Question

Business Accounting

Question 1 (10 points) These items are taken from the financial statements of Summit Ltd. at December 31, 2021: Accounts payable $21,050 Accounts receivable 20,780 Accumulated depreciation—buildings 50,600 Accumulated depreciation-equipment 21,470 Buildings 133,800 Cash 24,040 Common shares 140,000 Equipment 66,100 Income tax expense 5,200 Interest expense 4,550 Interest payable 2,100 Land 194,000 Long-term investments 28,970 Mortgage payable 104,000 Operating expenses 158,680 Prepaid insurance 1,420 Retained earnings, January 1 116,520 Service revenue 183,040 Supplies 1,240 Calculate the following items: Net Income, Ending Balance of Retained Earnings, Shareholders' Equity, Total Assets (Please follow this order for your answer and put a comma after thousands e.g., 100,000. Please show and upload your calculations in the Homework Folder of the Assignment Tab)

Answer 1

Solution: 1
	INCOME STATEMENT
	Revenue :
	Sales Revenue		$           183,040
	Less: Expenses
	Operating Expenses	$            158,680
	Interest Expenses	$                 4,550
	Income tax Expenses	$                 5,200
	Total Expenses		$           168,430
	Net Income		$             14,610
Solution: 2
	Statement of Retained Earnings
		AMOUNT
	Beginning Balance	$            116,520
	Add: Net Income of the year	$               14,610
	Less: Dividends	$                        -
	Ending balance of Retained Earnings	$            131,130
Solution: 3
	BALANCE SHEET
	ASSETS	AMOUNT	AMOUNT
	CURRENT ASSETS:
	Cash	$               24,040
	Account Receivable	$               20,780
	Prepaid insurance	$                 1,420
	Supplies	$                 1,240
			$             47,480
	Long Term Investment		$             28,970
	FIXED ASSETS:
	Land		$           194,000
	Building	$            133,800
	Less: Accumulation Depreciation - Building	$               50,600	$             83,200
	Equipment	$               66,100
	Less: Accumulation Depreciation - Equipment	$               21,470	$             44,630
	TOTAL OF ASSETS		$           398,280
	LIABILITIES & SHAREHOLDER'S EQUITY	AMOUNT	AMOUNT
	CURRENT LIABILITIES:
	Account Payable	$               21,050
	Interest Payable	$                 2,100
			$             23,150
	LONG TERM LIABILITIES
	Mortgage Payable		$           104,000
	Shareholder's Equity
	Common Shares	$            140,000
	Retained Earnings	$            131,130
	Total Shareholder's Equity		$           271,130
	TOTAL OF LIABILITES & SAHREHOLDER'S EQUITY		$           398,280