Question

A partial worksheet for Ramey Law Firm is presented below. Solve for the missing information. Total 6 5 A J K L M 33 34 35 (a) \( 211,325 \) 202,950 (e) 8,375 (d) \( 24,850 \) 24,850 Debit Credit Debit Credit Income Statement Balance Sheet Net (b) (c) Total (f).

Short answer

(a) $16,475

(b) Income

(c) $8,375

(d) $24,850

(e) $211,325

(f) $211,325

Step-by-step solution

Explanation on (a)

Total debit in income statement is calculated as follows:

$\begin{array}{c}\mathbf{Total}\mathbf{}\mathbf{Debits}\mathbf{=}\mathbf{Total}\mathbf{}\mathbf{Credit}-\mathbf{Net}\mathbf{}\mathbf{Income}\\ \mathbf{=}\mathbf{\$}\mathbf{24}\mathbf{,}\mathbf{850}-\mathbf{\$}\mathbf{8}\mathbf{,}\mathbf{375}\\ \mathbf{=}\mathbf{\$}\mathbf{16}\mathbf{,}\mathbf{475}\end{array}$

Explanation on (b)

In the income statement, total credits (revenues) are higher than total debits (expenses), hence it will result in net income.

Explanation on (c)

Net income is transferred to the retained earnings, hence in the worksheet it will be posted under credit side under balance sheet section.

Explanation on (d)

In the income statement, total credit balance equals $24,850, hence total debit balance should also be equal to $24,850.

Explanation on (e)

In the balance sheet section, total credit balance equals $211,325, hence total debit balance should also be equal to $211,325.

Explanation on (f)

As net income of $8,375 is posted on credit side of balance sheet, the total credit balance equals $211,325.