Question

Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 2018, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows: Required:Foxy Investigative ServicesEnd-of-Period SpreadsheetFor the Year Ended November 30, 2018 ~ Adjusted Trial BalanceAccount Title ~ Dr. Cr. ~Cash ~ 27,500Accounts Receivable ~ 71,800Supplies ~ 3,550Prepaid Insurance ~ 750Building ~ 330,500Accumulated Depreciation-Building ~ 184,100Accounts Payable ~ 16,100Salaries Payable ~ 6,600Unearned Rent ~ 1,500Common Stock ~ 40,000Retained Earnings ~ 70,300Dividends ~ 30,000Service Fees ~ 675,500Rent Revenue ~ 9,000Salaries Expense ~ 435,000Rent Expense ~ 55,000Supplies Expense ~ 11,850Depreciation Expense-Building ~ 10,000Utilities Expense ~ 8,800Repairs Expense ~ 4,250Insurance Expense ~ 3,000Miscellaneous Expense ~ 11,100 ~ 1,003,100 1,003,1001. A. Prepare an income statement for the year ended November 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles.B. Prepare a retained earnings statement for the year ended November 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.C. Prepare a balance sheet as of November 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.2. Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.3. If Retained Earnings had instead decreased $46,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss.

Answer 1

Foxy Investigative Services

1. Foxy Investigative Services

A. Income Statement

For the Year Ended November 30, 20Y8

REVENUE

Service Fees $675,500

Rent Revenue 9,000

Total revenues $684,500

EXPENSES

Salaries Expense 435,000

Rent Expense 55,000

Supplies Expense 11,850

Depreciation Expense-Building 10,000

Utilities Expense 8,800

Repairs Expense 4,250

Insurance Expense 3,000

Miscellaneous Expense 11,100

Total expenses $539,000

Net income $ 145,500

Retained Earnings 70,300

Dividends -30,000

Balance, November 30, 20Y8 $185,800

Foxy Investigative Services

B. Statement of Shareholders' Equity

November 30, 20Y8

Common Stock $40,000

Net income $ 145,500

Retained Earnings 70,300

Dividends -30,000

Balance, November 30, 20Y8 $185,800

Total stockholders' equity $225,800

Foxy Investigative Services

C. Balance Sheet

November 30, 20Y8

ASSETS

Current assets

Cash 27,500

Accounts Receivable 71,800

Supplies 5,550

Prepaid Insurance 750

Total Current Assets $105,600

Building 330,500

Accumulated Depreciation -184,100

Total property, plant, and equipment $146,400

Total assets $252,000

LIABILITIES

Current liabilities

Accounts Payable 16,100

Salaries Payable 6,600

Unearned Rent 1,500

Total Liabilities $24,200

EQUITY

Common Stock 40,000

Retained Earnings 185,800

Total stockholders' equity $225,800

Total liabilities and stockholders' equity $250,000

NB: Liabilities + Equity side is short by $2,000 because the Trial Balance is not in balance.

2. Closing Journal Entries:

Account Title Dr. Cr.

Income Summary 30,000

Dividends 30,000

To close dividends to the income summary (Retained Earnings)

Account Title Dr. Cr.

Service Fees 675,500

Rent Revenue 9,000

Income Summary 684,500

To close revenues to the income summary.

Account Title Dr. Cr.

Income Summary $539,000

Salaries Expense 435,000

Rent Expense 55,000

Supplies Expense 11,850

Depreciation Expense-Building 10,000

Utilities Expense 8,800

Repairs Expense 4,250

Insurance Expense 3,000

Miscellaneous Expense 11,100

To close the expenses to the income summary.

3. Net Income remained $ 145,500. Retained Earnings, beginning balance would have been reduced by $46,000.

Explanation:

a) Data and Calculations:

Foxy Investigative Services

End-of-Period Spreadsheet

For the Year Ended November 30, 20Y8

Adjusted Trial Balance

Account Title Dr. Cr.

Cash 27,500

Accounts Receivable 71,800

Supplies 5,550

Prepaid Insurance 750

Building 330,500

Accumulated Depreciation-Building 184,100

Accounts Payable 16,100

Salaries Payable 6,600

Unearned Rent 1,500

Common Stock 40,000

Retained Earnings 70,300

Dividends 30,000

Service Fees 675,500

Rent Revenue 9,000

Salaries Expense 435,000

Rent Expense 55,000

Supplies Expense 11,850

Depreciation Expense-Building 10,000

Utilities Expense 8,800

Repairs Expense 4,250

Insurance Expense 3,000

Miscellaneous Expense 11,100

Totals 1,003,100 1,003,100

Correct total of Debit side = 1,005,100 2,000