Prepare an Income Statement and Statement of Retained Earnings for the year ende

Question

Prepare an Income Statement and Statement of Retained Earnings for the year ended December 31,2010 Use the Data Service Center data to journalize their closing entries at December 31, 2010. Set up a T-account for Retained Earnings and post to that account. Does the ending balance in retained earnings equal the amount vou calculated in the Statement of retained earnings? Why or Why not? Did Retained Earnings increase or decrease during the year? What caused the increase or decrease? Prepare a Classified Balance Sheet as of December 31, 2010. Remember to use the ending Retained Earnings amount Calculate the Current Ratio and the Debt Ratio for 2010. Compare the ratios calculated to prior year amounts: Current Ratio-2.00. Quick Ratio-1.80 and Debt Ratio-15% 1. 2. 3. 4. 5. 6.

Explanation / Answer

1. a.    Income statement

Service Revenue $409438

less: Expense

Depreciation - Building $30002

Depreciaiton - Furniture $20736

   Advertising expense $4802

Insurance expense $ 23998

Salary expense $137042

Supplies expense $63360 $279940

Net income $129498

  

Note:-   Unearned commission revenue , Prepaid insurance expense and salary payable are already adjsuted in the " Trial Balance"

b. Statement of Retained Earning

Beginning balance of Retained Earning $434880

Add: Net income $129498

Less: Dividend ($67198)

  Closing Balance of retained Earning $497180

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