Prepare Worksheet For Financial Statement

Prepare Worksheet Financial Statement

Prepare a worksheet, financial statements, and adjusting and closing entries based on the trial balance, adjustments, and transactions provided for Sherlock Holmes, P.I., Inc. The assignment involves completing the worksheet, preparing an income statement, retained earnings statement, and a classified balance sheet, journalizing adjusting entries, and journalizing closing entries.

Paper For Above instruction

The task begins with analyzing the unadjusted trial balance for Sherlock Holmes, P.I., Inc. as of March 31, 2014, which includes various asset, liability, and equity accounts along with revenue and expense accounts. The primary goal is to prepare a comprehensive worksheet that facilitates the adjustment of accounts for accurate financial reporting, followed by the creation of the financial statements and necessary journal entries.

First, the worksheet must be completed by incorporating the adjustments suggested, such as supplies on hand, depreciation, interest accrued, insurance expiration, and unbilled service revenue. After adjusting the trial balance, the adjusted totals will be used to derive net income, which then feeds into the retained earnings statement and balance sheet.

Next, an income statement must be prepared for the quarter ending on March 31, 2014. This involves calculating total revenues and expenses, deducting expenses from revenues to find net income, and presenting the results in a formatted statement.

Following this, a retained earnings statement is prepared, starting with the opening balance of retained earnings (which, for a new business, might be zero or previous period retained earnings), adding net income for the quarter, and subtracting dividends paid to determine the closing retained earnings.

Subsequently, a classified balance sheet as of March 31, 2014, must be prepared. This includes current assets such as cash, accounts receivable, supplies, prepaid insurance, and equipment, along with total assets. Liabilities, including notes payable, accounts payable, and interest payable, are listed under current liabilities, with stockholders’ equity comprising common stock and retained earnings. The balance sheet must balance, meaning total assets equal total liabilities and stockholders' equity.

Furthermore, adjusting journal entries should be journalized based on the adjustments: recording supplies expense, depreciation expense, interest accrued, insurance expense, and unbilled services revenue. Each entry will specify the date, account titles, debit and credit amounts, and an explanation referencing the applicable adjustment.

Finally, closing entries are journalized to transfer the revenue and expense balances into retained earnings, and to close dividends to retained earnings. This process ensures the accounts are prepared for the next accounting period and reflect the proper ending balances.

This comprehensive task involves detailed calculations, appropriate journal entries, and precise presentation of financial statements. Complete this process meticulously to ensure the closing of books for Sherlock Holmes, P.I., Inc. for the quarter ended March 31, 2014.

References

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• Weygandt, J., Kieso, D., & Kimmel, P. (2020). Principles of Financial Accounting. Wiley.