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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

It is now August 31. You have journalized and posted the adjustments in the All About You Spa accounting records, and Ms. Valli wants to see financial statements for the last two months (July and August). Then she would like you to prepare the closing entries.

Required

  1. 1. Prepare an income statement for the two months ended August 31, 20--.
  2. 2. Prepare a statement of owner’s equity for the two months ended August 31, 20--. Ignore this step if using QuickBooks.
  3. 3. Prepare a balance sheet as of August 31, 20--.
  4. 4. Journalize the closing entries in the general journal.
    • If you are preparing the closing entries using Working Papers, enter your transactions beginning on page 5.
  5. 5. Post the closing entries to the general ledger accounts.
    • Ignore this step if you are using QuickBooks or CLGL.
  6. 6. Prepare a post-closing trial balance as of August 31, 20--.

Check Figures

  1. 1. Net income, $15,314.18
  2. 2. A. Valli, Capital (end of period), $67,085.93
  3. 3. Balance Sheet report total assets, $83,081.33
  4. 4. Post-closing trial balance total, $83,935.12

1.

To determine

Prepare an income statement for ABA Spa for two months ended August 31, 20--.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare an income statement for ABA Spa for two months ended August 31, 20--.

ABA Spa
Income Statement
For the Year Ended August 31, 20--
Revenue from sales:        
   Merchandise sales     $28,261.54  
   Less: Sales returns and allowances   $17.46    
            Sales discounts   70.00 87.46  
   Net sales       $28,714.08
Cost of goods sold:        
   Merchandise inventory, July 1, 20--     $0.0  
   Purchases   $23,344.00    
   Less: Purchase returns and allowances $82.00      
            Purchases discounts 168.00 250.00    
   Net purchases   23,094.00    
   Add: Freight-in   975.00    
   Delivered cost of purchases     24,069.00  
   Cost of goods available for sale     24,069.00  

   Less: Merchandise inventory, August

   31, 20--

    11,310...

2.

To determine

Prepare a statement of owners’ equity for ABA Spa for two months ended August 31, 20--.

3.

To determine

Prepare a balance sheet for ABA Spa (Refer to Table (2) for capital of the owner from the statement of owners’ equity prepared in Part (2)).

4.

To determine

Prepare closing entries for ABA Spa.

5.

To determine

Post the closing entries to ledger accounts.

6.

To determine

Prepare a post-closing trial balance for ABA Spa as at August 31, 20--.

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