Question

Ch 3: Homework 2 QS 3-22 Preparing financial statements LO P6 Part 1 of 2 Required (1) Prepare an income statement for the year ended December 31 (2) Prepare a statement of retained earnings for the year ended December 31 0.83 points Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a statement of retained earnings for the year ended December 31. Owner made no investments during period. eBook SIERRA COMPANY Statement retained Earnings Hint Retained earnings, December 31 prior year end Print 0 References Retained earnings, December 31 current year and $ 0 < Required 1 Raqua 2 692 Mc Grow Hall < Prev 2 3 of 13 Next > MacBook Air

Answer 1

Requirement 1:

SIERRA COMPANY
Balance sheet
At December 31
Assets
Current assets:
Cash		$37,000
Prepaid insurance		$2,100
Notes receivable		$7,200
Total current assets		$46,300
Property,plant and equipment:
Buildings	$100,000
Accumulated depreciation-Building	($28,000)
Total property,plant and equipment		$72,000
Total assest		$118,300
Liabilities and stockholders' Equity
Current liabilities:
Accounts payable		$10,500
Total current liabilities		$10,500
Notes payable		$11,000
Total liabilities		$21,500
Stockholders' equity:
Common stock		$13,000
Retained earnings		$83,800
Total stockholder's equity		$96,800
Total liabilities and stockholders' equity		$118,300

Requirement 2:

SIERRA COMPANY
Statement of Retained earnings
For the year ended December 31
Retained earnings, December 31 prior year end	$21,500
Add: Net income	$71,300
	$92,800
(Less): Dividends	($9,000)
Retained earnings, December 31 current year	$83,800

Calculations:

Income Statement
Consulting revenue		$89,500
Expenses:
Wages expense	$5,100
Depreciation expense-Buildings	$10,000
Insurance expense	$3,100
Total expenses		$18,200
Net income		$71,300