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PREPARATION OF FINANCIAL STATEMENTS

The following are taken from the ledger of MORALES Services for the year ended December
31, 2014

Account titles Amount MARKS


Cash 158,500
Accounts Payable 41,500
Accounts Receivable 66,000
Accrued Interest Income 4,000
Accrued Salaries Expense 8,000
Accumulated Depreciation- Equipment 48,000
Accumulated Depreciation-Furniture and Fixtures 26,500
Advances to Employees 3,900
Allowance for Bad Debts 5,800
Bad Debts Expense 3,200
Bonds Payable 100,000
Depreciation Expense Equipment 29,000
Depreciation Expense Furniture and Fixtures 1,500
Dividend Income 4,580
S. Morales, Drawing 20,000
S. Morales, Capital 197,780
Equipment 270,000
Furniture and Fixtures 108,100
Interest Expense Mortgage Payable 1,250
Interest Expense Notes Payable 2,000
Interest Income 3,700
Miscellaneous Expense 11,500
Mortgage Payable 100,000
Notes Receivable 41,400
Notes Payable 38,500
Prepaid Rent 15,000
Prepaid Taxes and Licenses 9,000
Rent Expense 28,000
Repairs and Maintenance Expense 12,750
Salaries Expense 46,200
Salaries Payable 7,500
Service Income 280,140
Supplies Expense 5,300
Supplies Inventory 14,500
Utilities Expense 18,900
Unearned Service Income 8,000

Instructions:
(1) On the space provided on the paper, put appropriate marks on the Marks Columns.
Use GREEN pen for Assets, RED pen for Liabilities, VIOLET pen for Revenue/Expenses,
BLUE pen for Capital/Drawing
Marks are as follows:
( * ) SFP- current assets, ( # ) SFP - non-current assets , ( + ) SFP- current liabilities
( X) SFP -non-current liabilities, ( $ ) IS- Revenue , ( O ) IS-Expenses ,
( @ ) SCOE - Capital/Drawing
(2) Prepare the following:
a. Step 1 : On Worksheet #1 - Notes to Financial Statement ( Note 1-Other
Income, Note 2: Depreciation Expense, Note 3: Finance Cost , Note 4: Trade and Other
Receivables, Note 5: Prepaid Expense, Note 6: Property, Plant and Equipment, Note 7: Trade
And Other Payable)
b. Step 2: On Worksheet #2 -left side - upper portion - Income Statement
c. Step 3: On Worksheet #2 - left side - lower portion - Statement of Changes in
Owner's Equity
d. Step 4 : On Worksheet #2- Right side - Statement of Financial Position (Report Form)