Question

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.

Answer 1

ekkarill92

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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: