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Prepare a Balance Sheet and Income Statement
My accountant has given me the following list of account balances for Moes Tires as of December 31, 2003:
Acccounts Payable 7,500 Accounts Receivable 10,000 Building 4,000 Cash 2,500 Common Stock 3,000 Cost of Goods Sold 5,000 Depreciation 1,000 Furniture and Fixtures 1,500 Inventory 2,000 Long Term Debt 8,000 Payoll Expenses 2,000 Sales 10,000 Taxes 400 Create a Balance Sheet and Income Statement. Determine the Retained earnings as of 12/31/03. Retained Earnings for the prior period was $1,000, determine if divedends were paid and if so, for how much? |
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A couple questions for clarification:
*Inventory: Is this the cost for a physical inventory being performed, or is this the total dollar amount of in-stock inventory? *Common Stock: For dividends paid out to employees, or common stock earnings? Basically what you need to do is assign each item to one of two catagories: Money In and Money Out. Add each category. Subtract Money Out from Money In to determine the total Profit or Loss for the period. Also, what is the formula for determining the dividends paid out? |
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Income Statement
Sales $10,000 Less COGS (5,000) Equals Gross profit $5,000 Less payroll expenses (2,000) Less depreciation (1,000) Equals income before taxes $2,000 Less tax (400) Equals Net income $1,600 Layout of Balance sheet Cash A/R Furniture and fixtures Inventory Total current assets Building Accumulated depreciation Total assets Accounts payable Long term debt Total liabilities Common stock Retained earnings Plug in your numbers to get the balance sheet total. To find change in retained earnings: Net income minus dividends paid Then add answer to the prior's years retained earnings to get retained earnings. To find dividends paid: Net Income - Change in Retained earnings |
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Income Statement
Sales $10,000 Less COGS (5,000) Equals Gross profit $5,000 Less payroll expenses (2,000) Less depreciation (1,000) Equals income before taxes $2,000 Less tax (400) Equals Net income $1,600 Layout of Balance sheet Cash Accounts Recievable Furniture and fixtures Inventory Total current assets Building Accumulated depreciation Total assets Accounts payable Long term debt Total liabilities Common stock Retained earnings |
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