Comprehensive Problem 1 Part 8:

The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts.

NOTE: You must complete parts 1, 2, 3, 4, 6 and 7 before completing part 8. Part 5 is optional.

Prepare an income statement.

Kelly Consulting
Income Statement
For the Month Ended May 31, 20Y8

Fees earned
$fill in the blank 2
40,000
Expenses:

Salary expense
$fill in the blank 4
1,705

Rent expense
fill in the blank 6
1,600

Supplies expense
fill in the blank 8
1,370

Depreciation expense
fill in the blank 10
330

Insurance expense
fill in the blank 12
275

Miscellaneous expense
fill in the blank 14
1,295

Total expenses
fill in the blank 16
6,575

Net income
$fill in the blank 18
33,425

Prepare a statement of stockholders’ equity. If an amount box does not require an entry, leave it blank. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign.

Kelly Consulting
Statement of Stockholders’ Equity
For the Month Ended May 31, 20Y8
Common Stock Retained Earnings Total

Balances, May 1, 20Y8
$fill in the blank 20
$fill in the blank 21
$fill in the blank 22
42,300

Net income
fill in the blank 24
fill in the blank 25
33,425
fill in the blank 26

Dividends
fill in the blank 28
fill in the blank 29
10,500
fill in the blank 30

Balances, May 31, 20Y8
$fill in the blank 32
$fill in the blank 33
$fill in the blank 34
2,295

Prepare a balance sheet.

Kelly Consulting
Balance Sheet
May 31, 20Y8
Assets Liabilities
Current assets: Current liabilities:

Cash
$fill in the blank 36

Accounts payable
$fill in the blank 38

Accounts receivable
fill in the blank 40

Salaries payable
fill in the blank 42

Supplies
fill in the blank 44

Unearned fees
fill in the blank 46

Prepaid rent
fill in the blank 48

Prepaid insurance
fill in the blank 50
Total liabilities $fill in the blank 51
Total current assets $fill in the blank 52

Property, plant, and equipment: Stockholders’ Equity

Office equipment
$fill in the blank 54

Common stock
$fill in the blank 56

Accumulated depreciation
fill in the blank 58

Retained earnings
fill in the blank 60

Total property, plant, and equipment fill in the blank 61
Total stockholders’ equity fill in the blank 62
Total assets $fill in the blank 63
Total liabilities and stockholders’ equity $fill in the blank 64
Feedback
a. The income statement is prepared directly from the information in the income statement columns of the worksheet. Expenses are typically listed in order of size and miscellaneous expense is listed last, regardless of its amount.

b. The statement of stockholders' equity shows the beginning balances of common stock and retained earnings. The common stock balance will be increased by any stock issued during the period and retained earnings will be increased by any net income, and decreased by any net losses and dividends.

c. The balance sheet includes all accounts that would be transferred to the balance sheet columns on the worksheet, except for the dividends balances. The ending retained earnings in the balance sheet must be the same amount as that calculated in the statement of stockholders' equity. Make sure that the accounting equation remains in balance for this financial statement.