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Problems and Final Exam Review

Essay by   •  April 2, 2012  •  Exam  •  599 Words (3 Pages)  •  2,782 Views

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A100 Solutions to Chapter 7 problems and Final Exam Review

Chapter 7

Step 7 - Prepare Financial Statements

Bella's Beauty Salon

Income Statement

FYE 12/31

Revenue:

Service fee revenue $ 23,400

Rental fee revenue 3,400

Total revenue $ 26,800

Expenses:

Property tax expense $ 4,350

Wages expense 3,400

Depreciation expense: building 2,220

Insurance expense 1,240

Interest expense 1,000

Shop supplies expense 780

Utilities expense 690

Advertising tax expense 600

Depreciation expense: shop equipment 350

Total expenses _ 14,630

Net income before income tax 12,170

Income tax expense 1,800

Net income $_10,370

Bella's Beauty Salon

Statement of Changes in Retained Earnings

FYE 12/31

Retained earnings, 1/1 $ 24,860

Add:

Net income 10,370

Subtotal 35,230

Deduct:

Dividends 0

________

Retained earnings, 12/31 $___35,230

Bella's Beauty Salon

Balance Sheet

12/31

Assets

Current assets:

Cash $4,200

Rental fee receivable 200

Shop supplies 210

Prepaid insurance 240

Total current assets $ 4,850

Property, Plant and Equipment

Shop equipment $ 3,860

Less: Accumulated depreciation 1,120 $ 2,740

Building 57,500

Less: Accumulated depreciation 6,060 51,440

Land 55,000

Total property, plant and equipment 109,180

Total assets $114,030

Liabilities & Stockholders' Equity

Current liabilities:

Income tax payable $ 1,800

Interest payable 1,000

Unearned rent 800

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