Question:
Account Title Debit Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000
Accounts receivable . . . . . . . . . . . . . . . . . . . 16,500
Office supplies . . . . . . . . . . . . . . . . . . . . . . 2,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000
Accumulated depreciation—Trucks . . . . . . . . $ 35,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . 11,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . 3,000
Long-term notes payable . . . . . . . . . . . . . . . 52,000
K.Webb, Capital . . . . . . . . . . . . . . . . . . . . . 161,000
K.Webb, Withdrawals . . . . . . . . . . . . . . . . . 19,000
Trucking fees earned . . . . . . . . . . . . . . . . . . 128,000
Depreciation expense—Trucks . . . . . . . . . . . 22,500
Salaries expense . . . . . . . . . . . . . . . . . . . . . 60,000
Office supplies expense . . . . . . . . . . . . . . . . 7,000
Repairs expense—Trucks . . . . . . . . . . . . . . . 11,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $390,000 $390,000
Answers:
Income statement
Revenue -
Trucking fees earned 128,000
less:
Costs & expenses -
Depn of trucks (22,500)
Salaries (60,000)
Office supplies (7,000)
Repairs (11,000)
Total costs & exp (100,500)
Profit before tax 27,500
Balance Sheet
Non current assets
Property, plant & equipment (at nbv) 210,000
Current assets
AR 16,500
Office supplies 2,000
Cash 7,000
Sub-total 25,500
Total assets 235,500
Non current liabilities
Long term notes payable 52,000
Current liabilities
AP 11,000
Interest payable 3,000
Sub-total 14,000
Total liabilities 66,000
Owner's equity
Capital 142,000
Retained earnings 27,500
Sub-total 169,500
Total liabilities + owner's equity 235,500
Note: PPE at nbv -
Trucks 170,000
less accd depn (35,000)
Land 75,000
PPE at nbv 210,000
Owner's capital
Capital 161,000
less withdrawals (19,000)
Net owner's capital 142,000
Put all the above information in Excel or other spreadsheet:
List all Account Titles in column A
Then in column C list the amounts that have Debit Balances
In Column D list the amounts that have Credit Balances.
At the bottom you're total amount of debits will equal credits which will give you the amount of $390,000
If you're having problems;
Assets are debits:
Cash
AR
Office Supplies
Trucks
Land
depreciation is a contra asset account and will have a credit balance
Liabilities have a credit balance:
Accts Pay
Int. Pay
LT note Pay
Owner's Equity has a credit balance:
K. Webb, Capital
and withdrawals is another contra account so it will have a debit balance
Revenue is a credit balance:
Trucking fees earned
Expenses are debit balances:
Dep Exp - Trucks
salaries Expense
Office Supplies Exp.
Repairs Expense - Trucks
Company made $ 27,500 in profit
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