Prison Watch Company offers legal consulting advice to prison inmates

PR 4-1A Prison Watch Company offers legal consulting advice to prison inmates. Prison Watch Company prepared the end-of-period spreadsheet (work sheet) at the top of the following page at June 30, 2010, the end of the current fiscal year.

Instructions
1. Prepare an income statement for the year ended June 30.
2. Prepare a statement of owner’s equity for the year ended June 30. No additional investments were made during the year.
3. Prepare a balance sheet as of June 30.
4. On the basis of the end-of-period spreadsheet (work sheet), journalize the closing entries.
5. Prepare a post-closing trial balance.

Check: Net Loss $14,150


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Legal Beagals Inc. is a legal services firm that files incorporation papers for small businesses

Legal Beagals Inc. is a legal services firm that files incorporation papers for small businesses. They charge $1,000 per application. This year's income statement shows the following:

Sales $1,440,000
Variable Expenses $1,008,000
Contribution margin $432,000
Fixed costs $250,000
Profit $182,000.

Required:
(a) Compute the break-even point in units.
(b) Compute the contribution margin ratio.
(c) Compute the current margin of safety.
(d) How many applications must the company sell to make a profit of $350,000?

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