Smith company

ed to consider some additional information.

  

·

   

     

One client had indicated that they were interested in purchasing $45,500 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 $45,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.

  

 

 

 

 

 

 

 

 

 

 

 

4,500 

 

 

 

 

 

 

 

   

Smith Company
31-Dec-12
Trial Balance (accounts in alphabetical order)
Debit	Credit
Accounts payable	67,000
Accounts receivable	2	4,500
Cash	30,000
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
Paid-in capital	90,000
Property taxes	8,900
Rent	18,000
Retained earnings	???
Revenues	406,000
Salaries	67,500
Utilities	6,700
Total	760,850	718,000

   

Required

 

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 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.

 

Modular SLP Assignment Expectations

 

It is important to answer the questions as posed. The document should be two to four pages and written in a clear and concise manner or present 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. The content should be equivalent to the page length suggested for a word processing document.