Financial statement

Balances from ledger of general electronics on January 31, 1998 are given below:
Debit Balances:
Cash Rs.218100, Merchandise inventory (1.1.98) Rs.30,000; Account Receivable Rs.40,000;
prepaid Rent Rs. 31200; Land 248000; Equipment 36000; Drawings Rs. 3500; Purchases 20,000;
Salaries Expense Rs 8700; Freight-in Rs.1000; Light and power Expense Rs. 1800; Wages
Expense Rs.1500; sales Return and allowances Rs. 400; Sales Discount Rs. 500.

Credit Balances:
Account Payable Rs. 44400; Notes Payable Rs. 246900; Unearned Commission Revenue Rs
31000; Purchase discount Rs. 500; Purchase Return & Allowances Rs. 1000; Sales Rs.200, 000;
Rent Revenue Rs. 3000; Capital Rs 113900.

Information for adjusting entries:

a) Outstanding Interest Expense Rs. 3000
b) Prepaid Rent has Expired Rs. 4000
c) Commission Receivable Rs. 1000
d) Salaries Expense for the period Rs. 8500
e) Make allowances for bad debt @10% of Account Receivables.
f) Depreciation Expense for the period Rs. 3600
g) Interest Revenue Receivables Rs. 30000
h) Unearned Commission Rs. 5000
i) Merchandise Inventory valued on jan 31, 1998 Rs. 1000
Required:
Prepare income statement for the month ended on January 31, 1998.
Prepare Balance Sheet as on January 31, 1998.
Prepare statement of changes in equity for the month ended on January 31, 1998.
Prepare Closing Entries
Prepare post-closing trial balance on January 31, 1998.
 General Electronics
Adjusting Entries
Date Particulars PR Debit Credit
Interest Expense 3000
Interest Payable 3000
(adjustment of outstanding Expenses)
Rent Expense 4000
Prepaid Rent 4000
(Adjustment of Salaries Expense)
Commission Receivable 1000
Commission Revenue 1000
(Adjustment of Commission Receivable)
Prepaid Salaries 200
Salaries Expense 200
(Adjustment of Salaries Expense)
Bad Debt Expense 4000
Allowance for Bad Debt 4000
(adjustment of bad debt Expense)
Depreciation Expense 3600
Allowance For Depreciation 3600
(Adjustment of Depreciation Expense)
Interest Revenue Receivables 30000
Interest Revenue 30000
(adjustment of interest Revenue Receivable)
Unearned Commission 26000
Commission Revenue 26000
(adjustment of Unearned Commission)
Merchandise Inventory 1000
Expense and Revenue Summary 1000
(adjustment of ending inventory)s
 General Electronics
General Ledgers

Interest Expense
1998 Adj 3000
Jan 31

‘
Interest Payable
1998 1998
Jan 31 Bal c/d 3000 Jan 31 3000
3000 3000
Feb 1 Bal b/f 3000

Rent Expense
1998 1998
Jan 31 Adj 4000 Jan 31

Prepaid Rent
1998 31200 1998 Adj 4000
Jan 31 Jan 31
Bal c/d 27200
31200 31200
Feb 1, Bal B.f 27200

Commission Receivable
1998 1998
Jan 31 Adj 1000 Jan 31 Balc/d 1000
1000 1000
Feb 1 Bal b/f 1000

Commission Revenue
1998 Adj 1000
Jan 31
Adj 26000
Bal 27000

Prepaid Salaries
1998 1998
Jan 31 Adj 200 Jan 31 Bal c/d 200
200 200
Feb 1 200

Salaries Expense
1998 1998
Jan 31 8700 Jan 31 Adj 200

Bal 8500

Bad Debt Expense

1998 Adj 4000
Jan 31

Allowance for Bad Debt

1998 1998 Adj 4000
Jan 31 bal c/d 4000 Jan 31
4000 4000
Feb 1 Bal b/f 4000
 Depreciation Expense
1998 Adj 3600
Jan 31

Allowance for Depreciation

1998 1998 Adj 3600
Jan 31 bal c/d 3600 Jan 31
3600 3600
Feb 1 Bal b/f 3600

Interest Revenue Receivables

1998 1998
Jan 31 Adj 30000 Jan 31 Balc/d 3000
3000 3000
Feb 1 Bal b/f 3000

Interest Revenue
1998
Jan 31 adj 30000

Unearned Commission
1998 1998
Jan 31 Adj 26000 Jan 31 31000
Bal c/d 5000
Feb 1 bal b/f 5000
 Expense and Revenue Summary
1998
Jan 31 Adj 1000

Note: Expenses and Revenue accounts shall not be carried down and brought forward, as
they are not forwarded to the next period. They would be closed in this period only.
Ledgers for merchandise inventory shall not be prepared.
 General Electronics
Adjusted Trial Balance
As on January 31, 1998
s.no Particulars Debit Credit
Cash 218100
Merchandise inventory (1.1.98) 30000
Account Receivable 40000
Allowances For Bad Debt 4000
Prepaid Rent 27200
Prepaid Salaries 200
Commission Receivable 1000
Interest Revenue Receivables 30000
Land 248000
Equipment 36000
Allowance For Depreciation 3600
Account Payable 44400
Unearned Commission 5000
Interest Payable 3000
Notes Payable 246900
Capital 113900
Drawings 3500
Sales 200, 000
sales Return and allowances 400
Sales Discount 500
Rent Revenue 3000
Interest Revenue 30000
Commission Revenue 27000
Purchases 20,000
Purchase Return & Allowances 1000
Purchase discount 500
Freight-in 1000
; Light and power Expense 1800
Wages Expense 1500
Rent Expense 4000
Bad Debt Expense 4000
Depreciation Expense 3600
Salaries Expense 8500
Interest Expense 3000
 Total 682300 682300

