5-36PGA
Question
The adjusted trial balance of Rachael Rey Music Company at June 30, 2018, follows:
RACHAEL REY MUSIC COMPANY
Adjusted Trial Balance
June 30, 2018
Balance
Account Title Debit Credit
Cash \(4,000
Accounts Receivable 38,400
Merchandise Inventory 18,100
Office Supplies 300
Furniture 39,900
Accumulated Depreciation-Furniture \)8,200
Accounts Payable 13,800
Salaries Payable 850
Unearned Revenue 7,500
Notes Payable, long-term 17,000
Common Stock 6,000
Retained Earnings 21,350
Dividends 40,000
Sales Revenue 184,000
Cost of Goods Sold 85,500
Selling Expense 18,600
Administrative Expense 12,000
Interest Expense 1,900
Total \(258,700 \)258,700
Requirements
1. Prepare Rachael Rey’s multi-step income statement for the year ended June 30, 2018.
2. Journalize Rachael Rey’s closing entries.
3. Prepare a post-closing trial balance as of June 30, 2018.
Step-by-Step Solution
VerifiedThe net income of the company is $66,000.
A bookkeeping worksheet that contains the closing balances of all the ledger accounts is termed trail balance. Trial balance is prepared periodically by business entities according to their requirements, and it facilitates the drafting of financial statements
RACHAEL REY MUSIC COMPANY | |
Multi-step Income Statement | |
For the year ended June 30, 2018 | |
Particulars | Amounts ($) |
Sales revenue | 184,000 |
Less: Cost of goods sold | (85,500) |
Gross profit | 98,500 |
Less: Operating expenses |
|
Selling expenses | (18,600) |
Administrative expenses | (12,000) |
Income from operations | 67,900 |
Less: Other expenses |
|
Interest expenses | (1,900) |
Net income | 66,000 |
Date | Accounts and Explanation | Debit ($) | Credit ($) |
2018 |
|
|
|
Jun 30 | Sales revenue | 184,000 |
|
| Income summary |
| 184,000 |
| (To close the revenue accounts) |
|
|
Jun 30 | Income summary | 118,000 |
|
| Cost of goods sold |
| 85,500 |
| Selling expenses |
| 18,600 |
| Administrative expenses |
| 12,000 |
| Interest expenses |
| 1,900 |
| (To close expenses accounts) |
|
|
Jun 30 | Income summary (184000-118000) | 66,000 |
|
| Retained earnings |
| 66,000 |
| (To close income summary account) |
|
|
Jun 30 | Retained earnings | 40,000 |
|
| Dividends |
| 40,000 |
| (To close the dividend account) |
|
|
Account Title | Debit ($) | Credit ($) |
Cash | 4,000 |
|
Accounts receivables | 38,400 |
|
Merchandise inventory | 18,100 |
|
Office supplies | 300 |
|
Furniture | 39,900 |
|
Accumulated depreciation-Furniture |
| 8,200 |
Accounts payable |
| 13,800 |
Salaries payable |
| 850 |
Unearned revenue |
| 7,500 |
Notes payable, long-term |
| 17,000 |
Common stock |
| 6,000 |
Retained earnings (21350+66000-40000) |
| 47,350 |
Total | $100,700 | $100,700 |