Question

Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 20Y8, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows:

Foxy Investigative Services
End-of-Period Spreadsheet
For the Year Ended November 30, 20Y8
~ Adjusted Trial Balance
Account Title ~ Dr. Cr.
~
Cash ~ 22,000
Accounts Receivable ~ 68,400
Supplies ~ 4,400
Prepaid Insurance ~ 2,500
Building ~ 433,500
Accumulated Depreciation-Building ~ 42,800
Accounts Payable ~ 11,400
Salaries Payable ~ 4,000
Unearned Rent ~ 2,000
Common Stock ~ 80,000
Retained Earnings ~ 293,400
Dividends ~ 11,700
Service Fees ~ 707,300
Rent Revenue ~ 11,700
Salaries Expense ~ 525,900
Rent Expense ~ 46,800
Supplies Expense ~ 11,000
Depreciation Expense-Building 7,600
Utilities Expense ~ 7,600
Repairs Expense ~ 3,000
Insurance Expense ~ 2,000
Miscellaneous Expense ~6,200
~ 1,152,600 1,152,600
Required:
1.
A. Prepare an income statement for the year ended November 30, 20Y8. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles.
B. Prepare a statement of stockholders’ equity for the year ended November 30, 20Y8. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.
C. Prepare a balance sheet as of November 30, 20Y8. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2. Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.
3. If Retained Earnings had instead decreased $33,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss.
CHART OF ACCOUNTS
Foxy Investigative Services
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Insurance
17 Building
18 Accumulated Depreciation-Building
LIABILITIES
21 Accounts Payable
22 Salaries Payable
23 Unearned Rent
EQUITY
31 Common Stock
32 Retained Earnings
33 Dividends
REVENUE
41 Service Fees
42 Rent Revenue
EXPENSES
51 Salaries Expense
52 Rent Expense
53 Supplies Expense
54 Depreciation Expense-Building
55 Utilities Expense
56 Repairs Expense
57 Insurance Expense
59 Miscellaneous Expense
Labels
Current assets
Current liabilities
Expenses
For the Year Ended November 30, 20Y8
November 30, 20Y8
Property, plant, and equipment
Revenues
Amount Descriptions
Balances, December 1, 20Y7
Balances, November 30, 20Y8
Dividends
Net income
Net loss
Total assets
Total current assets
Total expenses
Total liabilities
Total liabilities and stockholders’ equity
Total property, plant, and equipment
Total revenues
Total stockholders’ equity

Answer 1

Foxy Investigative Services

1. Foxy Investigative Services

A. Income Statement

For the Year Ended November 30, 20Y8

REVENUE

41 Service Fees $707,300

42 Rent Revenue 11,700

Total revenues $719,000

EXPENSES

51 Salaries Expense $525,900

52 Rent Expense 46,800

53 Supplies Expense 11,000

54 Depreciation Expense-Building 7,600

55 Utilities Expense 7,600

56 Repairs Expense 3,000

57 Insurance Expense 2,000

59 Miscellaneous Expense 6,200

Total expenses $610,100

Net income $ 108,900

32 Retained Earnings 293,400

33 Dividends 11,700

Balance, November 30, 20Y8 $390,600

Foxy Investigative Services

B. Statement of Shareholders' Equity

November 30, 20Y8

31 Common Stock $80,000

Net income 108,900

32 Retained Earnings 293,400

33 Dividends -11,700

Balance, November 30, 20Y8 $390,600

Total stockholders' equity $470,600

Foxy Investigative Services

C. Balance Sheet

November 30, 20Y8

ASSETS

Current assets

11 Cash $22,000

12 Accounts Receivable 68,400

13 Supplies 4,400

14 Prepaid Insurance 2,500

Total current assets $97,300

Property, plant, and equipment

17 Building 433,500

18 Accumulated Depreciation -42,800

Total property, plant, and equipment $390,700

Total assets $488,000

LIABILITIES

Current liabilities

21 Accounts Payable 11,400

22 Salaries Payable 4,000

23 Unearned Rent 2,000

Total liabilities $17,400

EQUITY

31 Common Stock 80,000

32 Retained Earnings 390,600

Total stockholders' equity $470,600

Total liabilities and stockholders' equity $488,000

2. Closing Journal Entries:

Account Title Dr. Cr.

Income Summary 11,700

Dividends 11,700

To close dividends to the income summary (Retained Earnings)

Account Title Dr. Cr.

Service Fees 707,300

Rent Revenue 11,700

Income Summary 719,000

To close revenues to the income summary.

Account Title Dr. Cr.

Income Summary $610,100

Salaries Expense $525,900

Rent Expense 46,800

Supplies Expense 11,000

Depreciation Expense-Building 7,600

Utilities Expense 7,600

Repairs Expense 3,000

Insurance Expense 2,000

Miscellaneous Expense 6,200

To close the expenses to the income summary.

3. Net Income would have remained $ 108,900. Retained Earnings, beginning balance would have been reduced by $33,000.

Step-by-step explanation:

a) Data and Calculations:

Foxy Investigative Services

End-of-Period Spreadsheet

For the Year Ended November 30, 20Y8

Adjusted Trial Balance

Account Title Dr. Cr.

Cash 22,000

Accounts Receivable 68,400

Supplies 4,400

Prepaid Insurance 2,500

Building 433,500

Accumulated Depreciation-Building 42,800

Accounts Payable 11,400

Salaries Payable 4,000

Unearned Rent 2,000

Common Stock 80,000

Retained Earnings 293,400

Dividends 11,700

Service Fees 707,300

Rent Revenue 11,700

Salaries Expense 525,900

Rent Expense 46,800

Supplies Expense 11,000

Depreciation Expense-Building 7,600

Utilities Expense 7,600

Repairs Expense 3,000

Insurance Expense 2,000

Miscellaneous Expense 6,200

Totals 1,152,600 1,152,600