Answer:
Income Statement for the year ended December 31, Year 1.
Sales Revenue 100,000
Less Expenses :
Fuel Expense (15,000)
Rent Expense (20,000)
Advertising Expense (5,000)
Salaries and Wages Expense (20,000) (60,000)
Net Income/ (loss) 40,000
Statement of retained earnings for the year ended December 31, Year 1
Retained Earnings Opening Balance 0
Add Profit for the year 40,000
Less Dividends for the year (10,000)
Retained Earnings Closing Balance 30,000
Balance sheet for the year ended December 31, Year 1.
Non - Current Assets
Equipment 50,000
Total Non - Current Assets 50,000
Current Assets
Accounts Receivable 40,000
Cash 10,000
Total Current Assets 50,000
Total Assets 100,000
Equity and Liabilities
Equity
Common Stock 20,000
Retained Earnings 30,000
Total Equity 50,000
Non - Current Liabilities
Notes Payable 20,000
Total Non - Current Liabilities 20,000
Current Liabilities
Accounts Payable 30,000
Total Current Liabilities 30,000
Total Equity and Liabilities 100,000
Explanation:
Income Statement.
Income / loss = Sales less Expenses
Retained Earnings
Retained Earnings Closing Balance = Opening Retained Earnings Balance plus Profit / Income for the year less dividends declared.
Balance Sheet.
Assets = Equity + Liabilities
