Question

The following is the adjusted year-end trial balance at December 31, 2018, of Wilson Trucking Company. Account Title Debit Credit Cash $ 8,000 Accounts receivable 17,500 Office supplies 3,000 Trucks 172,000 Accumulated depreciation—Trucks $ 36,000 Land 85,000 Accounts payable 12,000 Interest payable 4,000 Long-term notes payable 53,000 Common stock 20,000 Retained earnings, December 31, 2017 155,000 Dividends 20,000 Trucking fees earned 130,000 Depreciation expense—Trucks 23,500 Salaries expense 61,000 Office supplies expense 8,000 Repairs expense—Trucks 12,000 Totals $ 410,000 $ 410,000 (1) Prepare the income statement for the year ended December 31, 2018. (2) Prepare the statement of retained earnings for the year ended December 31, 2018. (3) Prepare its balance sheet as of December 31, 2018.

Answer 1

Answer:

Income Statment:

Trucking fees earned                 130,000

Depreciation expense—Trucks (23,500)

Salaries expense                         (61,000)

Office supplies expense               (8,000)

Repairs expense—Trucks          (12,000)  

                  Net Income               25,500

Retained Earnings

Beginning       155,000

Net Income      25,500

Dividends      (20,000)  

Ending            160,500

Balance Sheet:

Cash                             8,000    Accounts payable         12,000

Accounts receivable  17,500     Interest payable             4,000

Office supplies             3,000    Total current liabilities 16,000

Total Current Assets: 28,500    Long-term                     53,000

Trucks (net)               136,000   Total liabilities                69,000

Land                           85,000    Common Stock             20,000

Total non-current     221,000    Retained Earnings      160,500

                                                   Total Equity                 180,500

Total Assets             249,500    Liabilities + Equity    249,500

Explanation:

For the income statement we list the revenue and then, we subtract all the expenses account.

Retained Earnings will be beginning + income - dividends. This value will go into the balance sheet.

For the balance sheet, we display assets into both categories:

current: who are going to be converted into cash within a year.

and non-current like the truck and the land which are going to be in the company's book for more than a year before converting into cash.

Liabilities and equity will be in the other side and their sum should match the total assets.