JS Incorporated Reported The Following Adjusted Trial Balanc

1js Incorporated Reported The Following Adjusted Trial Balance Numb

Using the adjusted trial balance figures provided for J+S Incorporated as of December 31, 2012, prepare the company's financial statements for the year ended December 31, 2012. The financial statements to be prepared are the Income Statement, the Statement of Owner's Equity, and the Balance Sheet. Assume that there were no investments by the owner during 2012, and ensure all statements are formatted correctly with appropriate headings, subheadings, and totals.

Paper For Above instruction

Introduction

The preparation of financial statements is an essential step in financial reporting, providing stakeholders with a comprehensive overview of a company's financial performance and position. For J+S Incorporated, a company reporting adjusted trial balances at the end of 2012, the goal is to create three primary financial statements: the Income Statement, the Statement of Owner's Equity, and the Balance Sheet—organized side by side for clarity.

In this paper, the financial statements will be constructed based on the given adjusted trial balance. The income statement reflects the company's revenues and expenses, culminating in net income or loss. The statement of owner’s equity details changes in owner's capital during the period, primarily reflecting net income and any withdrawals. The balance sheet presents the company's assets, liabilities, and owner’s equity as of a specific date, confirming the accounting equation remains balanced.

Preparation of the Income Statement

First, we identify revenue and expense items from the trial balance. The service revenue is $300,000. Expenses include salaries at $65,000, rent at $35,000, and utilities at $15,000. The total expenses amount to $115,000. Therefore, net income is calculated as:

• Net Income = Total Revenues - Total Expenses = $300,000 - $115,000 = $185,000

Hence, the Income Statement shows a gross income of $300,000, total expenses of $115,000, and net income of $185,000.

Preparation of the Statement of Owner’s Equity

The beginning owner’s capital is $50,000. During 2012, the owner’s withdrawals amounted to $15,000. The net income for the year, as calculated, is $185,000. The statement of owner’s equity reflects these components:

• Beginning Owner’s Capital: $50,000
• Plus: Net Income: $185,000
• Less: Owner’s Drawings: $15,000
• Ending Owner’s Capital: $220,000

This statement states that the owner’s equity increased due to net income and decreased due to withdrawals, resulting in an ending capital of $220,000.

Preparation of the Balance Sheet

The balance sheet lists assets, liabilities, and owner’s equity. Assets include current assets such as Cash ($50,000), Accounts Receivable ($20,000), Supplies ($10,000), Prepaid Rent ($15,000), and long-term assets such as Land ($250,000) and Building ($175,000), net of accumulated depreciation ($55,000).

Calculations of total assets:

• Cash: $50,000
• Accounts Receivable: $20,000
• Supplies: $10,000
• Prepaid Rent: $15,000
• Land: $250,000
• Building: $175,000 - $55,000 (accumulated depreciation) = $120,000

Total Assets = $50,000 + $20,000 + $10,000 + $15,000 + $250,000 + $120,000 = $465,000

Liabilities include Accounts Payable ($65,000), Long-term Note Payable ($80,000), and Unearned Revenue ($100,000). Total Liabilities = $245,000.

Owner’s Equity, as calculated, is $220,000, per statement of owner’s equity. Verify total assets equal liabilities plus owner’s equity:

Total Liabilities and Owner’s Equity = $245,000 + $220,000 = $465,000, matching total assets, ensuring the balance sheet balances.

Side-by-Side Financial Statements

References

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