ed to consider some additional information.

 

 

·         One client had indicated that they were interested in purchasing $45,500 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase.

 

·         The bookkeeper already corrected the sales account. However, the bookkeeper may have made a mistake when computing cost of goods sold. She included total production costs for 2012 and did not adjust ending inventory for the $45,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.

 

 

Smith Company

31-Dec-12

Trial Balance (accounts in alphabetical order)

 

Debit

Credit

Accounts payable

 

67,000

Accounts receivable

24,500

 

Cash

30,000

 

Common stock

 

10,000

Depreciation expense

24,350

 

Cost of goods sold

234,000

 

Equipment (net of depreciation)

316,000

 

Insurance

1,400

 

Inventory

25,000

 

Long-term debt

 

145,000

Marketing

4,500

 

Paid-in capital

 

90,000

Property taxes

8,900

 

Rent

18,000

 

Retained earnings

 

???

Revenues

 

406,000

Salaries

67,500

 

Utilities

6,700

 
   

Total

760,850

718,000

 

 

 

Required

 

Prepare an income statement for the company in good format. Also, explain the adjustments separately. Always include the name of the company and the period covered in the title. Don't forget dollar signs where appropriate. You do not need to include the balance sheet. Consequently, you will not need all the accounts listed above. How does the income or loss compare to the original income statement? Explain the importance of the matching concept.

 

Modular SLP Assignment Expectations

 

It is important to answer the questions as posed. The document should be two to four pages and written in a clear and concise manner or present tables as required. Support your discussion or tables with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved. You can turn in the spreadsheet instead. The content should be equivalent to the page length suggested for a word processing document.

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