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In: Accounting

The following is the adjusted trial balance of Sierra Company. The Retained Earnings account balance was $5,500 on December 31 of theprior year.

The following is the adjusted trial balance of Sierra Company. The Retained Earnings account balance was $5,500 on December 31 of theprior year.

Account TitleDebitCredit
Cash$5,000



Prepaid insurance
500



Notes receivable (due in 5 years)
4,000



Buildings
20,000



Accumulated depreciation–Buildings


$12,000
Accounts payable



2,500
Notes payable (due in 3 years)



3,000
Common stock



5,000
Retained earnings



5,500
Dividends
1,000



Consulting revenue



9,500
Wages expense
3,500



Depreciation expense–Buildings
2,000



Insurance expense
1,500



Totals$37,500
$37,500

Required
(1) Prepare an income statement for the year ended December 31.
(2) Prepare a statement of retained earnings for the year ended December 31.

Solutions

Expert Solution

1.income statement:

consulting revenue 9,500
Total revenue 9,500
wages expense 3,500
depreciation expense- buildings 2,000
insurance expense 1,500
total expense (7,000)
net income 2,500

2.statement of retained earnings:

retained earnings december 31 prior year end 5,500
add; net income 2,500
less:dividends (1,000)
retained earnings december 31 current year 7,000

ekkarill92 answered 2 years ago
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