Prepare an income statement, a statement of returned income, and a balance sheet
ID: 2818087 • Letter: P
Question
Prepare an income statement, a statement of returned income, and a balance sheet. Also calculate profit margin, current ratio, working capital, assets turnovers and debt ratio. Prepare an Income Statement,statement of Retained Earnings and a Balance Sheet. Also caleulate profit margin, current ratio, working capital, assets turnover and debt ratio. Problem # 4 Cash Supplies Equipment Accounts payable. 3,270 5,060 1,500 6,400 1,000 845 7,000 3,000 5,205 Retained earings.. Service fees eamed.. Salaries Insurance expense 2,900 62.400 expense 33400 4,700 ..3,250 720 630Explanation / Answer
Income Statement
Service fees earned
$62400
Less:
Rent expense
$15000
Salaries expense
$33400
Supplies expense
$4700
Insurance expense
$3250
Depreciation expense-equipment
$720
Interest expense
$630
Total expenses
($57700)
Net income
$4700
Statement of Retained Earnings
Beginning balance
$5205
Add: Net income
$4700
Less: Dividends
($2900)
Ending balance
$7005
Balance Sheet
Current Assets;
Cash
$2700
Accounts receivable
$3270
Supplies
$5060
Prepaid insurance
$1500
Total current assets
$12530
Non-current Assets;
Equipment
$6400
Less: Accumulated dep.-Equipment
($1080)
$5320
Total Assets
$17850
Current liabilities;
Accounts payable
$845
Total current liabilities
$845
Non-current liabilities;
Long-term notes payable
$7000
Total liabilities
$7845
Stockholders’ equity;
Common stock
$3000
Retained earnings
$7005
Total stockholders’ equity
$10005
Total liabilities and stockholders’ equity
$17850
Profit margin = net income / Net income
Profit margin ($4700 / $62400) = 7.53%
Current ratio = Current assets / Current liabilities
Current ratio ($12530 / $845) = 14.83
Working capital = Current assets – Current liabilities
Working capital ($12530 – $845) = $11685
Assets turnover ratio = Net revenue / Total assets
Assets turnover ratio ($62400 / $17850) = 3.50 (Approx.)
Debt ratio = Total liabilities / Total assets
Debt ratio ($7845 / $17850) = 0.44
Income Statement
Service fees earned
$62400
Less:
Rent expense
$15000
Salaries expense
$33400
Supplies expense
$4700
Insurance expense
$3250
Depreciation expense-equipment
$720
Interest expense
$630
Total expenses
($57700)
Net income
$4700