50.1K

Verified Solution

Link Copied!

Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Incorporated) on January 1, 2020. The annual reporting period ends December 31. The trial balance on January 1, 2021, follows (amounts are rounded to thousands of dollars to simplify).

Account Titles	Debit	Credit
Cash	$ 5
Accounts Receivable	4
Supplies	1
Equipment	6
Accumulated Depreciation		$ 0
Software	12
Accumulated Amortization		5
Accounts Payable		7
Notes Payable (short-term)		0
Salaries and Wages Payable		0
Interest Payable		0
Income Tax Payable		0
Deferred Revenue		0
Common Stock		12
Retained Earnings		4
Service Revenue		0
Supplies Expense	0
Depreciation Expense	0
Salaries and Wages Expense	0
Amortization Expense	0
Interest Expense	0
Income Tax Expense	0
Totals	$ 28	$ 28

Transactions during 2021 (summarized in thousands of dollars) follow:

Borrowed $26 cash on July 1, 2021, signing a six-month note payable.

Purchased equipment for $23 cash on July 2.

Issued additional shares of common stock on July 3 for $6.

Purchased additional equipment on August 4, $2 cash.

Purchased, on account, supplies on September 5 for future use, $8.

On December 6, recorded revenues in the amount of $68, including $7 on credit and $61 received in cash.

Paid salaries and wages expenses on December 7, $40.

Collected accounts receivable on December 8, $9.

Paid accounts payable on December 9, $12.

Received a $5 deposit on December 10 for work to start January 15, 2022.

Data for adjusting journal entries on December 31:

Amortization for 2021, $5.

Supplies of $6 were counted on December 31, 2021.

Depreciation for 2021, $3.

Accrued interest on notes payable of $1.

Salaries and wages earned but not yet paid, $4.

Income tax for 2021 was $2 and will be paid in 2022.

Required:

6-a. Prepare an income statement.

6-b. Prepare statement of retained earnings.

6-c. Prepare a balance sheet.

an income statement. (Enter your answers in thousands of dollars.)

	LAZY SOFA FURNITURE, INCORPORATED Income Statement (in thousands)

statement of retained earnings. (Enter your answers in thousands of dollars.)

	LAZY SOFA FURNITURE, INCORPORATED Statement of Retained Earnings (in thousands) Balance, January 1, 2021 Balance, December 31, 2021

be deducted should be indicated by a minus sign. Enter your answers in thousands of dollars.)

e a balance sheet. (Amounts to be deducted should be indicated by a minus sign. Enter your answers in thousands of dollars.)

	LAZY SOFA FURNITURE, INCORPORATED Balance Sheet (in thousands) Equipment Software

Req 6B

Answer & Explanation Solved by verified expert

See Answer