Question

Presented here are the accounts of Jesse Daniel Lawn Service for the year ended December 31, 2018. The retained earnings account shows the $56,000 balance as of the end of 2017, which is the beginning balance for 2018. Land $6,000 Salaries Expense 63,000 Common Stock 30,000 Cash 3,200 Notes Payable 36,000 Salaries Payable 1,500 Accounts Payable 9,000 Equipment 12,000 Property Tax Expense 3,100 Service Revenue 185,000 Accounts Receivable 1,300 Insurance Expense 2,000 Dividends 30,000 Office Supplies 14,000 Advertising Expense 20,000 Interest Expense 6,800 Rent Expense 9,000 Retained Earnings, 12/31/17 56,000 Building 147,100 Requirements 1. Prepare Jesse Daniel Lawn Service's income statement for the year ended 12/31/2018 2. Prepare the statement of retained earnings for the year ended 12/31/2018 3. Prepare the balance sheet as of 12/31/2018

Answer 1

1. Income statement for year ended 12/31/2018:

Description	Amount
Revenues & other items:
Service revenue	$185000
Total revenue & other items	$185000
Expenses & other items:
Property expense expense	$3100
Advertising expense	$20000
Rent expense	$9000
Salaries expense	$63000
Insurance expense	$2000
Interest expense	$6800
Total expenses & other items	($103900)
Net income	$81100

2. Statement of retained earnings for year ended 12/31/2018:

Description	Amount
Beginning balance, on 31/12/2017	$56000
Add: Net income	$81100
Less: Dividends	($30000)
Ending balance, 31/12/2018	$107100

3. Balance sheet as on 12/31/2018:

Liabilities & stockholder's equity	Amount	Assets	Amount
Liabilities:
Notes payable	$36000	Land	$6000
Accounts payable	$9000	Building	$147100
Salaries payable	$1500	Equipment	$12000
Stockholder's equity:		Office supplies	$14000
Common stock	$30000	Accounts receivable	$1300
Retained earnings	$107100	Cash	$3200
Total	$183600	Total	$183600