Question

These financial statement items are for Ivanhoe Company at year-end, July 31, 2022.

Salaries and wages payable		$ 3,900
Salaries and wages expense		59,300
Supplies expense		16,900
Equipment		16,580
Accounts payable		3,500
Service revenue		67,900
Rent revenue		9,800
Notes payable (due in 2025)		3,000
Common stock		16,000
Cash		35,620
Accounts receivable		11,000
Accumulated depreciation—equipment		7,900
Dividends		4,000
Depreciation expense		4,000
Retained earnings (beginning of the year)		35,400

1. Prepare an income statement for the year. Ivanhoe Company did not issue any new stock during the year. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2. Prepare a retained earnings statement for the year. Ivanhoe Company did not issue any new stock during the year.

3. Prepare a classified balance sheet at July 31. (List Current Assets in order of liquidity.)

Answer 1

Answer -

1. Income Statement:

Ivanhoe Company
Income Statement
For the Year Ended July 31, 2022
Revenues:
Service revenue	$67,900
Rent revenue	$9,800
Total revenue		$77,700
Expenses:
Salaries and wages expense	$59,300
Supplies expense	$16,900
Depreciation expense	$4,000
Total expenses		$80,200
Net loss		($2,500)

Calculation:

Total revenue = Service revenue + Rent revenue

= $67900 + $9800

= $77700

Total expenses = Salaries and wages expense + Supplies expense + Depreciation expense

= $59300 + $16900 + $4000

= $80200

Net loss = Total revenue - Total expenses

= $77700 - $80200

= ($2500)

2. Retained earnings statement:

Ivanhoe Company
Retained Earnings Statement
For the Year Ended July 31, 2022
Retained earnings, beginning of the year		$35,400
Less: Net loss	$2,500
Less: Dividends	$4,000
		$6,500
Retained earnings, end of the year		$28,900

Calculation:

Retained earnings, end of the year = Retained earnings, beginning of the year - (Net loss + Dividends)

= $35400 - ($2500 + $4000)

= $35400 - $6500

= $28900

3. Balance Sheet:

Ivanhoe Company
Balance Sheet
At July 31, 2022
Assets
Current assets:
Cash	$35,620
Accounts receivable	$11,000
Total current assets		$46,620
Property, plant and equipment:
Equipment	$16,580
Less: Accumulated depreciation-Equipment	$7,900	$8,680
Total assets		$55,300
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$3,500
Salaries and wages payable	$3,900
Total current liabilities		$7,400
Long-term liabilities:
Notes payable (due in 2025)		$3,000
Total liabilities		$10,400
Stockholders' equity:
Common stock	$16,000
Retained earnings	$28,900
Total stockholders' equity		$44,900
Total liabilities and stockholders' equity		$55,300

Calculation:

Total current assets = Cash + Accounts receivable

= $35620 + $11000

= $46620

Equipment, net = Equipment - Accumulated depreciation-Equipment

= $16580 - $7900

= $8680

Total assets = Total current assets + Property, plant and equipment

= $46620 + $8680

= $55300

Total current liabilities = Accounts payable + Salaries and wages payable

= $3500 + $3900

= $7400

Total liabilities = Total current liabilities + Notes payable (Long-term liabilities)

= $7400 + $3000

= $10400

Total stockholders’ equity = Common stock + Retained earnings

= $16000 + $28900

= $44900

Total liabilities and stockholders’ equity = Total liabilities + Total stockholders’ equity

= $10400 + $44900

= $55300