Concept explainers
(a)
Income statement
This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. Income statement is also known as operations statement, earnings statement, revenue statement, or profit and loss statement. The net income is the excess of revenue over expenses.
This is a financial statement that shows the amount of the net income retained by a company at a particular point of time for reinvestment, and pays its debts and obligations. It shows the amount of retained earnings that is not paid as dividends to the shareholders.
Balance sheet
This is a financial statement that shows the available assets and claims to assets of a company at a particular point of time. Both the amount of assets and claims to assets remains always equal. Claims to assets are segregated into two categories, one is claims of creditors (liabilities) and the other is claims of stockholders (Stockholders’ equity).
This statement helps users to know about the creditworthiness of a company as to whether the company has enough assets to pay off its liabilities. The primary constituents of balance sheet are the assets, the liabilities and the
To prepare: An income statement and a retained earnings statement for Company ES for the month of June and balance sheet at June 30, 2017.
(b)
To discuss: whether Company ES’s first month of operations was a success.
(c)
To discuss: Company ES’s decision to distribute a dividend.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
FINANCIAL ACCT.:TOOLS...(LL)-W/ACCESS
- Toth Company had the following assets and liabilities on the dates indicated December 31 Total Assests total Liabilities 2016 400,000 260,000 2017 480,000 300,000 2018 590,000 400,000 Thot began business on January, 2016, with an investment of 100,000 from stockholders. Toth paid 15,000 in dividends for the year 2016. Instructions: From an analysis of the change in stockholders' equity during the year, compute the Net Income or Loss for: 1.- 2017, asuming stockholders made an additional investment of 50,000 and Toth paid no dividends in 2017. 2.- 2018, assuming stockholders made an aditional investment of 15,000 and Toth paid dividends of 30,000 in 2018.arrow_forward(Post-Balance-Sheet Events) Madrasah Corporation issued its financial statements for the year ended December 31, 2017, on March 10, 2018. The following events took place early in 2018.(a) On January 10, 10,000 shares of $5 par value common stock were issued at $66 per share.(b) On March 1, Madrasah determined after negotiations with the Internal Revenue Service that income taxes payable for 2017 should be $1,270,000. At December 31, 2017, income taxes payable were recorded at $1,100,000.InstructionsDiscuss how the preceding post-balance-sheet events should be reflected in the 2017 financial statementsarrow_forwardThe following account balances are for the Agee Company as of January 1, 2017, and December 31, 2017. All amounts are denominated in kroner (Kr).Additional Information• Agee issued additional shares of common stock during the year on April 1, 2017. Common stock at January 1, 2017, was sold at the start of operations in 2010.• Agee purchased buildings in 2011 and sold one building with a book value of Kr 1,500 on July 1 of the current year.• Equipment was acquired on April 1, 2017.Relevant exchange rates for 1 Kr were as follows:a. Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2017? The December 31, 2016, U.S. dollar–translated balance sheet reported retained earnings of $145,200, which included a remeasurement loss of $28,300.b. Assuming the foreign currency is the functional currency, what is the translation adjustment for 2017? The December 31, 2016, U.S. dollar–translated balance sheet reported retained earnings of $162,250 and a…arrow_forward
- On December 31, 2014, Bradshaw Corporation had $485,000 as an ending balance for its retained earnings account. During 2015, the corporation declared a $3.50/share dividend to its stockholders. The company has 35,000 shares of common stock outstanding. When the books were closed for 2015 year end, the corporation had a final retained earnings balance of $565,000. What was the net profit earned by Bradshaw Corporation during 2015?arrow_forwardAt the beginning of 2021, Artichoke Academy reported a balance in common stock of $150,000 and a balance in retained earnings of $50,000. During the year, the company issued additional shares of stock for $40,000, earned net income of $30,000, and paid dividends of $10,000. In addition, the company reported balances for the following assets and liabilities on December 31.Assets LiabilitiesCash $ 52,600 Accounts payable $ 9,100Supplies 13,400 Utilities payable 2,400Prepaid rent 24,000 Salaries payable 3,500Land 200,000 Notes payable 15,000Required: 1. Prepare a statement of stockholders’ equity. 