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19 March, 11:19

The December 31, 2021, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Account Title Debits Credits Cash 51,900 Accounts receivable 290,000 Prepaid rent 9,000 Inventory 43,000 Office equipment 530,000 Accumulated depreciation 222,000 Accounts payable 56,000 Notes payable (due in six months) 39,000 Salaries payable 6,800 Interest payable 1,300 Common stock 400,000 Retained earnings 115,000 Sales revenue 680,000 Cost of goods sold 408,000 Salaries expense 102,000 Rent expense 27,000 Depreciation expense 53,000 Interest expense 2,600 Advertising expense 3,600 Totals 1,520,100 1,520,100 Required: 1-a. Prepare an income statement for the year ended December 31, 2021. 1-b. Prepare a classified balance sheet as of December 31, 2021. 2. Prepare the necessary closing entries at December 31, 2021.

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  1. 19 March, 12:55
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    Blueboy Cheese Corporation

    Income Statement

    December 31, 2021

    Account Title Debits Credits

    Sales revenue 680,000

    Less Cost of goods sold 408,000

    Gross Profit 272,000

    less

    Salaries expense 108,800

    Rent expense 18,000

    Depreciation expense 53,000

    Interest expense 3,900

    Advertising expense 3,600

    Un adjusted Profit 84,700

    Adjusted Profit 82,900

    Blueboy Cheese Corporation

    Balance Sheet

    December 31, 2021

    Account Title Debits Credits

    Cash 51,900

    Accounts receivable 290,000

    Inventory 43,000

    Office equipment 308,000

    Accounts payable 56,000

    Notes payable (due in six months) 39,000

    Common stock 400,000

    Retained earnings 115,000 + 82,900 = 197,900

    Total $ 692,900 692,900

    Closing Entries

    Dec 31 Sales Revenue $680,000 Dr

    Income Summary $680,000 Cr

    The first closing entry transfers credit balances in revenue (and gain) accounts to the income summary accounts.

    Dec 31 Income Summary $ 187,300 Dr

    Salaries expense 108,800 Cr

    Rent expense 18,000 Cr

    Depreciation expense 53,000 Cr

    Interest expense 3,900 Cr

    Advertising expense 3,600 Cr

    The second closing entry transfers debit balances in expense (and loss) to the income summary accounts.

    Dec 31 Income Summary $ 82,900

    Retained Earnings Accounts $ 82,900

    The third entry transfers the balance of income summary account to the owner's capital account or retained earnings account.
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