Note: Entry of Merchandise inventory ending shall not be recorded in trial balance. Adjusted
trial balance shall only have beginning inventory.
General Electric
Income Statement
For the period ended on January 31, 1998
Sales Revenue
Sales 200, 000
Less: Sales Discount 500
Sales Return and Allowances 400 (900)
Net Sales Revenue 199100
Less: Cost of Good sold:
Merchandise Inventory Beg 30000
Purchases 20000
Less: Purchase discount 500
Purchase Return and Allowances 1000 (1500)
Net Purchases 18500
Add: Freight-in 1000
Add: Delivery Cost xxx 19500
Cost of Merchandise Available 49500
Less: Merchandise Inventory Ending 1000
Cost of Goods Sold (48500)
Gross Profit On Sales 150600
Less: Operating Expenses:
Salaries Expense 8500
Light & Power 1800
Wages Expense 1500
Rent expense 4000
Bad Debt Expense 4000
Depreciation Expense 3600
Total Operating Expenses (23400)
Income From Operations 127200
Add: other Revenues & Gains
Rent Revenue 3000
Commission Revenue 27000
Interest Revenue 30000 60000
187200
Less: Other Expenses & Losses
Loss on Sale of Fixed Asset
Income Before Interest and Income Tax 187200
Less: Interest Expense (3000)
Taxable Income 184200
Less: Income Tax XXX
Net Income 184200

General Electronics
Statement of Owners Equity
For the month ended January 31, 1998
Capital at Start (1,1.1998) 113900
Add: Investment -
Net profit 184200
298100
Less: Drawings
Net loss (3500)
Capital at End (31.1.1998) 294600

General Electronics
Balance sheet
As on January 31, 1998
Assets Equities
Current Assets: Liabilities:
Cash 218100 Current Liabilities:
Account Receivable 40000 Account Payable 44400
Allowances For Bad Debt (4000) Unearned Commission 5000
36000 Interest Payable 3000
Inventory (31.1.1998 1000 Current Liabilities 52400
Prepaid Rent 27200 Fixed Labilities
Prepaid Salaries 200 Notes Payable 246900
Commission Receivable 1000 Total Liabilities 299300
Interest Revenue Receivables 30000 Owners’ Equity:
Total Current Assets: 313500 Capital at end 294600
Fixed Assets:
Land 248000
Equipment 36000
Allowance For Depreciation (3600)
Total Fixed Assets 280400
Total Assets 593900 Total Equities 593900
 General Electronics
Closing Entries
s.no Particulars pr Debit Credit
Sales 200000
Rent Revenue 3000
Interest Revenue 30000
Commission Revenue 27000
Purchase Discount 500
Purchase Return & Allowance 1000
Expense & Revenue Summary 261500
(Closing of all revenues and contra purchase accounts)
Expense & Revenue Summary 77300
Purchases 20000
Freight-in 1000
Light and power 1800
Wages Expense 1500
Rent Expense 4000
Bad Debt 4000
Salaries Expense 8500
Depreciation Expense 3600
Sales Return 400
Sales Discount 500
Interest Expense 3000
Merchandise inventory Beg 30000
(closing of all expense, contra revenue and inventory
beg account)
Expense and Revenue Summary 184200
Capital 184200
(closing of Expense and Revenue Summary)
Capital 3500
Drawing 3500
( Closing of Drawings account)
 General Electronics
General Ledger
All income statement accounts (temporary/ nominal accounts) closing ledgers shall be prepared
now.
Sales
1998 1998
Jan 31 Closing 200000 Jan 31 200000
200000 200000

All revenues and contra purchase accounts and shall be closed like above sales account.
Purchases
1998 1998
Jan 31 20000 Jan 31 Closing 20000
20000 20000

All expenses and contra Sales accounts shall be closed like above sales account.

Expense and Revenue Summary

1998 1998
Jan 31 78300 Jan 31 Adj 1000
Closing account 184200 261500
262500 262500

Drawings
1998 3500 1998 Closing 3500
Jan 31 Jan 31
3500 3500

Capital
1998 1998
 Jan 31 Drawings 3500 Jan 31 bal 113900
Bal c/d 294600 Expense & Revenue Summary 184200
298100 298100
Feb 1 bal b/f 298600

General Electronics
Post-Closing Trial Balance
As on January 31, 1998
Date Particulars Debit Credit
Cash 218100
Account Receivable 40000
Allowance for bad Debt 4000
Inventory 1000
Prepaid rent 27200
Prepaid salaries 200
Commission Receivable 1000
Interest revenue Receivable 30000
Land 248000
Equipment 36000
Allowance for depreciation 3600
Account payable 44400
Unearned commission 5000
Interest Payable 3000
Notes Payable 246900
Capital at end 294600
601500 601500

Note: Now since all the revenues and expense accounts are closed therefore only balance sheet
(real accounts) shall go to post closing trial balance. Inventory ending will be recorded in post-
closing trial balance,