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Income Statement
The income statement for NetSolutions is prepared directly from the Income Statement or Adjusted Trial Balance columns of the end-of-period spreadsheet (work sheet) beginning with fees earned of $16,840.
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Account Title Debit Credit Debit Credit Debit Credit
Trial Balance Income Statement Balance Sheet
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Adjusted
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accumulated Depr. 50 50Accounts Payable 900 900Wages Payable 250 250Unearned Rent 240 240Capital Stock 25,000 25,000Dividends 4,000 4,000Fees Earned 16,840 16,840Rent Revenue 120 120Wages Expense 4,525 4,525Rent Expense 1,600 1,600Depreciation Expense 50 50Utilities Expense 985 985Supplies Expense 2,040 2,040Insurance Expense 200 200Miscellaneous Exp. 455 455
43,400 43,400 9,855 16,960 33,545 26,440Net income 7,105 7,105
16,960 16,960 33,545 33,545
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Account Title Debit Credit Debit Credit Debit Credit
Trial Balance Income Statement Balance Sheet
12345678910111213141516171819202122232425
Adjusted
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accumulated Depr. 50 50Accounts Payable 900 900Wages Payable 250 250Unearned Rent 240 240Capital Stock 25,000 25,000Dividends 4,000 4,000Fees Earned 16,840 16,840Rent Revenue 120 120Wages Expense 4,525 4,525Rent Expense 1,600 1,600Depreciation Expense 50 50Utilities Expense 985 985Supplies Expense 2,040 2,040Insurance Expense 200 200Miscellaneous Exp. 455 455
43,400 43,400 9,855 16,960 33,545 26,440Net income 7,105 7,105
16,960 16,960 33,545 33,545
Retained Earnings Statement
The first item presented on the retained earnings statement is the balance of the Retained Earnings account at the beginning of the period.
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Balance Sheet
The balance sheet is prepared directly from the Balance Sheet or Adjusted Trial Balance columns of the end-of-period spreadsheet (or work sheet), beginning with Cash of $2,065.
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Classified Balance Sheet
A classified balance sheet is a balance sheet that was expanded by adding subsections for current assets; property, plant, and equipment; current liabilities; and long-term liabilities.
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Current Assets
Cash and other assets that are expected to be converted into cash, sold, or used up usually within a year or less, through the normal operations of the business, are called current assets.
Cash Accounts
Receivable Notes
Receivable Supplies
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Fixed Assets
Property, plant, and equipment (also called fixed assets or plant assets) include assets that depreciate over a period of time. Land is an exception, as it is not subject to depreciation.
Equipment Machinery Buildings Land
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Current Liabilities
Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets are called current liabilities.
Accounts payable Wages payable Interest payable Unearned fees
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Long-Term Liabilities
Liabilities not due for a long time (usually more than one year) are called long-term liabilities.
Long-term notes payable
Mortgage payable Bond payable
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Stockholders’ Equity
Stockholders’ equity is the stockholders’ right to the assets of the business. It is presented on the balance sheet below the liabilities section.
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Capital stock Retained earnings