In this part of your Portfolio Project, you are going to prepare the financial statements for the Year 20X1 and record the closing entries.

1. Prepare an adjusted trial balance and complete the Worksheet. Refer to your textbook (Chapter 12 Section 2) to read about this.

1. Prepare the Income Statement.

• Refer back to your textbook (Chapter 13 pp. 433-435) about preparing the Income Statement.
• The salaries, rent and depreciation expenses are directly associated with preparing the dishes in the kitchen. Hence, they should be considered when computing the Cost of Goods Sold.
• Use the following template for the Classified Income Statement:

Income StatementYear Ended December 31, 20X1Operating Revenue Sales Cost of Goods Sold Merchandise Inventory Purchases Freight In Delivered Cost of Purchases Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, 20X1 Direct material costs Salaries Expense Rent Expense Depreciation expense - equipment Total Cost of Goods SoldGross Profit or SalesOperating Expenses Selling Expenses Advertising Expense Total Selling Expenses General and Administrative Expenses Insurance Expense Total General and Administrative ExpensesTotal Operating ExpensesNet Income from OperationsNet Income for YearGross Profit or SalesOperating Expenses Selling Expenses Advertising Expense Total Selling Expenses General and Administrative Expenses Insurance Expense Total General and Administrative ExpensesTotal Operating ExpensesNet Income from OperationsNet Income for Year

• To prepare the Income Statement, use the following template:

Income StatementYear Ended December 31, 20X1Net SalesCost of Goods SoldGross ProfitOperating Expenses: Selling Expenses General and Administrative ExpensesTotal Operating ExpensesNet Income from OperationsNet Income for Year

1. Prepare the Statement of Owner's equity. Refer to the textbook (Chapter 13 p. 435).
2. Prepare the Balance Sheet. To learn more about completing the Classified Balance Sheet, refer to your textbook (Chapter 13 pp. 436-437).

Make the closing entries and prepare the Post-closing Trial Balance. Refer to the textbook (Chapter 13 pp. 442-444