Reference no: EM13487042

You will use the information provided below for Costa Company for this application.Below find a working trial balance for Costa Company. This format is often used during the preparation phase of the financial statements since it provides a good overview.

Required:

Your task is to prepare an income statement and a balance sheet in good format after adjusting for the two errors below.

• A physical count of inventory indicates $70,500 on hand.
• There's a check for $5,000 from a customer that has not been recorded in the working trial balance. The sale was never recorded in the first place, so the transaction relating to this sale is missing.

In addition:

1. Describe the effect of the errors on the income statement and balance sheet.
2. Is this company profitable? How do you determine whether or not this is the case?
3. Is the company in a solid financial position? (Comment on balance sheet.)

Modular SLP Assignment Expectations

Always include the name of the organization(s), time period covered and source of information. It is important to answer the questions as posed. The document should be from 2 to 4 pages and written in a clear and concise manner. Don't forget to include tables as required. Support your discussion or tables with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved. You can turn in the spreadsheet instead of the Word document. The content should be equivalent to the page length suggested for a word processing document.

Costa Company
31-Dec-12
Trial Balance (accounts in alphabetical order)
Accounts	Working Trial Balance		Balance Sheet		Income Statement
	Debit	Credit	Debit	Credit	Debit	Credit		Credit
Accounts payable		$14,500		$14,500
Accounts receivable	$18,000		$18,000
Cash	41,500		41,500
Common stock		10,000		10,000
Depreciation expense	18,250				18,250
Cost of goods sold	402,610				402,610
Equipment (net of depreciation)	325,000		325,000
Insurance	1,500				1,500
Inventory	80,500		80,500
Long-term debt		105,000		105,000
Marketing	5,600				5,600
Misc. expenses	4,500				4,500
Paid-in capital		90,000		90,000
Property taxes	6,500				6,500
Rent	22,000				22,000
Retained earnings		156,400		245,500
Revenues		619,400				619,400		619,400
Salaries	61,940				61,940
Utilities	7,400				7,400
Total	$995,300	$995,300	$465,000	$465,000	$530,300			$619,400