Acc/280 Porter Company Case Study

Name: Learning Team
Course: ACC/280
Date:

P4-2A The adjusted trial balance columns of the worksheet for Porter Company are as follows. (a) Complete the worksheet by extending the balances to the financial statement columns.
PORTER COMPANY
Work Sheet (Partial)
For the Year Ended December 31, 2008 Adjusted Trial Balance Income Statement Balance Sheet Debit Credit Debit Credit Debit Credit
Cash $18,800 $18,800
Accounts Receivable 16,200 16,200
Prepaid Insurance 4,400 4,400
Supplies 2,300 2,300
Equipment 44,000 44,000
Accum Dep - Equip $20,000 $20,000
Notes Payable 20,000 20,000
Accounts Payable 8,000 8,000
Salaries Payable 2,600 2,600
Common Stock 30,000 30,000
Retained Earnings 6,000 6,000
Dividends 12,000 12,000
Service Revenue 77,800 $77,800
Advertising Expense 12,000 12,000
Salaries Expense 39,000 39,000
Supplies Expense 3,700 3,700
Depreciation Expense 8,000 8,000
Insurance Expense 4,000 4,000
Interest Expense 1,000 1,000
Interest Payable 1,000 1,000
Totals $165,400 $165,400 $67,700 $77,800 $97,700 $87,600
Net income 10,100 10,100
Totals $77,800 $77,800 $97,700 $97,700 P4-2A
"(b) Prepare an income statement and a retained earnings statement for the quarter and a classified balance sheet at March 31.
No additional common stock was issued during the quarter ended March 31,
2008."

PORTER COMPANY Income Statement For the Year Ended December 31, 2008 Revenues Service revenue $77,800 Expenses Advertising Expense $12,000 Salaries Expense 39,000 Supplies Expense 3,700 Depreciation Expense 8,000 Insurance Expense 4,000 Interest Expense 1,000 Total Expense 67,700 Net income $10,100

PORTER COMPANY Retained Earnings Statement For the Year Ended December 31, 2008 Retained Earnings Dec 1 $6,000 Add: Net income 10,100 16,100 Less Dividends 12,000 Retained Earnings $4,100

PORTER COMPANY Balance Sheet December 31, 2008 Assets Current Assets Cash $18,800 Accounts Receivable 16,200 Prepaid Insurance 4,400 Supplies 2,300 Total Current Assets $41,700 Equipment and Property Equipment $44,000 Less: Accumulated Depreciation 20,000 24,000 Total Assets $65,700 Liabilities and Stockholders’ Equity Current liabilities Notes Payable $10,000 Accounts Payable 8,000 Salaries Payable 2,600 Interest Payable 1,000 Total Current Liabilities $21,600 Long Term Liabilities Notes Payable 10000 Total Liabilities $31,600 Stockholders' Equity Common Stock $30,000 Retained Earnings 4,100 Total Stockholders' Equity 34,100 Total Liabilities and Stockholders' Equity $65,700 Exercise p4-2a Instructions:
(c) Prepare the closing entries. Use J14 for the journal page. (1) Dec 31 Service revenue $77,800 Income Summary $77,800 (2) Dec 31 Income Summary 67,700 Advertising Expense 12,000 Salaries Expense 39,000 Supplies Expense 3,700 Depreciation Expense 8,000 Insurance Expense 4,000 Interest Expense 1,000 (3) Dec 31 Income Summary 6,000 Retained Earnings 6,000 (4) Dec 31 Ratained Earnings 12,000 Dividends 12,000

"(d) Post the closing entries. Use the three-column form of account. Income Summary is account
No. 350." Income Summary Retained Earnings
(2) 67,700 (1) 77,800 (4) 12,000 Balance 6,000
(3) 10,100 (3) 10,100 77,800 77,800 4,100

(e) Prepare a post-closing trial balance. PORTER COMPANY Post-Closing Trial Balance December 31, 2008 Debit Credit Cash $18,800 Accounts Receivable 16,200 Prepaid Insurance 4,400 Equipment 44,000 Supplies 2,300 Accum Dep - Equip $20,000 Notes Payable 20,000 Accounts Payable 8,000 Salaries Payable 2,600 Interest Payable 1,000 Common Stock 30,000 Retained Earnings 4,100 $85,700 $85,700