Requirement:

P42:

P43:

P44:

Complete practice M4-8 from the handout (slides 43-44) by filling out the balance sheet and income statement templates below. Read slide # 42 from the handout before you start. ROMNEY'S MARKETING COMPANY Balance Sheet December 31, 2017 ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current Assets: Cash Accounts receivable Interest receivable Prepaid insurance Total Current Assets Notes receivable Current Liabilities: Accounts payable Accrued expenses payable Income taxes payable Unearned rent revenue Total Current Liabilities Total Liabilities Stockholders' Equity: Common Stock Additional Paid-in Capital Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity: Equipment, net Total Assets ROMNEY'S MARKETING COMPANY Income Statement For the year ended December 31, 2017 Revenues Sales revenue Rent revenue Total revenues Cost of revenues Wage expense Depreciation expense Rent expense Utilities expense Total cost of revenues Gross profit Operating expenses Insurance expense Total operating expenses Income from operations Interest income Income before taxes Income tax expense Net income Post-closing trial balance: PAY ATTENTION!!! The income statement is based on the trial balance before we reset the temporary accounts Retained earnings on the balance sheet is based on the trial balance after we reset the temporary accounts otherwise the balance sheet will not be balanced Practice M4-8: Romney's Marketing Company has the following adjusted trial balance at December 31, 2017. No dividends were declared. However, 500 shares ($0.10 par value per share) issued at the end of the year for $3,000 are included. Required: 1) Show the trial balance after all the closing entries. Homework: 2) Show the balance sheet as of December 31, 2017. 3) Show the income statement for the year ending on December 31, 2017. Solution to M4-8: Credit Credit Cash Debit 1,500 2,200 100 Debit 1,500 2.200 100 1,600 2.800 1,600 2,800 15,290 15,290 3,000 Accounts receivable Interest receivable Prepaid insurance Notes receivable (long-term) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent revenue Common Stock (800 shares) Additional paid-in capital Retained earnings Sales revenue Interest revenue Rent revenue Wages expense Depreciation expense Utilities expense Insurance expense Rent expense Income tax expense Total 3,000 2,400 3,920 2,700 500 80 3,620 2,000 38,500 100 Cash Accounts receivable Interest receivable Prepaid insurance Notes receivable (long-term) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent revenue Common Stock (800 shares) Additional paid-in capital Retained earnings Sales revenue Interest revenue Rent revenue Wages expense Depreciation expense Utilities expense Insurance expense Rent expense Income tax expense Total 2,400 3,920 2,700 500 80 3,620 7,270 0 0 800 19,500 1,800 380 750 0 0 9,000 2,700 57,620 57.620 23,490 23,490