Answer:
Dependable Delivery Service
Classified balance sheet as at July 31, 2022
Non Current Assets
Equipment $59,360
Total Non Current Assets $59,360
Current Assets
Accounts Receivable $11,400
Prepaid Insurance $1,800
Cash $15,940
Total Current Assets $29,140
Total Assets $88,500
Equity and Liabilities
<u>Equity</u>
Common Stock $40,000
Retained Earnings $8,750
Total Equity $48,750
<u>Liabilities</u>
<u>Non Current Liabilities</u>
Notes Payable, due 2024 $31,450
Total Non Current Liabilities $31,450
<u>Current Liabilities</u>
Accounts Payable $7,400
Salaries and Wages Payable $900
Total Non-Current Liabilities $8,300
Total Liabilities $39,750
Total Equity and Liabilities $88,500
Explanation:
Its very important to calculate the Retained Earnings Balance at the end of July 2020.
To do this, we need to first calculate the Net Income for the period as follows :
<u>Income Statement for the year ended July 31, 2022</u>
Service Revenue 15,500
Less Expenses :
Maintenance and Repairs Expense 1,200
Utilities Expense 950
Insurance Expense 600
Salaries and Wages Expense 8,400 (11,150)
Net Income/(loss) 4,350
Then, calculate the Retained Earnings Balance as follows :
<u>Retained Earnings Calculation </u>
Beginning Balance 5,200
Add Net Income during the period 4,350
Less Dividends (800)
Ending Balance 8,750
