HANDOUT 4–2
Use the balances in the T-accounts in handout 4–1 to prepare an adjusted trial balance.
Deana’s Decorators
Adjusted Trial Balance
December 31, 2016
Debit
Credit
Cash
Supplies
Accounts Receivable
Prepaid Rent
Prepaid Insurance
Certificate of Deposit
Interest Receivable
Property, Plant & Equipment
Accumulated Depreciation
Accounts Payable
Dividend Payable
Unearned Revenue
Notes Payable
Interest Payable
Income Taxes Payable
Contributed Capital
Retained Earnings
Dividends
Service Revenue
Interest Revenue
Salaries and Wage Expense
Utilities Expense
Telephone Expense
Supplies Expense
Rent Expense
Insurance Expense
Depreciation Expense
Interest Expense
Income Tax Expense
Totals
HANDOUT 4–2 SOLUTION
Use the balances in the T-accounts in handout 4–1 to prepare an adjusted trial balance.
Deana’s Decorators
Adjusted Trial Balance
December 31, 2016
Debit
Credit
Cash
$ 43,450
Supplies
800
Accounts Receivable
4,000
Prepaid Rent
8,000
Prepaid Insurance
2,500
Certificate of Deposit
20,000
Interest Receivable
1,200
Property, Plant & Equipment
40,000
Accumulated Depreciation
$ 2,000
Accounts Payable
250
Dividend Payable
750
Unearned Revenue
100
Notes Payable
30,000
Interest Payable
3,000
Income Taxes Payable
26,110
Contributed Capital
10,000
Retained Earnings
0
Dividends
750
Service Revenue
120,400
Interest Revenue
1,200
Salaries and Wage Expense
32,000
Utilities Expense
1,000
Telephone Expense
500
Supplies Expense
1,000
Rent Expense
4,000
Insurance Expense
3,500
Depreciation Expense
2,000
Interest Expense
3,000
Income Tax Expense
26,110
Totals
$193,810
$193,810
HANDOUT 4–3
FINANCIAL STATEMENTS
Use the adjusted trial balance in Handout 4–2 to prepare in good form an income statement, a statement
of retained earnings, and a classified balance sheet for Deana’s Decorators.
Deana’s Decorators
Income Statement
For the year ended December 31, 2016
Deana’s Decorators
Statement of Retained Earnings
For the year ended December 31, 2016
HANDOUT 4–3, continued
Deana’s Decorators
Balance Sheet
December 31, 2016
Assets
Liabilities
Stockholders’ Equity
HANDOUT 4–3 SOLUTION
FINANCIAL STATEMENTS
Use the adjusted trial balance in Handout 4–2 to prepare in good form an income statement, a statement
of retained earnings, and a classified balance sheet for Deana’s Decorators.
Deana’s Decorators
Income Statement
For the year ended December 31, 2016
Revenues:
Service Revenue
$120,400
Interest Revenue
1,200
Total Revenues
121,600
Expenses:
Salaries and Wage Expense
32,000
Utilities Expense
1,000
Telephone Expense
500
Supplies Expense
1,000
Rent Expense
4,000
Insurance Expense
3,500
Depreciation Expense
2,000
Interest Expense
3,000
Income Tax Expense
26,110
Total Expenses
73,110
Net Income
$ 48,490
Deana’s Decorators
Statement of Retained Earnings
For the year ended December 31, 2016
Balance, January 1
$0
Add: Net Income
48,490
Less: Dividends
(750)
Balance, December 31
$47,740
HANDOUT 4–3 SOLUTION, continued
Deana’s Decorators Sheet
Balance Sheet
December 31, 2016
Assets
Current Assets
Cash
$ 43,450
Certificate of Deposit
20,000
Supplies
800
Accounts Receivable
4,000
Interest Receivables
1,200
Prepaid Rent
8,000
Prepaid Insurance
2,500
Total Current Assets
79,950
Property, Plant & Equipment, Net of
Accumulated Depreciation
38,000
Total Assets
$117,950
Liabilities
Current Liabilities:
Accounts Payable
$ 250
Dividends Payable
750
Unearned Revenue
100
Note Payable
30,000
Interest Payable
3,000
Income Taxes Payable
26 110
Total Current Liabilities
60,210
Stockholders’ Equity
Contributed Capital
10,000
Retained Earnings
47,740
Total Stockholders’ Equity
57,740
Total Liabilities and Stockholders’ Equity
$117,950