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    Mar 20, 2012, 10:09 PM
    Calculating statement of retained earnings
    THE income statement for the year ended December 31st2008 and the balance sheet for December 31,2007 and 2008, for Technicia,Inc. Are given. Develop Technicia's statement of retained earnings for the year ended December 31, 2008. Briefly discuss the form and informational content of each of these statements.
    Income statement
    Technician Inc.
    For the year ended December 31,2008
    Sales revenue $600,000
    Less:cost of goods sold 460,000
    Gross margin $140,000
    Less: operating expenses
    General and administrative expense $30,000
    Amortization expense 30,000
    Total operating expenses $60,000
    Operating earnings (EBIT) $80,000
    Less: interest expense 10,000
    Earnings before taxes $70,000
    Less; taxes $27,100
    Earnings available for common shareholders (EAC) $42,900
    Earnings per share (EPS) $2.15

    Balance sheet
    Dec 31
    ASSETS 2007 2008
    Cash $16,000 $15,000
    Marketable securities 8000 7200

    Accounts receivable 42,200 34,100
    Inventories 50,000 82,000
    Total current assets $116,200 $138,300
    Land and buildings $150,000 $150,000
    Machinery and equipment 190,000 200,000
    Furniture and fixtures 50,000 54,000
    Other 10000 11000
    Total gross fixed assets $400,000 $415,000
    Less: accumulated amortization 115,000 145,000
    Net fixed assets $285,000 $270,000
    Total assets $401,200 $408,300

    Liabilities and shareholder's equity
    Accounts payable $49,000 $57,000
    Line of credit 16,000 13,000
    Accruals 6,000 5,000
    Total current liabilities $71,000 $75,000
    Long term debt $160,000 $150,000
    Shareholder's equity
    Common shares(20,000 shares
    Outstanding in 2007, 19,500 in 2008) $120,000 $110,200
    Retained earnings 50,200 73,100
    Total shareholders equity $170,200 $183,300
    Total liabilities and shareholder's
    Equity $401,200 $408,300

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