Question

The unadjusted trial balance of Fleming Investment Advisers at December 31, 2018, follows: Adjustment data at December 31, 2018: a. Unearned Revenue earned during the year, \(700. b. Office Supplies on hand, \)3,000. c. Depreciation for the year, \(3,000. d. Accrued Salaries Expense, \)4,500. e. Accrued Service Revenue, \(9,000. Account Title Office Supplies Cash Debit Credit Accounts Receivable Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Rent Expense Depreciation Expense—Equipment Total Balance \) 25,000 \( 183,000 \) 183,000 26,000 4,500 15,000 Retained Earnings 5,500 28,000 99,000 51,000 7,500 26,000 $ 19,000 14,000 2,500 33,000 3,000 7,000 FLEMING INVESTMENT ADVISERS Unadjusted Trial Balance December 31, 2018 Requirements 1. Prepare a worksheet for Fleming Investment Advisers at December 31, 2018. 2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in account format. 3. Prepare closing entries.

Short answer

(1) Worksheet is mentioned in Step 1.

(2) Net income is $51,200, ending balance of retained earnings equals $28,700 and total assets and total liabilities & stockholders’ equity equals $92,000.

(3) Closing entries are mentioned in Step 3.

Step-by-step solution

Step-by-Step-SolutionStep 1: Worksheet

(1) Worksheet is shown as follows:

FLEMING INVESTMENT ADVISERS
Worksheet
December 31, 2018
	Unadjusted Trial Balance			Adjustments			Adjusted Trial Balance		Income Statement		Balance Sheet
Account Names	Debit	Credit		Debit	Credit		Debit	Credit	Debit	Credit	Debit	Credit
Cash	$25,000						$25,000				$25,000
Accounts Receivable	51,000		(e)	$9,000			60,000				60,000
Office Supplies	7,500				$4,500	(b)	3,000				3,000
Equipment	26,000						26,000				26,000
Accumulated Depreciation—Equipment		$19,000			3,000	(c)		22,000				22,000
Accounts Payable		14,000						14,000				14,000
Salaries Payable					4,500	(d)		4,500				4,500
Unearned Revenue		4,500	(a)	700				3,800				3,800
Notes Payable		26,000						26,000				26,000
Common Stock		15,000						15,000				15,000
Retained Earnings		5,500						5,500				5,500
Dividends	28,000						28,000				28,000
Service Revenue		99,000			9700	(e,a)		108,700		108,700
Insurance Expense	2,500						2,500		2,500
Salaries Expense	33,000		(d)	4,500			37,500		37,500
Supplies Expense			(b)	4,500			4,500		4,500
Interest Expense	3,000						3,000		3,000
Rent Expense	7,000						7,000		7,000
Depreciation Expense—Equipment			(c)	3,000			3,000		3,000
Total	$183,000	$183,000		$21,700	$21,700		$199,500	$199,500	$57,500	$108,700	$142,000	$90,800
								Net Income	51,200			51,200
Total									$108,700	$108,700	$149,000	$142,000

Step 2: Income statement, Statement of retained earnings, and Classified balance sheet

Income statement is shown as follows:

FLEMING INVESTMENT ADVISERS
Income Statement
Year Ended December 31, 2018
Revenues
Service Revenue		$108,700
Expenses
Insurance Expense	$2,500
Salaries Expense	37,500
Supplies Expense	4,500
Interest Expense	3,000
Rent Expense	7,000
Depreciation Expense—Equipment	3,000
Total Expenses		57,500
Net Income		$51,200

Statement of retained earnings is shown as follows:

FLEMING INVESTMENT ADVISERS
Statement of Retained Earnings
Year Ended December 31, 2018
Retained Earnings, Beginning Balance	$5,500
Net Income for the year	51,200
	56,700
Dividends	(28,000)
Retained Earnings, November 30, 2018	$28,700

Balance Sheet is shown as follows:

FLEMING INVESTMENT ADVISERS
Balance Sheet
December 31, 2018
Assets
Current Assets:
Cash		$25,000
Accounts Receivable		60,000
Office Supplies		3,000
Total Current Assets			$88,000
Property, Plant, and Equipment:
Equipment	$26,000
Less: Accumulated Depreciation- Equipment	(22,000)	4,000
Total Property, Plant, and Equipment:			4,000
Total Assets			$92,000
Liabilities
Current Liabilities:
Accounts Payable		14,000
Salaries Payable		4,500
Unearned revenue		3,800
Total Current Liabilities:			$22,300
Long-term Liabilities
Notes Payable			26,000
Total Liabilities			48,300
Stockholders’ Equity
Common Stock			15,000
Retained Earnings			28,700
Total Stockholders’ Equity			43,700
Total Liabilities and Stockholders’ Equity			$92,000

Closing entries

(3) Closing entries are as follows:

Date	Accounts and Explanation	Debit	Credit
Dec. 31	Service Revenue	$108,700
	Income Summary		$108,700
	To close revenue.
Dec. 31	Income Summary	$57,500
	Insurance Expense		$2,500
	Salaries Expense		$37,500
	Supplies Expense		$4,500
	Interest Expense		$3,000
	Rent Expense		$7,000
	Depreciation Expense—Equipment		$3,000
	To close expenses.
Dec. 31	Income Summary	$51,200
	Retained Earnings		$51,200
	To close Income Summary
Dec. 31	Retained Earnings	$28,000
	Dividends		$28,000
	To close Dividends