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Answer |
1. Prepare an income statement (What is the Net Income).
2. Prepare a balance sheet (What is Total Assets and what is Total liabilities plus owners’ equity) Note: The ending retained earnings balance is equal to the beginning balance (which is assumed to be $0) plus the amount of net income less the amount of dividends.
Debit Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,000
Accounts Receivable . . . . . . . . . . . . . . . . . . . 126,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . .216,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . …200,000
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 150,000
Loan Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........270,000
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....250,000
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000
Sales Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 370,000
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . 244,000
Utilities Expense . . . . . . . . . . . . . . . . . . . . . . .. . 54,000
Rental Expense . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . 1,040,000……$1,040,000
Preparation of Income Statement (What are the Net Income and Earning per Share?) and Retained Earnings Statement (What is the Retained earnings on June 30, 2006?). Prepare an income statement and a statement of retained earnings for Big Sky Corporation for the year ended June 30, 2006, based on the following information:
Capital stock (1,500 shares @ $100) . . . . . . . . . . . . . . . . . . . . . . . $150,000
Retained earnings, July 1, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,800
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500
Ski rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,900
Expenses:
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . 38,600
Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . 7,500
Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . 7,700
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 64,300
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