Question

1. Net Income

2.Total Assets

3. Retained Earnings (the firm is in its first year of operations so the beginning balance of this account is zero; you need to caculate what would be reported at the end if the year).

5 Kokomo Company reports the following account balances on December 31, 2017, the end of 6 its first year of operations after adjusting entries have been recorded. 7 8 Accounts Payable $10,000 Insurance Expense $3,000 9 Accounts Receivable 30,000 Prepaid Insurance 5,000 187,000 Sales Revenue 80,000 11 Common Stock 200,000 Salaries Expense 40,000 12 Dividends 15,000 13 14 Calculate the following dollar amounts that would be reported on the company's financial 15 statements on December 31, 2017 (show work and write answer in box). 10 Cash 10

Answer 1

1) calculation fo net income:

Particulars	Amount
Sales revenue	$80,000
Less: expenses
Salaries expenses	($40,000)
Insurance expenses	($3,000)
Net income	$37,000

2) Total assets:

Particulars	Amount
Account receivable	$30,000
Cash	$187,000
Prepaid insurance	$5,000
Total Assets($30,000+$187,000+$5,000)	$222,000

3) Retained earnings statement:

Particulars	Amount
Opening retained earnings	0
Add: Net income	$37,000
Less: Dividend paid	($15,000)
Closing retained earnings (0+$37,000-$15,000)	$22,000