Question

The adjusted trial balance for Chiara Company as of December 31 follows.

	Debit			Credit
Cash	$	146,200
Accounts receivable		55,000
Interest receivable		21,800
Notes receivable (due in 90 days)		171,000
Office supplies		15,500
Automobiles		172,000
Accumulated depreciation—Automobiles				$	50,000
Equipment		140,000
Accumulated depreciation—Equipment					17,000
Land		77,000
Accounts payable					103,000
Interest payable					40,000
Salaries payable					24,000
Unearned fees					30,000
Long-term notes payable					146,000
Common stock					32,580
Retained earnings					293,220
Dividends		54,000
Fees earned					514,000
Interest earned					24,000
Depreciation expense—Automobiles		25,500
Depreciation expense—Equipment		18,500
Salaries expense		183,000
Wages expense		41,000
Interest expense		36,000
Office supplies expense		33,600
Advertising expense		58,500
Repairs expense—Automobiles		25,200
Totals	$	1,273,800		$	1,273,800

Required:
Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31; (b) the statement of retained earnings for the year ended December 31 [Note: Retained Earnings at December 31 of the prior year was $293,220]; and (c) the balance sheet as of December 31.

Prepare the income statement for the year ended December 31.

Prepare the statement of retained earnings for the year ended December 31. [Note: Retained Earnings at December 31 of the prior year was $293,220.]

Prepare Chiara Company's balance sheet as of December 31.

Answer 1

CHIARA COMPAY Income Statement For Year Ended December 31. Revenues Fees earned Interest earned S 514,000 S 24,000 S 538,000 Total Revenues Less : Expenses Salaries expense Wages expense Office Supplies expense Advetising expense Repair expense- Automobiles Interest expense S (183,000) S (41,000) $ (33,600) $ (58,500) $ (25,200) S (36,000) S (25,500) $ (18,500) Depreciation expense - Automobiles Depreciation expense - Equipment Total expenses S (421,300) S 116,700 Net Income

CHIARA COMPAY Statement of Retained earnings For year ended December 31. Beginning balance Add : Net income Less : Dividends S 293,220 S 116,700 S (54,000) S 355,920 Ending Balance

CHIARA COMPAY Balance sheet on December 31 Assets Current Assets Cash Accounts Receivable Interest receivable Notes Receivable Office Supplies Total Current Assets $ 146,200 $ 55,000 S 21,800 $ 171,000 $ 15,500 $ 409,500 Property, Plant & Equipment Land Automobiles Less : Accumulated depreciation - Automobiles $ 77,000 $172,000 S (50,000) $122,000 Equipment Accumulated depreciation - Equipment Total Property, Plan & Equipment S140,000 S (17,000) S123,000 $322,000 Total Assets $731,500

Liabilities and Stockholer's Equity Current Liabilities Accounts Payable Salaries Payable Interest payable Unearned fees Total Current Liabilities $103,000 $ 24,000 S 40,000 S 30,000 $197,000 Long-term notes payable Total Liabilities S146,000 $343,000 Shareholder's Equity Common Stock Retained Earnings Total Shareholder's Equity Total Liabilities & Shareholder's Equity S 32,580 $355,920 $388,500 $731,500