2. Prepare a balance sheet.arrow_forwardPlummer Stonework Corporation was organized on January 1, 2017. For its first two years of operations, it reported the following: $ 31,100 42,300 13,600 18,700 139,000 270,000 110,000 110,000 Net income for 2017 Net income for 2018 Dividends for 2017 Dividends for 2018 Total assets at the end of 2017 Total assets at the end of 2018 Common stock at the end of 2017 Common stock at the end of 2018 Required: On the basis of the data given, prepare a statement of stockholders' equity for 2018. PLUMMER STONEWORK CORPORATION Statement of Stockholders' Equity For the Year Ended December 31, 2018 Common Stock Retained Earnings Balance December 31, 2017 This is a numeric cell, so please enter numbers only. Add: Net income Less: Dividends Balance December 31, 2018arrow_forward
- Green House, LLP's balance sheet at the end of its most recent fiscal year, shows the following information: Assets Liabilities and Stockholders’ Equity Cash and marketable securities $ 23,015 Accounts payable $ 163,257 Accounts receivable 141,258 Notes payable 21,115 Inventories 212,444 Total current assets $ 376,717 Total current liabilities $ 184,372 Long-term debt 168,022 Total liabilities $ 352,394 Net plant and equipment 711,256 Common stock 313,299 Goodwill and other assets 89,879 Retained earnings 512,159 Total assets $1,177,852 Total liabilities and stockholders’ equity $1,177,582 In addition, the company reported the following: Net income = $156,042 Sales = $4,063,589 COGS = $2,641,333 Determine the following values for the company: Cash ratio _____________ Inventory…arrow_forwardOn January 1, 2017 Del-V Company had a retained earnings balance of $206,000. During 2017, the following events occurred: 1. Treasury stock (ordinary) was acquired at a cost of $14,000. The law requires a restriction of retained earnings in an equal amount. The company reports its retained earnings restrictions in a note to the financial statements. 2. Cash dividends totaling $9,000 and share dividends totaling $6,000 were declared and distributed. 3. Net income was $58,000. 4. Two thousand shares of callable preference shares were recalled and retired at a price of $150 per share. This share had originally been issued at $130 per share. 5. A material error in net income for a previous period was corrected. This error correction decreased retained earnings by $12,600 after a related income tax credit of $5,400. Required: 1. Prepare a statement of retained earnings for the year ended December 31, 2017. 2. Prepare a note to disclose the restriction of retained earnings.arrow_forwardGiven the following account information for Leong Corporation, prepare a statement of financial position in report form for the company as of December 31, 2012. All accounts have normal balances. Equipment ¥ 40,000 Interest Expense 2,400 Interest Payable 600 Retained Earnings ? Dividends 50,400 Land 137,320 Inventory 102,000 Bonds Payable 78,000 Notes Payable (due in 6 months) 14,400 Share capital–ordinary 60,000 Accumulated Depreciation - Eq. 10,000 Prepaid Advertising 5,000 Revenue…arrow_forward
- The following is a partial trial balance for the Green Star Corporation as of December 31, 2016: Debits Account Title Credits Sales revenue 1,300,000 Interest revenue 30,000 50,000 Gain on sale of investments Cost of goods sold Selling expenses General and administrative expenses 720,000 160,000 75,000 40,000 Interest expense Income tax expense 130,000 100,000 shares of common stock were outstanding throughout 2016. Required: 1. Prepare a single-step income statement for 2016, including EPS disclosures. 2. Prepare a multiple-step income statement for 2016, including EPS disclosures.arrow_forwardAsure corp earned $339,000 during the year ended June 30, 2017. After paying out $225,794 in dividends, the balance went into retained earnings. If the firm's total earnings were $842,250 at the end of fiscal year 2017, what were the retained earnings on its balance sheet on July 1,2016?arrow_forwardSelected information from the financial statements of Sandhill's Coffee Brewers for the year ended December 31, 2014, appears below: Current assets Total assets Current liabilities Long-term liabilities Sales revenue Dividends Net income $225,000 792,000 90,000 108,000 1,044,000 72,000 160,800 Calculate the amounts indicated below relating to the year ended December 31, 2014. The number of shares outstanding at the end of the year was 48,000. Show computations. (Round "Current ratio" and "Earnings per share" to 2 decimal places, e.g. 52.75.) 1. The current ratio for 2014 is 2. The debt to assets ratio for 2014 is 3. The working capital for 2014 is $ 4. The earnings per share for 2014 is $ times % per sharearrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning