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In: Accounting

The adjusted trial balance for Chiara Company as of December 31 follows. Debit Credit Cash $...

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.

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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 Bitmap Bitmap
Amount
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: