Chapter 4 Completing the Accounting Cycle
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E X H I B I T 2
Financial Statements—NetSolutions
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4
NetSolutions
Income Statement For the Two Months Ended December 31, 2013
Fees earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,840 Rent revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120 Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,960 Expenses:
Wages expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,525
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,040 Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600
Utilities expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 985 Insurance expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
455 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,855 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,105
NetSolutions
Balance Sheet December 31, 2013
Assets Liabilities
Current assets: Current liabilities:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,065
Accounts payable . . . . . . . . . . . . . . . . . . 900 Accounts receivable . . . . . . . . . . . . . . . . .
2,720 Wages payable . . . . . . . . . . . . . . . . . . . .
250 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . .
760 Unearned rent . . . . . . . . . . . . . . . . . . . . . 240
Prepaid insurance . . . . . . . . . . . . . . . . . . . 2,200
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 1,390
Total current assets . . . . . . . . . . . . . . . . 7,745
Property, plant, and equipment: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,000
Stockholders’ Equity
Office equipment . . . . . . . . . . 1,800
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 Less accum. depreciation. . .
50 1,750
Retained earnings . . . . . . . . . . . . . . . . . . . . 3,105 Total property, plant,
Total stockholders’ equity . . . . . . . . . . . . . 28,105
and equipment . . . . . . . . . . . . . . . . .
21,750 Total liabilities and
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,495
stockholders’ equity . . . . . . . . . . . . . . . . 29,495
NetSolutions
Retained Earnings Statement For the Two Months Ended December 31, 2013
Retained earnings, November 1, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income for November and December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,105
Less dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Increase in retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,105
Retained earnings, December 31, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,105
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Chapter 4 Completing the Accounting Cycle
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