Using the trial balance construct an income statement and ba

Using the trial balance, construct an income statement and balance sheet.

Adiusted Trial Balance December 31, 2015 Acct No Account Title Debit Credit 1001 Cash 1003 Cash -Money Market 1005 Receivables 1006 Allowance for doubtful accounts 1010 Merchandise inventories 1015 Prepaid expenses and other current assets 1110 Property and equipment 1111 Accumulated depreciation 2001 Accounts payable 2010 Accrued payroll and employee benefits 2012 Payroll taxes payable 2015 Interest payable 2017 Current portion of long term debt 2020 Income taxes payable 2210 Long term debt 2220 Other debt 3101 Preferred stock 3110 Common stock 3111 Additional paid-in capital 3120 Retained earnings 5001 Merchandise sales 5003 Services sales 6001 Cost of Merchandise Sales 6003 Cost of services sales 7001 Salares & Wages 7003 Payroll tax expense 7005 Employee benefits 7010 Advertising 7020 Rent 7023 Untilities 7025 Depreciation 7030 Bad debt expense 7040 Interest Expense 7050 Miscellaneous expense 7900 Income tax expense 28,500 216,500 10,500 1,000 80,000 7,500 360,000 30,000 35,000 16,000 4,500 1,500 15,000 50,000 10,500 500 150,000 235,000 710,000 82,000 415,000 53,000 25,000 8,400 5,400 15,000 14,000 4,500 30,000 1,000 1,500 200 65,000 1,341,000 1,341,000

Solution

INCOME STATEMENT Revenue: Marchandise sales 710000 Services sales 82000 Total revenue 792000 Cost of sales: Merchandise sales 415000 Services sales 53000 Total cost of sales 468000 Gross margin 324000 Operating expenses: Salaries and wages 25000 Payroll tax expense 8400 Employee benefits 5400 Advertising 15000 Rent 14000 Utilities 4500 Depreciation 30000 Bad deb expense 1000 Miscellaneous expense 200 Total operating expenses 103500 Operating profit 220500 Interest expense 1500 Income before tax 219000 Income tax expense 65000 Net income 154000 BALANCE SHEET ASSETS: Current Assets: Cash 28500 Cash-Money market 216500 Receivables 10500 Allowance for doubtful accounts -1000 Merchandise inventories 80000 Prepaid expenses and other current assets 7500 Total current Assets 342000 Non-Current Assets: Property and equipment 360000 Accumulated depreciation -30000 Total non current assets 330000 TOTAL ASSETS 672000 LIABILITIES & STOCKHOLDERS\' EQUITY: Current liabilities: Accounts payable 35000 Accrued payroll and employee benefits 16000 Payroll taxes payable 4500 Interest payable 1500 Income taxes payable 15000 Total current liabilities 72000 Non-Current Liabilities: Long term debt 50000 Other debt 10500 Total non current liabilities 60500 Total liabilities 132500 Stockholders\' Equity: Common stock 500 Additional paid in capital 150000 Retained earnings 389000 Total stock holders\' equity 539500 Total liabilities and stockholders\' equity 672000