Question

The assets and liabilities of Julius corp as of December 31,2019, and revenues and expenses for the year ended on that date follow:

Land $98,000	Property tax expense $5,000
Note payable (due 2025) 95,000	Accounts receivable 25,000
Accounts payable 21,000	Advertising expense 10,000
Rent expense 3,000	Building 140,000
Cash 10,000	Salary expense 85,000
Common shares 75,000	Salary payable 12,000
Furniture 20,000	Service revenue 200,000
Interest expense 4,000	Supplies 3,000

Beginning retained earnings were $50,000, and dividends totalled $50,000 for the year.

Required

1. Prepare in good form a statement of earnings (income statement) of Julius corp. for the year ended December 31, 2019.

1. Prepare in good form a statement of retained earnings of Julius Corp's. for the year ended December 31, 2019.

1. Calculate the following for Julius Corp's at December 31, 2019 -show your work-:

Current Assets :____________________________________________________________

Total Assets:________________________________________________________________

Total Liabilities::_____________________________________________________________

Total Shareholders’ equity:___________________________________________________

1. Analyze Julius Corp's. by answering these questions

1. Was Julius Corp's. profitable during 2019? By how much?______________________________________________________________

______________________________________________________________________

1. Who owns more of Julius Corp’s assets, the creditors or the shareholders? Why?________________________________________________________________

_____________________________________________________________________

Answer 1

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Julius corp
Income Statement	Amount $
Service Revenue	200,000.00
Total Revenue	200,000.00
Less: expenses
Salaries	85,000.00
Rent expense	3,000.00
Property tax expense	5,000.00
Advertising expense	10,000.00
Total Operating expenses	103,000.00
Earnings before interest and taxes	97,000.00
Less: Interest expense	(4,000.00)
Net Income	93,000.00
Statement of Retained Earnings	Amount $
Opening Balance	50,000.00
Net Income	93,000.00
Dividends	(50,000.00)
Closing Balance	93,000.00
Balance Sheet
Assets	Amount $	Amount $
Cash	10,000.00
Accounts Receivable	25,000.00
Supplies	3,000.00
Total Current Assets		38,000.00
Investment in Land
Property, plant & equipment, net
Land	98,000.00
Furniture	20,000.00
Building	140,000.00
Property, plant & equipment, net		258,000.00
Total Assets		296,000.00
Liabilities & Stockholders' Equity
Liabilities	Amount $	Amount $
Accounts Payable	21,000.00
Salaries Payable	12,000.00
Current Liabilities		33,000.00
Non Current Liabilities
Notes Payable	95,000.00
Non Current Liabilities		95,000.00
Stockholders' Equity
Common Stock	75,000.00
Retained Earnings	93,000.00
Total Stockholders' Equity		168,000.00
Total Liabilities & Stockholders' Equity		296,000.00

Was Julius Corp's. profitable during 2019? By how much?

Yes Julius Corp. was profitable during 2019 by $ 93,000.

Who owns more of Julius Corp’s assets, the creditors or the shareholders? Why?

Shareholders owns more of Julius Corp’s assets, because they are $ 168,000 out of $ 296,000.