Question

Test 11 Chapters 1-3 NOT Proctored Problem 3-5A Preparing financial statements from the adjusted trial balance and computing profit margin LO P3, A1, A2 36 The following information applies to the questions displayed below] The adjusted trial balance for Chiara Company as of December 31, 2017, follows. Credit $ 125,00 Accounts receivable receivable (due in a days) 19.000 170,000 17.00 Accumulated depreciation-utomobiles Equipment Accumulated depreciation Equipment 100.000 Interest payable notes payable 32.00 142.000 25,580 24,00 Depreciation expense-quipment Bagair expense Automobiles Problem 3-5A Part 1 Required: a) Prepare the income statement for the year ended December 31, 2017 b) Prepare the statement of retained earnings for the year ended December 31 2017 1(c) Prepare Chiara Company's balance sheet as of December 31, 2017 Complete this question by entering your answers in the tabs below. Red 1A Red 18 Renc Prepare the income statement for the year ended December 31, 2017 CHIARA COMPANY

Answer 1

CHIARA COMPANY
Income Statement
For Year Ended December 31, 2017
Revenues:
Fees Earned	$564,000
Interest Earned	$24,000
Total revenues		$588,000
Expenses:
Salaries expense	$183,000
Wages expense	$44,000
Interest expense	$36,400
Office supplies expense	$34,200
Advertising expense	$64,500
Repairs expense - Automobiles	$27,600
Depreciation expense—Automobiles	$25,000
Depreciation Equipment	$18,500
Total expenses		$433,200
Net income                                   [$588,000 - $433,200]		$154,800

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CHIARA COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2017
Retained earnings, Dec. 31, prior year end	$239,220
Add: Net income         [Refer Income Statement]	$154,800
	$394,020
Less: Dividends	$47,000
Retained earnings, Dec. 31, current year end	$347,020

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CHIARA COMPANY
Balance Sheet
December 31, 2017
Assets
Cash		$125,300
Accounts receivable		$50,500
Interest receivable		$19,800
Notes receivable		$170,000
Office supplies		$17,000
Automobiles	$169,000
Accumulated depreciation - Automobiles	$60,000	$109,000
Equipment	$144,000
Accumulated depreciation - Equipment	$21,000	$123,000
Land		$86,000
Total assets		$700,600
Liabilities
Accounts payable		$100,000
Interest payable		$30,000
Salaries payable		$23,000
Unearned fees		$32,000
Long term notes payable		$142,000
Total liabilities		$327,000
Equity
Common stock	$26,580
Retained earnings [Refer statement of earnings statement]	$347,020
Equity                                       [26,580 + $347,020]		$373,600
Total liabilities and Equity   [$327,000 + $373,600]		$700,600