Adjustments at the end of the period are not formally entered in ...

[charchew]

Adjustments at the end of the period are not formally entered in the journal or posted to the accounts.
 a. True
   b. False
   Indicate whether the statement is true or false

Question 2

(Preparation of financial statements)
   (This problem is based on the transactions for problem 35 .)
 
  Following is a trial balance for Ricardo Sanchez's Auto Repair as of January 31, 2013 .
 
  Prepare an (1) income statement and a (2) statement of changes in owner's equity for the month ended January 31, 2013, and a (3) balance sheet as of January 31, 2013 .
 
   Debits Credits
   Cash 7,400
   Investments 10,000
   Accounts receivable 23,000
   Accrued interest receivable 25
   Allowance for uncollectible accounts 2,100
   Repair parts inventory 20,000
   Prepaid rent 4,000
   Equipment 65,000
   Accumulated depreciation, equipment 25,500
   Accounts payable 13,000
   Salaries payable 1,200
   R. Sanchez, Capital 80,000
   Repair revenue 35,000
   Parts expense 13,000
   Salaries expense 9,200
   Rent expense 4,000
   Bad debts expense 700
   Depreciation expense 500
   Interest revenue 25
   Totals 156,825 156,825
 
  What will be an ideal response?

[HandsomeMarc]

Answer to Question 1

False

Answer to Question 2

Ricardo Sanchez Auto Repair
Income Statement
For the Month Ended January 31, 2013
Repair revenue 35,000
Expenses:
Parts expense 13,000
Salaries expense 9,200
Rent expense 4,000
Bad debts expense 700
Depreciation expense 500 27,400
Operating Income 7,600
Interest revenue 25
Net Income 7,625

Ricardo Sanchez Auto Repair
Statement of Changes in Owner's Equity
For the Month Ended January 31, 2013

Ricardo Sanchez, Capital, January 1, 2013 80,000
Net income for January 7,625
Ricardo Sanchez, Capital, January 31, 2013 87,625

Ricardo Sanchez Auto Repair
Balance Sheet
January 31, 2013

Assets:
Cash 7,400
Investments 10,000
Accounts receivable 23,000
Less, allowance for uncollectible accounts 2,100 20,900
Repair parts inventory 20,000
Prepaid rent 4,000
Accrued interest receivable 25
Equipment 65,000
Less, accumulated depreciation 25,500 39,500 Total Assets 101,825

Liabilities and Equity:
Liabilities:
Accounts payable  13,000
Salaries payable 1,200
Total Liabilities  14,200
Ricardo Sanchez, Capital 87,625
Total Liabilities and Equity 101,825

[charchew]

YES! Correct, THANKS for helping me on my review

[sultansheikh]

Great answer, keep it coming