Question

5. Prepare an income Statement and a Ralance sheet from a Trial Balance. (20 points Using the information from the Year 2 ending trial balance of Barger Comp. from the Year 2 ending trial balance of Barger Company, prepare an income statement and balance sheet in proper form em proper form. (Hint: Prepare the income statement first, then separately calculate ending retained inlip earnings, and lastly prepare the balance sheet) Accounts Receivable Beginning Retained Earnings Cash Common Stock Dividends Land Prepaid Rent Rent Expense Salaries Expense Salaries Payable Service Revenue Unearned Revenue Debit Credit 14,000 38,000 16,000 15,000 3,000 30,000 10,000 2.000 5,000 5,000 12,000 10,000 80,000 80.000 Page 9 of 10

Answer 1

Barger Company
Income Statement
		$
Revenues:
Service revenue		12,000.00
Less Expenses:
Salaries expense	5,000.00
Rent Expenses	2,000.00
Total Expenses		7,000.00
Net Income		5,000.00

Barger Company
BALANCE SHEET
	$	$
Assets
Current Assets
Cash	16,000.00
Accounts Receivable	14,000.00
Prepaid Rent	10,000.00
Total current assets		40,000.00
Property, plant and equipment
Land		30,000.00
Total assets		70,000.00
Liabilities and stockholders’ equity
Current liabilities
Salaries Payable	5,000.00
Unearned Revenue	10,000.00
Total Current liabilities		15,000.00
Stockholders’ equity
Common stock	15,000.00
Retained earnings	40,000.00
Total stockholders’ equity		55,000.00
Total liabilities and stockholders’ equity		70,000.00

Explanation
Barger Company
Retained Earnings Statement
	$
Beginning Retained earnings	38,000.00
Add: Net income	5,000.00
	43,000.00
Less: Dividends	(3,000.00)
Ending Retained earnings	40,000.00