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

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.)

Solutions

Expert Solution

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

ekkarill92 answered 2 years ago
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