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

**Retained earning at end =Beginning RE+ net income -dividend

       = 235000+154000-0

      = 389000

Income statement
Revenue
merchandise revenue	710000
service revenue	82000
Total revenue		792000
Less:cost of goods sold
cost of merchandise sales	415000
cost of service sales	53000	(468000)
Gross margin		324000
less:operating expense
salaries and wages	25000
payroll tax expense	8400
Employee benefits	5400
Advertising	15000
Rent	14000
utilities	4500
Depreciation	30000
Bad debt expense	1000
Interest expense	1500
Miscellaneous expense	200
Total operating expense		(105000)
Income before tax		219000
less:Income tax expense		(65000)
Net Income		154000