MBA-520
Financial Statement Review
STUDENT:_______________________________
Problem 1. Preparation of Basic Financial Statements
Below is an alphabetical list of account balances of Serious Supply Corporation as of
December 31, 2018 and 2019 prior to the preparation of closing entries and financial
statements.
REQUIRED A — (20 points total)
1. Column 1 – Type of Account – Identify each account listed as an Asset (A), a Contra-Asset (CA), a
Liability (L), an Equity (EQ), a Revenue (R), or an Expense (EXP).
2. Column 2 – Financial Statement -Identify each account listed as going on the Balance Sheet
(BS), Income Statement (IS) or Statement of Retained Earnings (RE).
December 31,
Type of
Account
Financial
Statement
Account Title
2019
Debit
Accounts Payable
Accounts Receivable
Allowance for Doubtful Accounts
Debit
64,400
48,300
2,100
2,000
14,000
88,200
64,000
185,100
175,845
Depreciation Expense
16,100
15,295
Dividends
62,200
62,200
Equipment
126,500
97,600
Income Tax Expense
29,300
27,835
Insurance Expense
24,600
23,370
Inventories
37,700
52,200
Land
69,100
22,100
Notes Payable
Other Operating Expense
Prepaid Insurance
52,000
Salary Expense
38,000
50,100
47,595
1,700
3,900
Retained Earnings
Credit
31,300
62,000
17,900
Common Stock, no-par
Cost of Goods Sold
Credit
35,500
58,800
Accumulated Depreciation, Equipment
Cash and Cash Equivalents
2018
23,000
76,900
35,095
76,055
Salary Payable
30,000
21,100
Sales Revenue
438,000
416,100
22,800
24,100
Unearned Revenue
Totals
756,000
756,000 679,995
679,995
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REQUIREMENT B: Using the data from the previous page, prepare the 2019 statements below
as follows: 1 – Income Statement (10 points), 2 – Statement of Retained Earnings (10 points), 3
– Comparative Balance Sheet (10 points) and 4 – Statement of Cash Flows using the Indirect
Method (10 points).
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Problem 2. Journal Entry Debits & Credits (40 points)
For each transaction described below, write the name of the account that would be debited
and the name of the account that would be credited when recording the transaction. No dollar
amounts or explanations are required.
Transaction
To Record the Transaction in a Journal Entry, Name the
Accounts that you would debit and credit
Account to DEBIT
Account to CREDIT
Company purchased inventory on account
Company sold/provided services for cash
Company recorded depreciation on
equipment for the period
Company paid NEXT YEAR’s insurance
premium
Company paid vendor for a prior purchase on
account
Company paid utility bill
Company received cash deposit from
customer for work to be performed in the
future
Company received payment on previous sale
made on account
Company purchased machinery with a note
Company issued a bond at face value
Company paid interest due on bond issued at
face value
Company issued common stock at par value
Company issued common stock at par value in
exchange for a building
Company declared a dividend on common
stock
Company paid a previously declared dividend
on common stock
Company disposed of equipment that was
fully depreciated (no residual)
Company uses the percent of sales method
and records estimated bad debts.
Company recorded closing entry for revenue
account
Company recorded closing entry for expense
account
Company’s bank statement indicated a service
charge that had not previously been recorded
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