Using the accompanying Stone Arbor Landscaping trial balance, prepare an Income Statement, Statement of Retained Earnings, and Balance Sheet with the following requirements:
1. The one adjusting entry that has not yet been recorded is income tax expense. Determine this entry and add it to the trial balance. Assume the company has an effective tax rate of 25%.
2. Prepare each financial statement, in good form, using a different sheet in Excel. Good form means you should have an appropriate three-part heading, no abbreviations, and dollar signs and underscores in appropriate places. You should be proud to hand these financial statements to your banker. Use the financial statements in the Accounting Cycle Review PowerPoint file from the first day of class as a guide with the following modifications:
a. Balance Sheet: Be aware that the T-Shirts "R" Us Balance Sheet does not have any long-term assets or liabilities. You should prepare a classified balance sheet with appropriate subtotals for current assets and current liabilities. You can group like assets and liabilities (i.e. all cash accounts can be totaled in one line item called "Cash and equivalents" and all payroll tax liabilities including FUTA and SUTA can be totaled in one line item called "Payroll tax liabilities". Note that the retained earnings balance on the trial balance is the beginning of the year retained earnings.
b. Income Statement: Because Stone Arbor is primarily a service business, you will not have a subtotal for cost of goods sold or gross margin. You should break out all sales but combine accounts into one subtotal called "Net Sales". You should also list out all expenses. The income statement is for the quarter ended March 31, 2012.
3. Articulate the financial statements by using cell references (i.e. The Statement of Retained Earnings should cell reference net income from the Income Statement and the Balance Sheet should cell reference retained earnings from the Statement of Retained Earnings). You should print your financial statements in both standard view and formula view. (Ctrl ~ will change the statements to formula view). All subtotals on your statements should be calculated using Excel formulas.
4. You should hand in six statements: the three financial statements and the three statements in formula view. If you wish, you can print more than one statement per page.
ATTACHED THE GENERAL LEDGER TRIAL BALANCE.
Attachment:- THE GENERAL LEDGER TRIAL BALANCE.rar