 1, 2017.
ii.) A December 31 adjustment is required.
.) i.) The company entered into a contract to provide security work for a client. The client paid Fred’s security $10,000 on October 1, 2017. The company was required to provide security service for 12 months, from October 1, 2017 – September 30, 2018.
This makes it actually 12 months.
ii.) A December 31 adjustment is required (assume the company provided security service as promised up to December 31).
c.) The company pays salaries of $8,000 every week on Sunday, based on a 7-day workweek. Assume salaries are earned at the same rate each day. This year, December 31 falls on a Thursday. Record the necessary adjustment.
d.) i.) The company purchased a car for $15,000 cash on Fe
uary 1, 2017. The car is expected to have a 10-year useful life and no residual value. The company’s accountant wishes to use straight line depreciation.
ii.) A December 31 adjustment is required.
#4 (3 marks – 6 minutes)
The July 31, 2018 adjusted trial balance of Anderson Company is found below:
Cash
$ 1,000
Accounts receivable
1,500
Supplies
500
Notes receivable
600
Equipment
32,000
Accumulated depreciation, equipment
$ 14,000
Land
58,000
Accounts payable
500
Notes payable
1,000
Mortgage payable
30,000
Common shares
100
Retained earnings
32,000
Dividends
2,000
Repairs revenue
55,000
Wages expense
20,000
Supplies expense
1,000
Depreciation expense
3,000
Maintenance expense
5,000
Interest expense
2,000
Income tax expense
6,000
Totals
$132,600
$132,600
Required: Prepare closing entries for the company.
#5 (4 marks – 8 minutes)
XXXXXXXXXXSmith Inc.
XXXXXXXXXXBank Reconciliation
XXXXXXXXXXJuly 31, 2017
Balance per bank
$3,359
Balance per book
$2,550
Add: deposit in transit
817
NSF cheque J Brown
(300)
Deduct: Outstanding cheques #
Collected note receivable
408*
232
$1,061
Bank fees
(18)
234
240
Bookkeeper e
o
(9)
195
195
49
49
(1,545)
Balance
$2,631
Balance
$ 2,631
(*) The collection included the original note of $380 and interest of $28. (**) The bookkeeper made an e
or recording a payment on account. They recorded the cheque, a payment on account for $1,590, the actual amount of the cheque was $1,599.
Required: Based on the completed Bank Reconciliation above, please record any required journal entries.
#6 (5 marks – 10 minutes)
Smith Company shows the following information on December 31, 2017, the company’s fiscal year-end: Account XXXXXXXXXXDebit XXXXXXXXXXCredit
Accounts receivable $17,000
Allowance for doubtful accounts XXXXXXXXXX400
Sales ($5,000 of cash sales) $75,000
The company’s accountant generated the following aging schedule of accounts receivable:
Number of Days Outstanding XXXXXXXXXXAmount Receivable XXXXXXXXXXEstimated Uncollectible
0-30 days $10,000 XXXXXXXXXX1%
31-60 days XXXXXXXXXX4,000 XXXXXXXXXX5%
61-90 days XXXXXXXXXX2,000 XXXXXXXXXX10%
Over 90 days XXXXXXXXXX1,000 XXXXXXXXXX25%
Required:
a.) Prepare the adjustment to allowance for doubtful accounts based on the information above.
.) Show how accounts receivable, net would be disclosed on the balance sheet.
c.) What is the most likely cause of the allowance for doubtful accounts being in a debit balance?
d.) On Fe
uary 15, 2018, the company writes off a $300 account receivable from Marco Inc. Record the journal entry.