Financial Statements Turtle Company has prepared the following adjusted Trial balance for the year ended December 31, 2019:

Required:

For 2019, prepare in proper form: (1) an income statement, (2) a retained earnings statement, (3) an ending balance sheet, and (4) closing entries.

Prepare (1) income statement, (2) a retained earnings statement, (3) an ending balance sheet, and (4) closing entries.

Financial statements: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements are balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Statement of Retained Earnings:

This is a financial statement that determines the amount of earnings kept by the business as retained earnings at the end of the financial year. This statement shows the retained earnings held by the business at the beginning and at the end of the financial year, amount of net income earned during the year and the amount of dividend declared to the shareholder for the year.

Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

Closing entries: The journal entries prepared to close the temporary accounts to Retained Earnings account are referred to as closing entries. The revenue, expense, and dividends accounts are referred to as temporary accounts because the information and figures in these accounts is held temporarily and consequently transferred to permanent account at the end of accounting year.

Prepare financial statements and closing entries of Company T for 2019 as follows:

(1) Income statement:

Table (1)

Working note (1):

Calculate the value of income tax expense.

Income tax expense = Income before income tax × Income tax rate=$1,200×30100=$360

(2) Retained earnings statement:

Table (2)

(3) Ending balance sheet: