AFM 123 ARBUS 102: Goldsmith Inc. Financial Statements Analysis

This document presents a comprehensive solution to an accounting assignment focused on Goldsmith Inc. It begins with adjusting entries in the general journal, detailing the necessary debits and credits for various transactions, such as supplies expense, depreciation, salary expense, and accrued and unearned service revenue. Following this, T-accounts are provided for various ledger accounts, including cash, accrued service revenue, supplies, furniture and fixtures, accumulated depreciation, building, account payable, salary payable, unearned service revenue, income tax payable, share capital, retained earnings, dividends, service revenue, salary expense, supplies expense, depreciation expenses, income tax expense and miscellaneous expenses, showcasing the impact of each transaction. An adjusted trial balance is then presented, ensuring the equality of debits and credits after adjustments. The solution culminates in the preparation of financial statements, including an income statement, statement of changes in equity, and balance sheet, followed by closing entries to prepare the accounts for the next accounting period, and a post-closing trial balance to verify the accuracy. This detailed solution provides a complete overview of the accounting cycle for Goldsmith Inc.

Section 1: Adjusting Entries
General Journal
in the books of Goldsmith Inc.
Date Account/Explanation
P
R Debit Credit
Amount in
thousands of
dollars
a Supplies Expenses
$
4.00
Supplies
$
4.00
($4 has been used in current financial year)
b Depreciation expense-Furniture and fixtures
$
20.00
Accumulated Depreciation-furniture and fixtures
$
20.00
(Depreciation is charged for a year $20 on furniture and
fixtures)
c Depreciation expense-building
$
10.00
Accumulated Depreciation-building
$
10.00
(Depreciation is charged for a year $20 on building)
d Salary Expenses $
5.00
Salary Payable $
5.00
(Salary expenses for current year has not been paid)
e Accrued service revenue
$
12.00
Service revenue
$
12.00
(Service revenue but not received)
f Unearned service revenue
$
32.00
Service revenue
$
32.00

(Unearned service revenue earned in current year)
g Income tax expenses
$
35.00
Income tax payable
$
35.00
(tax not paid in current year)
Section 2: Ledger T-accounts
Cash
Particulars Amount Particulars Amount
Balance B/f $ 198.00 Balance c/d $ 198.00
Total $ 198.00 Total $ 198.00
Balance B/d $ 198.00
Accrued service revenue
Particulars Amount Particulars Amount
Balance B/f $ 370.00
Service revenue $ 12.00 Balance c/d $ 382.00
Total $ 382.00 Total $ 382.00
Balance B/d $ 198.00
Supplies
Particulars Amount Particulars Amount
Balance B/f $ 6.00 Supplies expenses $ 4.00
Balance c/d $ 2.00
Total $ 6.00 Total $ 6.00
Balance B/d $ 2.00
Furniture and fixtures
Particulars Amount Particulars Amount
Balance B/f $ 100.00 Balance c/d $ 100.00
Total $ 100.00 Total $ 100.00
Balance B/d $ 100.00
Accumulated Dep-Furniture and fixtures
Particulars Amount Particulars Amount
Balance B/f $ 40.00
Balance c/d $ 60.00 Dep exp-F&F $ 20.00

Total $ 60.00 Total $ 60.00
Balance B/d $ 60.00
Building
Particulars Amount Particulars Amount
Balance B/f $ 250.00 Balance c/d $ 250.00
Total $ 250.00 Total $ 250.00
Balance B/d $ 250.00
Accumulated Dep-Building
Particulars Amount Particulars Amount
Balance B/f $ 130.00
Balance c/d $ 140.00 Dep exp-Building $ 10.00
Total $ 140.00 Total $ 140.00
Balance B/d $ 140.00
Account Payable
Particulars Amount Particulars Amount
Balance c/d $ 380.00 Balance B/f $ 380.00
Total $ 380.00 Total $ 380.00
Balance B/d $ 380.00
Salary Payable
Particulars Amount Particulars Amount
Balance c/d $ 5.00 Salary Exp $ 5.00
Total $ 5.00 Total $ 5.00
Balance B/d $ 5.00
Unearned service revenue
Particulars Amount Particulars Amount
Service Revenue $ 32.00 Balance B/f $ 45.00
Balance c/d $ 13.00
Total $ 45.00 Total $ 45.00
Balance B/d $ 13.00
Income Tax payable
Particulars Amount Particulars Amount
Balance c/d $ 35.00 Income tax expense $ 35.00
Total $ 35.00 Total $ 35.00
Balance B/d $ 35.00
Share Capital
Particulars Amount Particulars Amount

Balance c/d $ 100.00 Balance B/f $ 100.00
Total $ 100.00 Total $ 100.00
Balance B/d $ 100.00
Retained Earnings
Particulars Amount Particulars Amount
Balance c/d $ 193.00 Balance B/f $ 193.00
Total $ 193.00 Total $ 193.00
Balance B/d $ 193.00
Dividends
Particulars Amount Particulars Amount
Balance B/f $ 65.00 Balance c/d $ 65.00
Total $ 65.00 Total $ 65.00
Balance B/d $ 65.00
Service Revenue
Particulars Amount Particulars Amount
Balance B/f $ 286.00
Accrued service revenue $ 12.00
Income Summary $ 330.00 Unearned service revenue $ 32.00
Total $ 330.00 Total $ 330.00
Balance B/d $ -
Salary Expense
Particulars Amount Particulars Amount
Balance B/f $ 172.00
Salary payable $ 5.00 Income Summary $ 177.00
Total $ 177.00 Total $ 177.00
Balance B/d $ -
Supplies Expense
Particulars Amount Particulars Amount
Supplies $ 4.00 Income Summary $ 4.00
Total $ 4.00 Total $ 4.00
Balance B/d $ -
Depreciation Exp-Furniture and fixtures
Particulars Amount Particulars Amount
Accu dep-F&F $ 20.00 Income Summary $ 20.00
Total $ 20.00 Total $ 20.00
Balance B/d $ -

