Question

The adjusted trial balance for Tybalt Construction as of December 31, 2017, follows.

TYBALT CONSTRUCTION
Adjusted Trial Balance
December 31, 2017
No. Account Title Debit Credit
101 Cash $ 6,500
104 Short-term investments 22,000
126 Supplies 8,000
128 Prepaid insurance 8,300
167 Equipment 50,000
168 Accumulated depreciation—Equipment $ 25,000
173 Building 162,000
174 Accumulated depreciation—Building 54,000
183 Land 68,020
201 Accounts payable 16,500
203 Interest payable 3,000
208 Rent payable 3,200
210 Wages payable 2,400
213 Property taxes payable 1,200
233 Unearned professional fees 7,400
251 Long-term notes payable 68,000
301 O. Tybalt, Capital 132,800
302 O. Tybalt, Withdrawals 10,000
401 Professional fees earned 100,000
406 Rent earned 15,500
407 Dividends earned 2,000
409 Interest ear 2,400
606 Depreciation expense—Building 11,880
612 Depreciation expense—Equipment 7,500
623 Wages expense 28,500
633 Interest expense 4,800
637 Insurance expense 7,300
640 Rent expense 11,600
652 Supplies expense 7,100
682 Postage expense 3,500
683 Property taxes expense 3,100
684 Repairs expense 7,800
688 Telephone expense 2,100
690 Utilities expense 3,400
Totals $ 433,400 $ 433,400
O. Tybalt invested $6,500 cash in the business during year 2017 (the December 31, 2016, credit balance of the O. Tybalt, Capital account was $126,300). Tybalt Construction is required to make a $8,500 payment on its long-term notes payable during 2018.
Required:
1a. Prepare the income statement for the calendar-year 2017.
1b. Prepare the statement of owner's equity for the calendar-year 2017.
1c. Prepare the classified balance sheet at December 31, 2017.
2. Prepare the necessary closing entries at December 31, 2017.

Answer 1

Answer and Explanation:

According to the scenario, The presentation are presented below:

1a. Income Statement

Particular Amount ($)

Professionals fees earned 100,000

Add - Rent earned 15,500

Add - Dividends Earned 2,000

Add - Interest earned 2,400

Total Revenue 119,900

Less - Building depreciation expenses 11,880

Less - Equipment depreciation expenses 7,500

Less - Wages expenses 28,500

Less - Interest expenses 4,800

Less - Insurance expenses 7,300

Less - Rent expenses 11,600

Less - Repair expenses 7,800

Less - Property taxes expenses 3,100

Less - supplies expenses 7,100

Less - Telephone expenses 2,100

Less - Postage expenses 3,500

Less - Utilities expenses 3,400

Net income 21,320

1 b Statement of Owner’s Equity

Particular Amount ($)

Tybalt capital on 31 Dec. 2016 126,300

Add-Additional invested cash 6,500

Add - Net income 21,320

Less - withdrawals 10,000

Tybalt capital on 31 Dec. 2017 144,120

1 c Balance Sheet

Assets Amount ($) Liabilities Amount ($)

Cash 6,500 Accounts payable 16,500

Short term

investment 22,000 Interest payable 3,000

supplies 8,000 Rent payable 3,200

Prepaid insurance 8,300 Wages payable 2,400

Equipment

($50,000-$25,000 25,000 Property taxes payable 1,200

Building

($162,000-$54,000) 108,000 Unearned professional fees 7,400

Land 68,020 Long term notes payable 68,000

Tybolt capital on 31 Dec. 2017 144,120

Total 245,820 Total 245,820

2.

Journal Entry

31, Dec. Rent earned A/c Dr. $100,000

Professional fees earned A/c Dr. $15,500

Dividends earned A/c Dr. $2,000

Interest earned A/c Dr. $2,400

To Income summary A/c $119,900

(Being the closing of revenue account is recorded)

31 Dec. Income summary A/c Dr. $98,580

To Building Depreciation expenses A/c $11,880

To Equipment Depreciation expenses A/c $7,500

To Wages expenses A/c $28,500

To Interest expenses A/c $4,800

To Insurance expenses A/c $7,300

To Rent expenses A/c $11,600

To Supplies expenses A/c $7,100

To Postage expenses A/c $3,500

To Property taxes expenses A/c $3,100

To Repairs expenses A/c $7,800

To Telephone expenses A/c $2,100

To Utilities expenses A/c $3,400

(Being the closing of expense account is recorded)

31 Dec. Income Summary A/c Dr. $21,320

To Tybalt capital A/c $21,320

(Being the closing of income summary is recorded)

31 Dec. Tybalt capital A/c Dr. $10,000

To Tybalt withdrawals A/c $10,000

(Being the closing of withdrawals account is recorded)