Question

Prepare the income statement, statement of retained earnings and balance sheet for the following company:

Debits Credits

Cash $15,500

Accounts Receivable 4,500

Equipment 45,000

Accumulated depreciation $5,000

Accounts Payable 4,000

Unearned revenue 1,200

Salaries Payable 2,000

Interest payable 1,200

Notes Payable   20,000

Capital Stock 30,000

Revenue 32,800

Salaries expense 17,000

Advertising expense 5,000

Fuel expense 2,000

Depreciation expense 5,000

Interest expense 1,200

Dividends 1,000

$96,200 $96,200   

Answer 1

Income Statement Revenue Expenses: $ 32,800 Salaries Expense 17,000 Advertising Expense Fuel Expense 5,000 $ 2,000 Depreciation Expense 5,000 Interest Expense 1,200 $ Total expenses Net Income 30,200 2,600 Statement of Retained Earnings Beginning balance Add: Net Income Less: dividends Retained Earnings (ending) $ $ 2,600 $ 1,000 1,600

Balance Sheet Assets Current Assets Cash $ 15,500 Accounts receivable Total Current Assets Property, Plant and Equipment Equipment Less: Accumulated Depreciation 4,500 $ 20,000 45,000 $ 5,000 $ Equipment 40,000 Total Assets 60,000 Liabilities and Stockholders' Equity Current liabilities Accounts Payable $ 4,000 Unearned Revenue Salaries payable Interest payable Total Current Laibilities Non-Current liabilities Notes Payable (assumed to be long-term) 1,200 2,000 1,200 $ 8,400 $ 20,000 Total Liabilities $ 28,400 Shareholders' Equity Capital stock Retained Earnings 30,000 1,600 $ Total Stockholders' Equity 31,600 $ Total Liabilities and Stockholders' Equity 60,000