Question

As of December 31, 2017, Armani Company’s financial records show the following items and amounts.

As of December 31, 2017, Armani Company's financial records show the following items and amounts Cash Accounts receivable Supplies Equipment Accounts payable Common stock Retained earnings, Dec. 31, 2016 Retained earnings, Dec. 31, 2017 Dividends Consulting revenue Rental revenue Salaries expense Rent expense Selling and administrative expenses $11,200 10,200 7,200 6,200 9,100 18,500 5,200 7,200 14,200 35,400 24,400 21,200 13,200 9,200 Required: Prepare a year-end balance sheet for Armani Company ARMANI COMPANY Balance Sheet December 31, 2017 Assets Liabilities Total liabilities Equity Total equity 0 Total liabilities and equity Total assets 0

Answer 1

Step 1: Prepare income statement as follows:
Particulars	Amount
Consulting revenue	$35,400
Rental revenue	$24,400
Total revenues (a)	$59,800
Less: Operating expenses
Salaries expense	$21,200
Rent expense	$13,200
Selling and administrative expense	$9,200
Total operating expenses (b)	$43,600
Net income (a) − (b)	$16,200
Step 2: Prepare statement of shareholders' equity
Particulars	Amount
Retained earnings, Jan. 1, 2017	$5,200
Add: Net income for the year	$16,200
	$21,400
Less: Dividends paid	$14,200
Retained earnings, Dec. 31, 2017	$7,200
Step 3: Prepare balance sheet as follows:
A Inc.
Balance Sheet
December 31, 2017
Assets
Cash	$11,200
Accounts receivable	$10,200
Supplies	$7,200
Equipment	$6,200
Total assets	$34,800
Liabilities
Accounts payable	$9,100
Total liabilities	$9,100
Stockholders' Equity
Commons stock	$18,500
Retained earnings - ending balance	$7,200
Total equity	$25,700
Total liabilities and stockholders' equity	$34,800