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The following adjusted balances were taken from the worksheet of Sir A. Nikks Repair Shop as of December 31, 2014: Cash In Bank 80 450,670 20,000 Cash on Hand Petty Cash Fund 5,000 Accounts Receivable 25,320 Allowance for Doubtful Accounts 1,270 Notes Receivable 5,320 Commission Receivable 5,850 Unused Supplies 7,850 Prepaid Rent 12,000 Prepaid Advertising 9,000 Equipment 60,000 Accumulated Depreciation Equip 24,000 Furniture and Fixtures 40,000 Accumulated Depreciation - Fur and Fix 16,000 Tools 26,340 Accounts Payable 10,260 Notes Payable (due June 30, 2015) 15,450 Unearned Service Income 3,650 Loans Payable 90,000 Nikko, Capital (01/01/2014) 160,620 Nikko, Drawing Service Income Commission Income Salaries Expense 6,780 457,890 9,870 68,970 Utilities Expense 12,650 Tools Expense 5,630 Doubtful Accounts Expense 570 Rent Expense 3,000 Supplies Expense 2,380 Advertising Expense Depreciation Expense - Equip 6,000 Interest Expense Depreciation Expense - Fur and Fix 6,000 4,000 Totals 5,680 789,010 789,010

Additional information: The loans payable is payable in eight equal quarterly installments starting March 31, 2015.

Required:
1. Complete the financial statements.
2. Support line items with notes to financial statements.​

Sagot :

martusjenylyn

Answer:

To complete the financial statements for Sir A. Nikks Repair Shop as of December 31, 2014, we need to prepare the Income Statement, Statement of Owner's Equity, and Balance Sheet.

Income Statement

1. Revenue

  • Service Income: 457,890
  • Commission Income: 68,970
  • Total Revenue: 526,860

2. Expenses

  • Salaries Expense: 6,780
  • Utilities Expense: 12,650
  • Tools Expense: 5,630
  • Doubtful Accounts Expense: 570
  • Rent Expense: 3,000
  • Supplies Expense: 2,380
  • Advertising Expense: 9,870
  • Depreciation Expense - Equip: 6,000
  • Depreciation Expense - Fur and Fix: 6,000
  • Interest Expense: 4,000
  • Total Expenses: 789,010

3. Net Income

  • Net Income: 526,860 - 789,010 = -262,150

Statement of Owner's Equity

1. Beginning Balance

  • Nikko, Capital (01/01/2014): 160,620

2. Net Loss

  • Net Loss: -262,150

3. Ending Balance

  • Nikko, Capital (12/31/2014): 160,620 - 262,150 = -101,530

Balance Sheet

1. Assets

  • Cash in Bank: 450,670
  • Cash on Hand: 5,000
  • Petty Cash Fund: 5,000
  • Accounts Receivable: 25,320
  • Notes Receivable: 5,320
  • Commission Receivable: 5,850
  • Unused Supplies: 7,850
  • Prepaid Rent: 12,000
  • Prepaid Advertising: 9,000
  • Equipment: 60,000
  • Accumulated Depreciation - Equip: 24,000
  • Furniture and Fixtures: 40,000
  • Accumulated Depreciation - Fur and Fix: 16,000
  • Tools: 26,340
  • Total Assets: 784,310

2. Liabilities

  • Accounts Payable: 10,260
  • Notes Payable (due June 30, 2015): 15,450
  • Unearned Service Income: 3,650
  • Loans Payable: 90,000
  • Total Liabilities: 119,360

3. Owner's Equity

  • Nikko, Capital (12/31/2014): -101,530
  • Nikko, Drawing: 0 (assuming no drawing)
  • Total Owner's Equity: -101,530

Notes to Financial Statements

1. Loans Payable

The loans payable are payable in eight equal quarterly installments starting March 31, 2015.

2. Depreciation

The depreciation expenses are calculated based on the original cost of the equipment and furniture and fixtures.

3. Allowance for Doubtful Accounts

The allowance for doubtful accounts is calculated based on the accounts receivable balance.

4. Unearned Service Income

The unearned service income represents the amount of services provided but not yet earned.

5. Prepaid Rent and Advertising

The prepaid rent and advertising represent the amount of rent and advertising paid in advance.

6. Unused Supplies

The unused supplies represent the amount of supplies that have not been used.

7. Tools

The tools represent the cost of the tools and equipment used in the business.

8. Accounts Payable and Notes Payable

The accounts payable and notes payable represent the amount of goods and services purchased on credit.

9. Nikko, Capital and Drawing

The Nikko, Capital represents the owner's initial investment in the business.

The Nikko, Drawing represents the amount of funds withdrawn by the owner.

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