Depreciation Exp-Building
Particulars Amount Particulars Amount
Accu Dep-Building $ 10.00 Income Summary $ 10.00
Total $ 10.00 Total $ 10.00
Balance B/d $ -
Income tax expense
Particulars Amount Particulars Amount
Income tax payable $ 35.00 Income Summary $ 35.00
Total $ 35.00 Total $ 35.00
Balance B/d $ -
Miscellaneous Expenses
Particulars Amount Particulars Amount
Balance B/f $ 13.00 Income Summary $ 13.00
Total $ 13.00 Total $ 13.00
Balance B/d $ -
Section 3: Adjusted Trial Balance
Goldsmith Inc.
Adjusted Trial Balance
Account Debit Credit
Amount in thousands of dollars
Cash $ 198.00
Accrued service revenue $ 382.00
Supplies $ 2.00
Furniture and fixtures $ 100.00
Accumulated Dep-Furniture and fixtures $ 60.00
Building $ 250.00
Accumulated Dep-Building $ 140.00
Account Payable $ 380.00
Salary Payable $ 5.00
Unearned service revenue $ 13.00
Income Tax payable $ 35.00
Share Capital $ 100.00
Retained Earnings $ 193.00
Dividends $ 65.00
Service Revenue $ 330.00
Salary Expense $ 177.00
Supplies Expense $ 4.00

Depreciation Exp-Furniture and fixtures $ 20.00
Depreciation Exp-Building $ 10.00
Income tax expense $ 35.00
Miscellaneous Expenses $ 13.00
Total $ 1,256.00 $ 1,256.00
Section 4: Financial statements
Goldsmith Inc.
Income Statement
Particulars Amount Amount
Amount in thousands of
dollars
Revenue
Service Revenue $ 330.00
Expenses
Salary Expense $ 177.00
Supplies Expense $ 4.00
Depreciation Exp-Furniture and fixtures $ 20.00
Depreciation Exp-Building $ 10.00
Income tax expense $ 35.00
Miscellaneous Expenses $ 13.00
Total Expenses $ 259.00
Net Income $ 71.00
Goldsmith Inc.
Statement of change in Equity
Particulars Share
capital
Retained
Earnings
Total
Equity
Balance at the beginning of period
$
100.00
$
193.00
$
293.00
Share issued
$
-
$
-
Dividend
$
-
$
-
Net Income
$
71.00
$
71.00
Balance at the end of period
$
100.00
$
264.00
$
364.00

Goldsmith Inc.
Balance Sheet
Particulars Amount Amount
Amount in thousands
of dollars
Assets
Cash $ 198.00
Accrued service revenue $ 382.00
Supplies $ 2.00
Furniture and fixtures $ 100.00
Less: Accumulated Dep-Furniture and fixtures $ 60.00 $ 40.00
Building $ 250.00
Less: Accumulated Dep-Building $ 140.00 $ 110.00
Dividends 65
Total Assets $ 797.00
Liabilities
Account Payable $ 380.00
Salary Payable $ 5.00
Unearned service revenue $ 13.00
Income Tax payable $ 35.00
Total Liabilities $ 433.00
Equity
Share Capital $ 100.00
Retained Earnings $ 264.00
Total Equity $ 364.00
Total Equity and liabilities $ 797.00
Section 5: Closing Entries
General Journal
in the books of Goldsmith Inc.
Dat
e Account/Explanation
P
R Debit Credit
Amount in
thousands of dollars
h Service Revenue
$
330.00
Income Summary $ 330.00
To close revenue account

i Income Summary
$
259.00
Salary Expense $ 177.00
Supplies Expense
$
4.00
Depreciation Exp-Furniture and fixtures $ 20.00
Depreciation Exp-Building $ 10.00
Income tax expense $ 35.00
Miscellaneous Expenses $ 13.00
To close expense account
j Income Summary
$
71.00
Retained Earnings $ 71.00
To close income summary to retained earnings
$
660.00 $ 660.00
Section 6: Post closing trial balance
Goldsmith Inc.
Post Closing Trial Balance
Account Debit Credit
Amount in thousands of dollars
Cash $ 198.00
Accrued service revenue $ 382.00
Supplies $ 2.00
Furniture and fixtures $ 100.00
Accumulated Dep-Furniture and fixtures $ 60.00
Building $ 250.00
Accumulated Dep-Building $ 140.00
Account Payable $ 380.00
Salary Payable $ 5.00
Unearned service revenue $ 13.00
Income Tax payable $ 35.00
Share Capital $ 100.00
Retained Earnings $ 264.00
Dividends $ 65.00
Total $ 997.00 $ 997.00