Question

You are the president of High Power Corporation. At the end of the first year of operations (December 31, 2017), the following financial data for the company are available:
  

Cash	$	18,250
Accounts Receivable		14,000
Supplies		8,400
Equipment		132,000
Accounts Payable		76,500
Notes Payable		1,860
Sales Revenue		132,000
Operating Expenses		79,200
Other Expenses		12,900
Contributed Capital		55,500
Dividends		1,110

Required:
1. Prepare an income statement for the year ended December 31, 2017.

2. Prepare a statement of retained earnings for the year ended December 31, 2017.

3. Prepare a balance sheet at December 31, 2017.

Answer 1

1.Income Statement for the year ended 31st Dec 2017

Amount in $

Sales Revenue 132000

Less Operating Expenses 79200

Gross Income    52800

Less Other Expenses 12900

Net Income 39900

2.Statement of Retained Earnings for the year ended December 31st 2017

  Retained Earnings at the beginning $ 0 (being the first year)

Add:Net Income $ 39900

Less:Dividend Paid $ 1110

Retained Earnings at the end $ 38790

3. Balance Sheet at December 31st 2017

Assets		Amount in $
Current Assets
Cash		18250
Accounts receivable	14000
Supplies		8400
Total Current Assets			40650
Non Current Assets
Equipment		132000
Total Assets		172650
Liabilities and Equity	Amount in $
Current Liabilities
Accounts payable	76500
Notes Payable	1860
Total Current Liabilities			78360
Equity and retained earnings
Contributed capital	55500
Retained Earnings	38790
			94290
Total Liabilities and Equity		172650