Question

Adjustod Trial Balance Cash $ 3,500 8,000 3,600 75,000 Prepaid insurance Equipment $12,000 4 30,000 14,100 7,500 102,200 4,200 Service fees earned 42,800 12,900 1,800 8,000 8,800 Insurance expense. Depreciation expense. 8,800 1 Totals....

Please figure out the following:

1. Income Statement.

2. Statement of Retained earnings.

3. Profit Margin and Payout Ratio.

Answer 1

	Answer =1)
	INCOME STATEMENT
	Service Fees Earned	$                  1,02,200
	Misclaneous income	$                        4,200
	Total Income (A)	$                  1,06,400
	Less: Expenses
	Salaries Expenses	$                      42,800
	Rent Expenses	$                      12,900
	Insurance Expenses	$                        1,800
	Depreciation expenses	$                        8,000
	Income tax Expenses	$                        8,800
	Total Expenses (B)	$                      74,300
	Net Income (A-B)	$                      32,100
	Answer =2)
	Statement of Retained Earnings:
	Opening Balance of Retained Earning	$                      14,100
	Add: Net income of the year	$                      32,100
	Balance Available for Shareholder's	$                      46,200
	Less: Cash Dividend Paid	$                        7,500
	Closing Retained Earnings	$                      38,700
	Answer = = 3)
	Profit Margin = Net Income / Total Revenue
	Profit Margin = $ 32,100 / $ 106,400
	Profit Margin = 0.3017 or 30.17%
	Payout Ratio = Dividend Paid / Net income
	Payout Ratio = $ 7,500 / $ 32,100
	Payout Ratio = 0.2336    Or 23.36%