Question

Practice Questions: Financial Statement Preparation Prepare the three financial statements (in good form) for XYZ Company Accounts Receivable Accounts Payable Salanes Expense Notes Payable (1year Dividends $20,000 18,000 50,000 80 000 4000 $26,000 .000 10,000 Retaincd Earnines,A15,000 ALTEA120.000 Cash tlitics Ex Capitail Stock fees Eatned quipment Income Tax Expense 50.000 Rent hx pes35,000 15,000 Income Statement Salaries expense $50,000 NET INCOME Statement of Retained Earnings $15,000 BEGINNING RE, 1-1 ADD DEDUCT ENDING RE, 12-31 Balance Sheet ASSETS LIABILITIES&STK EQUITY CURRENT LONG-TERM STK.EQUITY CURRENT Cash $26,000 TOTAL LIABILITIES & STK. EQUITY TOTAL ASSETS

Answer 1

First I will explain which items will be shown in income statement retained earnings and balance sheet All nominal accounts will be in income statement and overall assets and liabilities are shown in balance sheet

Income statement

Revenue

Fee earned 120000

Expense

Salary 50000

Income tax expense 5000

Utility expense 3000

Rent expense 40000

NET INCOME 22000

Statement of retained earnings

Beginning 15000

Add

Net income 22000

Less

Dividend 4000

Ending 33000

BALANCE SHEET

Assets

Current

Cash 26000

Accounts receivable 20000

Long term

Equipment 60000

Land 45000

TOTAL ASSETS 151000

LIABILITIES AND EQITIES

current.

Accounts payable 18000

Long term

Noted payable 80000.

STK.EQUITY

capital stock 10000

Retained earnings 33000

TOTAL LIABILITIES AND STK EQUITY 151000