Use the following image below(if needed) to answer the question
QUESTION:
Closing entries reset the balance in the revenue account to zero.
o True
o False
1. Force, Inc. has the following unadjusted trial balance at December 31, 2016: Credit Debit $700,000 $450,000 $660,000 $15.000 $1,080.000 Account Description Cash Accounts receivable Inventory Prepaid rent Property, plant & equipment Accumulated depreciation Accounts payable Salaries and wages payable Long-term Debt Contributed capital Retained earnings Revenue Cost of goods sold Salaries and wages Depreciation expense Utility expense Rental expense Totals $180,000 $420,000 $15,000 $655,000 $1,080,000 $150,000 $1,500,000 $900.000 $150,000 $45,000 $4,000,000 $4,000,000 a. Use the information below to prepare any adjusting entries at December 31, 2016: i. PP&E has an expected useful life of ten years, and an expected residual value of $180,000. ii. Prepaid rent expires December 31, 2016. iii. Eamed and unpaid salaries and wages at December 31, 2016 are $60,000. iv. Long-term debt bears 10% interest, payable annually on January 1 (principal due at maturity on December 31, 2025). i) Depreciation expense $90,000 Accumulated depreciation $90,000 ii) Rent expense $ 15,000 Prepaid rent $ 15,000 111) Salaries and wage expense $60,000 Salaries and wages payable $60,000 iv) Interest expense $65,500 Interest payable $65,500 b. Prepare an adjusted trial balance for Force Inc. as of December 31, 2016. Credit Debit $700,000 $450,000 $660,000 $ 0 $1,080,000 Account Description Cash Accounts receivable Inventory Prepaid rent Property plant & equipment Accumulated depreciation Accounts payable Salaries and wages payable Long-term debt Contributed capital Retained earnings Revenue renne Cost of goods sold Salaries and wages Depreciation expense Utility expense Rent expense Interest expense Totals Interest payable $ 270,000 $420,000 $ 75,000 565,500 $655,000 $1,080,000 $ 150,000 $1,500,000 $900,000 $ 210,000 S 90,000 $ 45,000 $ 15,000 $65,500 $4,215,500 $4,215,500 c. Prepare the income statement for Force Inc. for the year ended December 31, 2016. Force Inc. Income Statement for the year ended December 31, 2016 Revenue Cost of goods sold Gross margin $1,500,000 $900,000 $600,000 Expenses. Salaries and wages Depreciation Utilities Rental Interest expense Total expenses $210,000 $90,000 $45,000 $15,000 $65.500 $425,500 Net Income $174.500 d. Prepare the closing entries for Force, Inc. for the year ended December 31, 2016. Revenue Cost of goods sold Salaries and wages expense Depreciation expense Utilities expense Rental expense Interest expense Retained earnings $1,500,000 $900,000 $210,000 $ 90,000 $ 45,000 $ 15,000 $ 65,500 $174,500 e. Prepare the classified balance sheet for Force, Inc. as of December 31, 2016. Assets Cash Accounts receivable Inventory Total current assets Force, Inc. Balance Sheet As of December 31, 2016 Liabilities $ 700,000 Accounts payable $450,000 Salaries and wages payable $660,000 Interest payable $1,810,000 Total current liabilities $420,000 $75,000 $65,500 $560,500 Long-term debt Total non-current liabilities $655,000 $655,000 + Property, plant & equipment Less accumulated depreciation Net property, plant & equipment Total non-current assets $1,080,000 ($270,000) $810,000 $810,000 Total liabilities $1,215,500 Shareholders' Equity Contributed capital Retained earnings Total shareholders' equity $1,080,000 $324,500 $1,404,500 Total assets $2,620,000 $2,620,000 Total liabilities and shareholder's equity +
