Michaels Car Repair Services was established on 1 st of July 2020 as a sole proprietor business,
Question:
Michael’s Car Repair Services was established on 1st of July 2020 as a sole proprietor business, specialising in providing car repairs and general maintenance services. The owner, Michael Robert, contributed $110,000 in cash to start the business. Towards the end of the financial year, Michael has hired you to work as a part-time accountant to prepare financial statements of the business. While looking at the financial records, you have noted the following unadjusted Trial Balance of Michael’s Car Repair Services on 30th June 2021.
Unadjusted Trial Balance | ||
Debit ($) | Credit ($) | |
Cash at Bank | 60,000 | |
Trade & Accounts Receivable | 14,000 | |
Office Supplies | 10,000 | |
Prepaid Rent | 20,000 | |
Machinery & Equipment | 140,000 | |
Loans Payable | 50,000 | |
Accounts Payable | 15,000 | |
Accumulated Dep. – Machinery & Eqpt. | 18,000 | |
Michael, Capital | 110,000 | |
Service Revenue | 125,000 | |
Interest Income | 5,000 | |
Wages Expense | 38,000 | |
Office Supplies Expense | 26,000 | |
Marketing Expense | 15,000 | |
323,000 | 323,000 |
You have also discovered the following information that has not yet been recorded and need to be adjusted in the company’s accounts for the year ended 30th June 2021.
Additional Information:
- Depreciation on the machinery & equipment for 1 year is $12,000.
- A prepaid rent of $14,000 has expired.
- Electricity expenses owing at 30th June 2021, $16,000
Required:
A. Prepare a worksheet for the year ended 30th June 2021.
B. Prepare an Income Statement for the year ended 30th June 2021.
C. Prepare a Balance sheet (in narrative form) as at 30th June 2021.
Canadian Income Taxation Planning And Decision Making
ISBN: 9781259094330
17th Edition 2014-2015 Version
Authors: Joan Kitunen, William Buckwold