Question

NC Use the information below for the MAX& ARIEL Company to prepare the company's financial statements for the year ended 12-31-18. Use good form! PLEASE COMPLETE THE HEADINGs: S4,000 500 4,500 1,500 6,000 1,000 1,500 10,500 3,500 45,000 (2,000) S3,500 34,000 Marketable Securities Land Advertising expense Cash Accounts payable Machinery Service Revenue Prepaid insurance Common (capital) Stock Salaries expense Accumulated depreciation Treasury Stock Unearned revenue Insurance expense Retained earnings 1-1-18 Supplies on hand Dividends Taxes payable Rent expense Accounts Receivable Depreciation expense Mortgage payable Allowance for Bad Debts 400 29,000 9,500 120,000 20,000 3,000 123,000 600 (10,000) INCOME STATEMENT

Answer 1

1.

Max & Ariel Company Income Statement For the year ended December 31, 2018
	$	$
Service Revenue		20,000
Less: Operating Expenses
Salaries Expense	600
Advertising Expense	400
Insurance Expense	500
Rent Expense	1,500
Depreciation Expense	3,500
Total Operating Expenses		6,500
Net Operating Income		13,500

2.

Max & Ariel Company Statement of Retained Earnings For the year ended December 31, 2018
Retained Earnings, January 1	$ 4,500
Add: Net Income	13,500
Less: Dividends	(6,000)
Retained Earnings, December 31	$ 12,000

3.

Max & Ariel Company Balance Sheet December 31, 2018
Assets	$	$	Liabilities and Stockholders' Equity	$	$
Cash	29,000		Accounts Payable	9,500
Accounts Receivable, net	8,500		Taxes Payable	1,000
Supplies on hand	1,500		Unearned Revenue	4,000
Prepaid Insurance	3,000		Total Current Liabilities		14,500
Total Current Assets		42,000	Long-term Liabilities
Investments			Mortgage Payable		45,000
Marketable Securities		3,500	Total Liabilities		59,500
Machinery, net	110,000		Stockholders' Equity
Land	34,000	144,000	Common Stock	123,000
			Retained Earnings	12,000
			Treasury Stock	(5,000)
			Total Stockholders' Equity		130,000
Total Assets		$ 189,500	Total Liabilities and Stockholders' Equity		$ 189,500

Current Ratio = Total Current Assets / Total Current Liabilities = $ 42,000 / $ 14,500 = 2.90 : 1