Prepare the financial statements for the Year 20X1 and record the closing entries.

1. Prepare an adjusted trial balance and complete the Worksheet.
2. Prepare 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 Statement

Year Ended December 31, 20X1

Operating 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 Sold

Gross Profit or Sales

Operating Expenses

Selling Expenses

Advertising Expense

Total Selling Expenses

General and Administrative Expenses

Insurance Expense

Total General and Administrative Expenses

Total Operating Expenses

Net Income from Operations

Net Income for Year

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

Income Statement

Year Ended December 31, 20X1

Net Sales

Cost of Goods Sold

Gross Profit

Operating Expenses:

Selling Expenses

General and Administrative Expenses

Total Operating Expenses

Net Income from Operations

Net Income for Year

3. Prepare the Statement of Owner's equity.

4. Prepare the Balance Sheet.

5. Make the closing entries and prepare the Post-closing Trial Balance.