Reference no: EM131140016

Smith Company 31-Dec-15 Trial Balance (accounts in alphabetical order) Debit Credit Accounts payable 67,000 Accounts receivable 24,500 Cash 50,000 Common stock 10,000 Depreciation expense 24,350 Cost of goods sold 234,000 Equipment (net of depreciation) 316,000 Insurance 1,400 Inventory 25,000 Long-term debt 145,000 Marketing 4,500 Paid-in capital 90,000 Property taxes 8,900 Rent 18,000 Retained earnings ? Revenues 436,000 Salaries 67,500 Utilities 6,700 Total 780,850 780,850 For Part I, consider additional information below. One client had indicated that they were interested in purchasing $50,000 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase. The bookkeeper already corrected the sales account. However, the bookkeeper may have made a mistake when computing cost of goods sold. She included total production costs for 2015 and did not adjust ending inventory for the $50,000 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count. Prepare an income statement for the company in good format. Also, explain the adjustments separately. Always include the name of the company and the period covered in the title. Don't forget dollar signs where appropriate. You will not need all the accounts listed above. How does the income or loss compare to the original income statement? Explain the importance of the matching concept.