(Learning Objectives 3, 4: Evaluate business operations; construct and analyze anincome statement, a statement of retained earnings, and a balance sheet) The assets andliabilities of Full Moon Products, Inc., as of December 31, 2018, and revenues and expenses forthe year ended on that date are as follows:Equipment........................... $ 115,000Interest expense................... 10,000Interest payable ................... 2,800Accounts payable ................ 25,000Salary expense..................... 108,900Building............................... 405,000Cash.................................... 46,000Common stock.................... 26,100Land................................... $ 29,000Note payable...................... 99,200Property tax expense .......... 7,300Rent expense ...................... 41,000Accounts receivable............ 85,000Service revenue................... 451,600Supplies.............................. 6,200Utilities expense ................. 8,100Beginning retained earnings was $364,800, and dividends declared and paid totaled $108,000for the year.Requirements1. Prepare the income statement of Full Moon Products, Inc., for the year ended December 31,2018.2. Prepare the company’s statement of retained earnings for the year.3. Prepare the company’s balance sheet as of December 31, 2018.4. Analyze Full Moon Products, Inc., by answering these questions:a. Was Full Moon profitable during 2018? By how much?b. Did retained earnings increase or decrease? By how much?c. Which is greater, total liabilities or total stockholders’ equity? Who has a greater claimto Full Moon Products’ assets: its creditors or its stockholders?
(Learning Objectives 3, 4: Evaluate business operations; construct and analyze an
income statement, a statement of
liabilities of Full Moon Products, Inc., as of December 31, 2018, and revenues and expenses for
the year ended on that date are as follows:
Equipment........................... $ 115,000
Interest expense................... 10,000
Interest payable ................... 2,800
Accounts payable ................ 25,000
Salary expense..................... 108,900
Building............................... 405,000
Cash.................................... 46,000
Common stock.................... 26,100
Land................................... $ 29,000
Note payable...................... 99,200
Property tax expense .......... 7,300
Rent expense ...................... 41,000
Accounts receivable............ 85,000
Service revenue................... 451,600
Supplies.............................. 6,200
Utilities expense ................. 8,100
Beginning retained earnings was $364,800, and dividends declared and paid totaled $108,000
for the year.
Requirements
1. Prepare the income statement of Full Moon Products, Inc., for the year ended December 31,
2018.
2. Prepare the company’s statement of retained earnings for the year.
3. Prepare the company’s balance sheet as of December 31, 2018.
4. Analyze Full Moon Products, Inc., by answering these questions:
a. Was Full Moon profitable during 2018? By how much?
b. Did retained earnings increase or decrease? By how much?
c. Which is greater, total liabilities or total
to Full Moon Products’ assets: its creditors or its stockholders?
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