Question

Following are the accounts and balances (in random-order from the adjusted trial balance of Stark Company. Notes payable Prepaid insurance Interest expense Accounts payable Wages payable Cash $ 11,000 2,500 See 1,500 400 10,000 7,5ee 1,800 10,eee 14,800 2e, eee Accumulated depreciation-Buildings Accounts receivable Utilities expense Interest payable Unearned revenue Supplies expense Buildings Dividends Depreciation expense-Buildings Supplies $ 15,000 4,000 1,300 100 Bee 200 40,ce 3,000 2,80 800 Wages expense Insurance expense Common stock Retained earnings Services revenue Prepare the (1) Income statement and ater of retained earnings for the year ended December 31 and (3) balance sheet at December 31. The Retained Earnings account balance was $14,800 on December 31 of the prior year.

Answer 1

STARK COMPANY Income Statement For Year Ended December 31 Revenue: Service Revenue $20,000 Expenses: Interest expense $500 Wages expense $7,500 Insurance expense $1,800 Utilities expense $1,300 Supplies expense $200 Depreciation expense $2,000 Total expenses $13,300 Net Income $6,700

STARK COMPANY Statement of Retained Earnings For Year Ended December 31 Retained earnings, Dec 31 prior year end Less: Dividends $14,800 $3,000 $11,800 $6,700 $18,500 Add: Net Income Retained earnings, Dec 31 Current year end

STARK COMPANY Balance Sheet December 31 Assets Current Assets Prepaid Insurance $2,500 Cash $10,000 Accounts Receivable $4,000 Supplies $800 $17,300 Non-Current Assets Building $40,000 Less: Accumulated Depreciation ($15,000) $25,000 Total Assets $42,300 Liabilities Notes Payable $11,000 Accounts Payable $1,500 Wages Payable $400 Interest Payable $100 Unearned Revenue $800 Total Liabilities $13,800 Equity Common stock $10,000 Retained Earnings $18,500 Total equity $28,500 Total liabilities and equity $42,300

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