Question

These items are taken from the financial statements of Ivanhoe Company for 2022.

Retained earnings (beginning of year)		$33,800
Utilities expense		2,160
Equipment		66,300
Accounts payable		20,560
Cash		13,750
Salaries and wages payable		6,640
Common stock		21,800
Dividends		12,000
Supplies		3,600
Debt investment (long-term)		5,600
Trademarks		1,900
Service revenue		71,700
Prepaid insurance		7,140
Maintenance and repairs expense		1,640
Depreciation expense		3,270
Accounts receivable		15,160
Insurance expense		2,530
Salaries and wages expense		40,700
Accumulated depreciation—equipment		21,250

1. Prepare an income statement for the year ended December 31, 2022. (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 ended December 31, 2022. (List items that increase retained earnings first.)

3. Prepare a classified balance sheet as of December 31, 2022. (List Current Assets in order of liquidity.)

Answer 1

1.

Income Statement
Revenues:
Service revenue	71,700
Total revenue	71,700
Expenses:
Utilities expense	-2,160
Insurance expense	-2,530
Salaries and wages expense	-40,700
Maintenance and repairs expense	-1,640
Depreciation expense	-3,270
Total expenses	-50,300
Net Income	$21,400

2.

Statement of Retained Earnings
Beginning retained earnings	33,800
Net Income	21,400
	$55,200
Dividends	-12,000
Retained earnings, Ending	$43,200

3.

Balance Sheet
Assets	Amount	Liabilities + Stockholders Equity	Amount
Current Assets:		Current Liabilities:
Cash	13,750	Accounts payable	20,560
Accounts receivable	15,160	Salaries and wages payable	6,640
Supplies	3,600	Total Current Liabilities	27,200
Trademarks	1,900	Stockholders Equity:
Prepaid insurance	7,140	Common stock	21,800
Total Current Assets	41,550	Retained earnings	43,200
Debt investment (long-term)	5,600	Total stockholders equity	65,000
Plant,Assets :
Equipment                                              66,300
Accumulated depreciation- equipment -21,250	45,050
Total Assets	$92,200	Total Liabilities & Stockholders Equity	$92,200

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