In: Accounting
The adjusted trial balance for Chiara Company as of December 31
follows.
Debit | Credit | |||||
Cash | $ | 265,100 | ||||
Accounts receivable | 51,000 | |||||
Interest receivable | 23,200 | |||||
Notes receivable (due in 90 days) | 173,000 | |||||
Office supplies | 15,500 | |||||
Automobiles | 173,000 | |||||
Accumulated depreciation—Automobiles | $ | 55,000 | ||||
Equipment | 140,000 | |||||
Accumulated depreciation—Equipment | 28,000 | |||||
Land | 84,000 | |||||
Accounts payable | 97,000 | |||||
Interest payable | 50,000 | |||||
Salaries payable | 22,000 | |||||
Unearned fees | 34,000 | |||||
Long-term notes payable | 154,000 | |||||
Common stock | 35,580 | |||||
Retained earnings | 320,220 | |||||
Dividends | 53,000 | |||||
Fees earned | 584,000 | |||||
Interest earned | 32,000 | |||||
Depreciation expense—Automobiles | 27,500 | |||||
Depreciation expense—Equipment | 18,500 | |||||
Salaries expense | 182,000 | |||||
Wages expense | 45,000 | |||||
Interest expense | 34,800 | |||||
Office supplies expense | 35,800 | |||||
Advertising expense | 60,000 | |||||
Repairs expense—Automobiles | 30,400 | |||||
Totals | $ | 1,411,800 | $ | 1,411,800 | ||
Required:
Use the information in the adjusted trial balance to prepare (a)
the income statement for the year ended December 31; (b) the
statement of retained earnings for the year ended December 31
[Note: Retained Earnings at December 31 of the prior
year was $320,220]; and (c) the balance sheet as of December
31.
Ans. 1 | Chiara Company | |||||
Income Statement | ||||||
For the Year Ended December 31 | ||||||
Particulars | Amount | Amount | ||||
Revenues: | ||||||
Fees earned | $584,000 | |||||
Interest earned | $32,000 | |||||
Total revenue (a) | $616,000 | |||||
Less: Expenses: | ||||||
Depreciation expense - Automobiles | $27,500 | |||||
Depreciation expense - Equipment | $18,500 | |||||
Salaries expense | $182,000 | |||||
Wages expense | $45,000 | |||||
Interest expense | $34,800 | |||||
Office supplies expense | $35,800 | |||||
Advertising expense | $60,000 | |||||
Repairs expense - Automobiles | $30,400 | |||||
Total expenses (b) | $434,000 | |||||
Net Income (a - b) | $182,000 | |||||
*Net income is the excess of total revenues on expenses. | ||||||
Ans. 2 | Chiara Company | |||||
Retained Earnings Statement | ||||||
For the Year Ended December 31 | ||||||
Particulars |
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Beginning balance of Retained earnings | $320,220 | |||||
Add: Net income | $182,000 | |||||
Less: Dividends | -$53,000 | |||||
Ending balance of Retained earnings | $449,220 | |||||
*Net Income is added and dividends are subtracted from beginning balance of retained earnings. | ||||||
Ans. 3 | Chiara Company | |||||
Balance Sheet | ||||||
For the Year Ended December 31 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $265,100 | |||||
Accounts receivables | $51,000 | |||||
Interest receivable | $23,200 | |||||
Notes receivable | $173,000 | |||||
Office supplies | $15,500 | |||||
Total current assets | $527,800 | |||||
Non current assets : | ||||||
Automobiles | $173,000 | |||||
Less: Accumulated depreciation | -$55,000 | $118,000 | ||||
Equipment | $140,000 | |||||
Less: Accumulated depreciation | -$28,000 | $112,000 | ||||
Land | $84,000 | |||||
Total non current assets | $314,000 | |||||
Total Assets | $841,800 | |||||
Liabilities and Stockholder's Equity | ||||||
Current Liabilities: | ||||||
Accounts payable | $97,000 | |||||
Interest payable | $50,000 | |||||
Salaries payable | $22,000 | |||||
Unearned fees | $34,000 | |||||
Total current liabilities | $203,000 | |||||
Non current liabilities : | ||||||
Long term notes payable | $154,000 | |||||
Total Liabilities | $357,000 | |||||
Stockholder's equity: |