Reference no: EM132008135
Problem - We are using the same company as in the second module. However, you need to consider some additional information.
- One client had indicated that they were interested in purchasing $42,500 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 2012 and did not adjust ending inventory for the $42,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.
Nybrostrand Company 31-Dec-12 Trial Balance (accounts in alphabetical order)
Debit Credit
Accounts payable 78,000
Accounts receivable 36,500
Cash 30,000
Common stock 10,000
Depreciation expense 24,350
Cost of goods sold 307,000
Equipment (net of depreciation) 415,000
Insurance 1,400
Inventory 34,000
Long-term debt 127,000
Marketing 4,500
Paid-in capital 50,000
Property taxes 16,900
Rent 28,000
Retained earnings ?
Revenues 586,000
Salaries 78,500
Utilities 6,700
Total 982,850 851,000
Prepare an income statement for the company in good format. Always include the name of the company and the period covered in the title. Don't forget dollar signs where appropriate. You do not need to include the balance sheet. Consequently, 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.
The submission should be 2 to 4 pages and need to include answers to all the questions listed above. Show computations, discuss the results and include references in APA format.