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Skysong, Inc. is a private camping ground near the Mount Miguel Recreation Area. It has compiled the following financial information as of December 31, 2017 Service revenue (from camping fees) $145,200 Dividends $9,900 Sales revenue (from general store) 27,500 Notes payable 55,000 Accounts payable 12,100 Expenses during 2017 138,600 Cash 9,350 Supplies 6,050 Equipment 125,400 Common stock 44,000 5,500 Retained earnings (1/1/2017) Determine Skysong, Inc.'s net income for 2017. Skysong, Inc's net income for 2017 $

Answer 1

Q1.

Net income = Total revenues – Total expenses

                        = (145,200 + 27,500) – 138,600

                        = 172,700 – 138,600

                        = 34,100 (Answer)

Q2.

Statement of retained earnings

As on 31/12/2017 Retained earnings (1/1/2017) $ 5,500 Add : Net income for 2017 34,100 39,600 Less : Dividends 9,900 Retained earnings 31/12/2017 $ 29,700

Q3.

Balance sheet

As on 31/12/2017 Assets Cash 9,350 Supplies 6,050 125,400 Equipment Total assets $ 140,800

Liabilities and Stockholders' Equity Liabilities Accounts payable $ 12,100 Notes payable 55,000 Total liabilities $ 67,100 Stockholders' equity Common stock 44,000 Retained earnings (31/12/2017) 29,700 Total stockholders' equity 73,700 Total liabilities and stockholders' equity $ 140,800

Note: the criteria of a balance sheet is its total assets must equal to the total liabilities and stockholders' equity, which is met above.