Question

Preparing Financial Statements and Closing Procedures
Solomon Corporation's adjusted trial balance for the year ending December 31, 2013, is:

Solomon Corporation Adjusted Trial Balance December 31, 2013
	Debit	Credit
Cash	$4,400
Accounts Receivable	7,150
Equipment	85,800
Accumulated Depreciation		$15,400
Notes Payable		11,000
Common Stock		47,300
Retained Earnings		13,860
Service Fees Earned		78,100
Rent Expense	19,800
Salaries Expense	40,810
Depreciation Expense	7,700
Totals	$165,660	$165,660

Prepare its income statement and statement of stockholders' equity for the current year, and its balance sheet for the current year-end. Cash dividends were $8,800 and there were no stock issuances or repurchases.

Do not use negative signs with answers, unless otherwise noted.

Answer 1

Ans. 1	SOLOMON CORPORATION
	Income Statement
	For the Year Ended December 31 2013
	Particulars	Amount	Amount
	Revenues:
	Service fees earned	$78,100
	Total revenue (a)		$78,100
	Less: Expenses:
	Rent expense	$19,800
	Salaries expense	$40,810
	Depreciation expense	$7,700
	Total expenses (b)		$68,310
	Net Income (a - b)		$9,790
	*Net income is the excess amount of total revenues over the total amount of expenses.
Ans. 2	The balance of dividends are given it means no dividends are paid during the year. So the amount will be added back
	in the beginning balance of retained earnings.
	Beginning balance of retained earnings ($13,860 + $8,800)   =   $22,660
	SOLOMON CORPORATION
	Statement of Stockholder's Equity
	For the Year Ended December 31, 2013
		Common stock	Retained earnings	Total stockholder's equity
	Beginning balance (adjusted)	$47,300	$22,660	$69,960
	Issuance of common stock	$0		$0
	Net income		$9,790	$9,790
	Dividends paid		-$8,800	-$8,800
	Ending balance	$47,300	$23,650	$70,950
	*Total stockholder's equity = Common stock + Retained earnings
Ans. 3	SOLOMON CORPORATION
	Balance Sheet
	For the Year Ended December 31 2013
	Assets:
	Cash	$4,400
	Accounts receivables	$7,150
	Total current assets		$11,550
	Equipment	$85,800
	Less: Accumulated depreciation	-$15,400	$70,400
	Total Assets		$81,950
	Liabilities and Stockholder's Equity:
	Current Liabilities:
	Notes payable	$11,000
	Total Liabilities		$11,000
	Stockholder's equity:
	Common stock	$47,300
	Retained earnings	$23,650
	Total Stockholder's Equity		$70,950
	Total Liabilities and Stockholder's Equity		$81,950
	*No any long term liability is given, so the total liabilities are equal to current liabilities.