Johnson Parker is a automotive parts company that sells car parts and provides car service to customers. This is Johnson Parker's first year of operations and they noted the following adjusted trial balance at year-end.
As such, they have hired you as their CPA to prepare the income statement and balance sheet for their company. Johnson Parker has notified you of the following things to consider:
1.) Net Income hasn't been closed out to retained earnings yet as of the end of the period.
2.) When preparing the income statement, ensure that you use the Multiple Step Method.
3.) Johnson Parker has one customer with a notes receivable balance. The customer intends to pay this balance off in 5 years.
4.) Supplies Inventory are all considered to be used within the next fiscal year.
5.) Pre-Paid Expenses are for expenses that will be incurred by Johnson Parker within the next fiscal year.
6.) Johnson Parkers investments are considered long-term.
7.) Classify all selling and administrative expenses under the operating expense section on the income statement.
8.) Items that need to be recorded net of tax for the financial statements are entered net of tax on the trial balance.
Prepare the Balance Sheet and Income Statement on the following tabs below using the adjusted trial balance to the right.
| Account Description |
Amount |
| Accounts Payable |
1,000,000 |
| Accounts Receivable |
1,500,000 |
| Accumulated Depreciation |
300,000 |
| Accumulated Other Comprehensive Income |
140,000 |
| Additional Paid In Capital |
4,999,000 |
| Admin Wages Expense |
2,000,000 |
| Allowance for Doubtful Accounts |
20,000 |
| Bad Debt Expense |
20,000 |
| Building |
3,000,000 |
| Cash |
500,000 |
| Common Stock |
1,000 |
| Cost of Goods Sold |
5,000,000 |
| Deprecation Expense |
300,000 |
| Gain on Sale of PP&E |
100,000 |
| Income Tax Expense |
1,080,000 |
| Interest Income |
10,000 |
| Inventory |
1,500,000 |
| Investment (Available for Sale) |
250,000 |
| Loss on Operations of Discontinued Operations |
70,000 |
| Loss on Sale of Assets of Discontinued Operations |
30,000 |
| Notes Receivable |
1,200,000 |
| Pre-Paid Expense |
610,000 |
| Rent Expense |
310,000 |
| Retained Earnings |
- |
| Revenue (Third Party Sales) |
8,000,000 |
| Sales Team Wages |
1,000,000 |
| Service Revenue |
4,000,000 |
| Supplies |
300,000 |
| Supplies Expense |
400,000 |
| Unearned Service Revenue |
100,000 |
| Wages Payable |
400,000 |