Question: prepare the income statement and balance sheet and closing entries

1.

Use the following income statement and balance sheet to answer the following questions.

Income Statement

Sales 130,000

(Cost of Goods Sold 26,000

Salaries and Wages 15,000

Rent Expense 5,000

Licensing Expenses 20,000

Advertising Expense 4,000

Balance Sheet

Assets

Cash 10,000

Inventory 15,000

The property, Plant, and Equipment 250,000

Accounts Receivable 5,000

Liabilities

Accounts Payable 20,000

Notes Payable 40,000

Owners' Equity

Common Stock 120,000

Retained Earnings 100,000

Instructions:

a) Calculate Gross Profit, Net Profit, Total Current Asset, Total fixed Asset, Total

Asset, Total Current Liability, Total liability, Ending owners' equity, Post closing

Trail Balance.

2.

Use the following information to prepare Closing Entries and Cost Closing trial balance.

Cash 40,000

Accounts Receivable 8,000

The property, Plant, and Equipment 150,000

Inventory 30,000

Accounts Payable 15,000

Wages Payable 22,000

Common Stock 50,000

Retained Earnings 60,000

Sales 380,000

Cost of Goods Sold 120,000

Rent Expense 60,000

Wages and Salary Expense 110,000

Advertising Expense 9,000

3.

Materials purchased 2,50,000, Wages paid 2,00,000, Carriage inward 2,000, Consumable Stores

10,000, Wages of Storekeeper 7,000, Depreciation of Plant & Machinery 10,000, Materials

destroyed by Fire 5,000, Repairs & Renewals 5,010, Office Manager's Salary 10,000, Salary to

Office Staff 20,500, Printing & Stationary 10,000, Power 10,500, Lighting for Office Building

2,000, Carriage outward 3,000, Freight 5,000, Entertainment 2,500, Warehousing charges 1,500,

Legal charges 2,000, Expenses for participating in Industrial exhibition-6,000.

Closing Stock:

(i) Raw material 35,000,

(ii) Work-in-Progress 14,500, and

(iii) Finished Stock 40,030. Profit 25% on cost.

Calculate:

Product cost, Period cost, Prime cost, Factory cost, Cost of Goods sold, profit, Total cost,

Variable cost, fixed cost, Break-even point.

4.

Short notes:

Double-entry systems, Accounting Equation, GAAP, Ledger, Financial Reporting, adjusting

journal, Closing Journal, Post Closing Trial Balance, Work Sheet, Accounting Cycle, Reversing

entries, Managerial Accounting, cost unit, cost element, Break even Analysis.