Question

-1 Preparing an Income Statement, Statement of Stockholders" Equity, and Balance Sheet LO1-1 The foWowing informetion applies to the questions displayed below) Assume that you are the president of Highlight Construction Company At the end of the first year of operations (December 31), the following tinancial data for the company are avaiable Recehables from customers (all considered collectible) Inverntory of merchandise based on physical count and priced at cos Equipment owned, at cost less used portion Accounts payable owed to suppliers $ 24700 0,900 41,600 47,840 3100 payable lon December 31 this was owed to an empioyee who will be paid on January 10) Total sales revenue Expenses, including the cost of the Income taxes expense at 30% x pr common stock pecember Dividends deciared and paid during the current yeer merchandse soid lexcluding income taxes) eto icone, all pad ding the current yeer Note: The beginning belances in Common stock and Retained earnings are zero because it is the fiest year ot operations) References Section Break P1-1 Prepering an Income Statement, Statement of "Stockhoiders" Equity, and Balence Sheet LO1-1 5 6 8 9 0 ACCT.UB1 20 CHAPTER

Answer 1

3) Balance Sheet of Highlight Construction Company at December 31 (Amount in $)

Highlight Construction Company
Balance Sheet
At December 31
Assets
Cash	24,700
Receivables from Customers	10,900
Inventory of Merchandise	74,000
Equipment Owned, at cost less used Portion	41,600
Total Assets		151,200
Liabilities and Shareholders' Equity
Liabilities
Accounts Payable	47,840
Salary Payable	3,100
Total Liabilities		50,940
Shareholders' Equity
Common Stock	85,700
Retained Earnings
Net Income after Tax (1)	25,060
Less: Dividend Paid during the year	(10,500)
Total Shareholders' Equity		100,260
Total Liabilities and Shareholders' Equity		151,200

Working Notes:-

(1) Calculation of Net Income after Tax:

	$	$
Sales Revenue	117,000
Less: Expenses including cost of merchandise	(81,200)
Net Income(A)		35,800
Less : Income Tax (A*30%)		(10,740)
Net Operating Income after Tax		25,060