BUS-FP3061 – Fundamentals of Accounting Part 3 (Southwest Business School)

BUS-FP3061 – Fundamentals of Accounting Part 3

Part 3: Income Statement Preparation

Generally accepted accounting principles (GAAP) require organizations to prepare both an income statement and a balance sheet. Before the balance sheet can be prepared, the organization's net income must be determined. This requires the accountant to pull together data from numerous system accounts and other sources of information. In this part of the assessment, demonstrate your skill in putting together the necessary account data and preparing an income statement in good form.

Use the Assessment 2, Part 3 Template to complete Part 3 of the assessment. On the first page of the template is financial data for Southwest Business School. On the second page is a blank income statement. Use the information provided on the first page to prepare the income statement on the second page.

Southwest Business School
Adjusted Trial Balance
December 31 20XX

 
    Debit ($)    Credit ($)
Cash        26,000   
Accounts receivable        7,500   
Teaching supplies        2,600   
Prepaid insurance        12,000   
Prepaid rent        0   
Professional library        30,000   
Accumulated depreciation—Professional library            15,000
Equipment        70,000   
Accumulated depreciation—Equipment            28,000
Accounts payable            36,000
Salaries payable            400
Unearned training fees            6,600
Common stock            10,000
Retained earnings            53,600
Dividends        40,000   
Tuition fees earned            109,500
Training fees earned            42,400
Depreciation expense—Professional library        6,000   
Depreciation expense—Equipment        12,000   
Salaries expense        48,400   
Insurance expense        3,000   
Rent expense        24,000   
Teaching supplies expense        7,400   
Advertising expense        7,000   
Utilities expense              5,600    _______
Totals        $301,500    $301,500