Question

The adjusted trial balance of Rockin Robbin Dance Company at April 30, 2018, follows:

ROCKIN ROBBIN DANCE COMPANY

Adjusted Trial Balance

April 30, 2018

Balance

Account Title Debit Credit

Cash \(4,400

Accounts Receivable 38,000

Merchandise Inventory 17,800

Office Supplies 850

Furniture 39,900

Accumulated Depreciation-Furniture \)8,300

Accounts Payable 14,100

Salaries Payable 1,000

Unearned Revenue 6,500

Notes Payable, long-term 12,000

Common Stock 5,000

Retained Earnings 36,150

Dividends 40,000

Sales Revenue 178,500

Cost of Goods Sold 83,700

Selling Expense 19,000

Administrative Expense 16,000

Interest Expense 1,900

Total \(261,550 \)261,550

Requirements

1. Prepare Rockin Robbin’s multi-step income statement for the year ended April 30, 2018.

2. Journalize Rockin Robbin’s closing entries.

3. Prepare a post-closing trial balance as of April 30, 2018.

Short answer

The net income of the company is $57,900.

Step-by-step solution

Step-by-Step SolutionStep 1: Meaning of Net Income

In accounting, net income refers to the amount of money left with a business entity after the settlement of all its expenses such as selling and administrative, interest, and taxes. Net income is computed by subtracting theoperating and non-operating costs from the total revenue.

Preparation of multi-step income statement

ROCKIN ROBBIN DANCE COMPANY
Multi-step Income Statement
For the year ended April 30, 2018
Particulars	Amounts ($)
Sales revenue	178,500
Less: Cost of goods sold	(83,700)
Gross profit	94,800
Less: Operating expenses
Selling expense	(19,000)
Administrative expense	(16,000)
Income from operations	59,800
Less: Other expenses and losses
Interest expense	(1,900)
Net income	$57,900

Preparation of closing entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
2018
Apr 30	Sales revenue	178,500
	Income summary		178,500
	(To close revenue account)
Apr 30	Income summary	120,600
	Cost of goods sold		83,700
	Selling expense		19,000
	Administrative expense		16,000
	Interest expense		1,900
	(To close expenses accounts)
Apr 30	Income summary (178500-120600)	57,900
	Retained earnings		57,900
	(To transfer net income)
Apr 30	Retained earnings	40,000
	Dividends		40,000
	(To close dividend account)

Preparation of post-closing trial balance

ROCKIN ROBBIN DANCE COMPANY
Post-closing Trial Balance
As of April 30, 2018
Account Title	Debit ($)	Credit ($)
Cash	4,400
Accounts receivable	38,000
Merchandise inventory	17,800
Office supplies	850
Furniture	39,900
Accumulated depreciation-Furniture		8,300
Accounts payable		14,100
Salaries payable		1,000
Unearned revenue		6,500
Notes payable, long-term		12,000
Common stock		5,000
Retained earnings (Working notes)		54,050
Total	$100,950	$100,950

Working Notes:

Computation of Retained Earnings balance:

Particulars	Amounts ($)
Opening balance	36,150
Add: Net income	57,900
Less: Dividends	(40,000)
Closing balance	$54,050