Question

Requirement:

Using this adjusted trial balance, complete an income statement, a statement of retained earnings, and a balance sheet. Make sure all three are in good form.

Bertrand Irrigation System
Adjusted Trial Balance
December 31, 2018
		Balance
	Account Title	Debit	Credit
	Cash	$12,000
	Accounts Receivable	46,200
	Office Supplies	17,700
	Prepaid Insurance	4,600
	Building	58,000
	Accumulated Depreciation—Building		$24,300
	Equipment	26,000
	Accumulated Depreciation—Equipment		7,600
	Accounts Payable		27,100
	Interest Payable		1,800
	Salaries Payable		4,200
	Unearned Revenue		1,900
	Notes Payable (long-term)		19,600
	Common Stock		18,000
	Retained Earnings		18,000
	Dividends	2,400
	Service Revenue		70,000
	Insurance Expense	1,300
	Salaries Expense	16,700
	Supplies Expense	1,500
	Interest Expense	1,800
	Depreciation Expense—Equipment	2,700
	Depreciation Expense—Building	1,600
	Total	$192,500	$192,500

Answer 1

Income statement is prepared to ascertain the profit or net income generated by the business. Retained earnings include Opening balance, net income for current year less dividends. Balance sheet shows the position of assets and liabilities along with shareholders equity.

70,000 Bertrand Irrigation System Income statement for the year ended December 31, 2018 Revenues Service revenue Expenses Insurance Expense 1,300 Salaries Expense 16,700 Supplies Expense 1,500 Interest Expense 1,800 Depreciation Expense Equipment 2,700 Depreciation Expense Building 1,600 Total expenses Net income 25,600 44,400 Bertrand Irrigation System Statement of Retained earnings for the year ended December 31, 2018 Retained earnings, 1 Jan 2018 Add: Net income during the year Less: Dividends paid Retained earnings, Dec 31, 2018 18,000 44,400 -2,400 60,000

Bertrand Irrigation System Balance Sheet as at December 31, 2018 Current Assets Cash 12,000 Accounts Receivable 46,200 Office Supplies 17,700 Prepaid Insurance 4,600 Total Current Assets 80,500 Fixed Assets Building 58,000 Accumulated Depreciation Building -24,300 33,700 Equipment 26,000 Accumulated Depreciation Equipment -7,600 18,400 Total Current Assets 52,100 Total Assets 132,600 Current Liabilities Accounts Payable Interest Payable Salaries Payable Unearned Revenue Total Current Liabilities 27,100 1,800 4,200 1,900 35,000 19,600 19,600 54,600 Non current Liabilities Notes Payable (long-term) Total Non Current Liabilities Total Liabilities Shareholders equity Common Stock Retained Earnings Total Shareholders equity 60,000 18,000 78,000 Total Liabilities and Shareholders equity 132,600