Q11E - Intermediate Accounting (Kieso)

Question

The adjusted trial balance of Anderson Cooper Co. as of December 31, 2017, contains the following.

ANDERSON COOPER CO. ADJUSTED TRIAL BALANCE DECEMBER 31, 2017
	Dr.	Cr
Cash	\(19,472
Accounts Receivable	6,920
Prepaid Rent	2,280
Equipment	18,050
Accumulated Depreciation—Equipment		\) 4,895
Notes Payable		5,700
Accounts Payable		5,472
Common Stock		20,000
Retained Earnings		11,310
Dividend	3,000
Service Revenue		11,590
Salaries and Wages Expense	6,840
Rent Expense	2,260
Depreciation Expense	145
Interest Expense	83
Interest Payable		83
	\(59,050	\)59,050

 

Instructions 

(a) Prepare an income statement. 

(b) Prepare a statement of retained earnings. 

(c) Prepare a classified balance sheet.

Step-by-Step Solution

Answer

a) Net Income is $2,262.

b) Retained earnings on December 31 are$10,572.

c) Balance sheet total is $41,827.

Step 1: Meaning of Income Statement

The income statement, sometimes referred to as a profit and loss statement, is a document created by a company's management that lists the company's earnings, costs, and net gain or loss for a given period.

Step 2: (a) Preparing an Income Statement

ANDERSON COOPER CO. Income Statement DECEMBER 31, 2017
Revenues
Service revenue	$11,590
Expenses
Salaries and wages expense                                 $6,840
Rent expense2,260
Depreciation expense    145
Interest expense83	9,328
Net Income	$2,262

 

Step 3: (b) Preparing a statement of retained earnings

ANDERSON COOPER CO. Retained Earnings Statement DECEMBER 31, 2017
Retained earnings on January 1	$11,310
Add: Net Income	2,262
	13,572
Less: Dividends	3,000
Retained earnings, December 31	$10,572

 

Step 4: (c) Preparing a classified balancesheet

ANDERSON COOPER CO. Balance Sheet DECEMBER 31, 2017
Assets
Current assets
Cash	$19,472
Accounts receivables	6,920
Prepaid rent	2,280
Total current assets	28,672
Property, plant, and equipment
Equipment                                                                $18,050
Accumulated depreciation-equipment                     (4,895)	13,155
Total assets	$41,827
Liabilities and stockholders’ Equity
Current liabilities
Account payable	$5,472
Interest payable	83
Total current liabilities	5,555
Non-current liabilities
Notes payable	5,700
Total non-current liabilities	5,700
Total liabilities	$11,255
Stockholders’ equity
Common stock                                                             $20,000
Retained earnings                                                          10,572	30,572
Total liabilities and stockholders’ equity	$41,827