Natalie had a very busy May. At the end of the month, after Natalie has journalized and posted her adjusting and correcting entries, she has prepared an adjusted trial balance.

Instructions

Using the information in the adjusted trial balance, do the following:

a. Prepare an income statement for the two months ended May 31, 2021.

b. Prepare a statement of owner?s equity for the two months ended May 31, 2021, and a classifi ed balance sheet at May 31, 2021.

c. Calculate Sant? Smoothies? working capital, current ratio, and acid-test ratio. Comment on Sant? Smoothies? liquidity.

d. Natalie has decided that her year end will be May 31, 2021. Prepare closing entries.

e. Prepare a post-closing trial balance.

f. Natalie had reviewed her unadjusted trial balance prior to preparing the adjusting journal entries. When Natalie initially recorded the purchase of the equipment in May for $725, she thought the equipment should be recorded as ?supplies expense.? After posting the original transaction, Natalie reviewed her accounting textbook, and remembered that the purchase of equipment should be recorded as an asset. She then made an entry to correct this error. Had she not made a correcting entry, would the fi nancial statements have been misstated? How?

Transcribed Image Text:

SANTÉ SMOOTHIES Adjusted Trial Balance May 31, 2021 Debit Credit $3,060 Cash Accounts receivable Supplies Equipment Accumulated depreciation-equipment Accounts payable 675 95 1,550 2$ 66 88 Unearned revenue 100 Interest payable Notes payable, 3%, principal and interest due April 15, 2022 N. Koebel, capital 11 3,000 1,725 1,225 Revenue Advertising expense Salaries expense Telephone expense Supplies expense Depreciation expense Interest expense 325 48 174 211 66 11 $6,215 $6,215