InCome statement Accounts

Service revenue Miscellaneous expenses

_{0 1/1 Bal. 1/1 Bal. 0}

_{100,000 a. e. 24,000}

100,000 12/31 Bal.12/31 Bal.24,000

Depreciation expense Bad debt expense

_{1/1 Bal. 0 1/1 Bal. 0}

_{Adjusting 2,000 Adjusting 1,000}

12/31 Bal.2,00012/31 Bal.1,000

Salaries expense

_{1/1 Bal. 0}

_{d. 41,000}

_{Adjusting 1,000}

12/31 Bal.42,000

Problem 2-6 (continued)

Requirement 6

Account Title	Debits		Credits
Cash	45,800
Accounts receivable	17,700
Allowance for uncollectible accounts			1,500
Equipment	35,000
Accumulated depreciation			8,000
Salaries payable			1,000
Common stock			50,000
Retained earnings			7,000
Service revenue			100,000
Salaries expense	42,000
Miscellaneous expenses	24,000
Depreciation expense	2,000
Bad debt expense	1,000		______
Totals	167,500		167,500

Requirement 7

KARLIN COMPANY
Income Statement
For the Year Ended December 31, 2011
Service revenue			$100,000
Operating expenses:
Salaries	$42,000
Miscellaneous	24,000
Depreciation	2,000
Bad debt	1,000
Total operating expenses			69,000
Net income			$ 31,000

32. Problem 2-6 (continued)

KARLIN COMPANY
Balance Sheet
At December 31, 2011
Assets
Current assets:
Cash			$45,800
Accounts receivable	$17,700
Less: Allowance for uncollectible accounts	(1,500)		16,200
Total current assets			62,000
Property and equipment:
Equipment	35,000
Less: Accumulated depreciation	(8,000)		27,000
Total assets			$89,000
Liabilities and Shareholders' Equity
Current liabilities:
Salaries payable			$ 1,000
Total current liabilities			1,000
Shareholders’ equity:
Common stock	$50,000
Retained earnings	38,000*
Total shareholders’ equity			88,000
Total liabilities and shareholders’ equity			$89,000

*Beginning balance of $9,500 plus net income of $31,000 less dividends of $2,500.

Problem 2-6 (continued)

Requirement 8

December 31, 2011

Service revenue 100,000

Income summary 100,000

Income summary 69,000

Salaries expense 42,000

Miscellaneous expenses 24,000

Depreciation expense 2,000

Bad debt expense 1,000

Income summary 31,000

Retained earnings 31,000

Problem 2-6 (continued)