Question

Following are the accounts and balances from the adjusted trial balance of stark company

Answer 1

Answer:

                                STARK COMPANY  

                             INCOME STATEMENT  

                FOR THE YEAR ENDED DECEMBER 31  

PARTICULARS                                 AMOUNT $

Service Revenue                               20,000

Expenses

Supplies expense          200  

Interest expense            500  

Insurance expense        1,800

Utilities expense            1,300

Depreciation expense   2,000

Wages expense             7,500

Total expenses                                  13,300

Net profit                                            6,700

                            STARK COMPANY  

                 STATEMENT OF RETAINED EARNINGS  

                  FOR THE YEAR ENDED DECEMBER 31

                                                                                       Amount $

Retained earnings December 31 prior year end            14,800

Add- Net income           6,700

Less- Dividends             3,000                                           3,700

Retained earnings, December 31 Current year end     18,500

3.                                          STARK COMPANY  

            BALANCE SHEET FOR THE YEAR ENDED DECEMBER 31

Current Assets

Cash                               10,000

Accounts receivable      4,000  

Office supplies               800  

Prepaid insurance          2,500

Total current asset                           17,300

Non Current Assets

Buildings                            40,000

Less- Accumulated dep.    15,000  

Total Non Current Assets                25,000

Total Assets                                       42,300

Liabilities

Current liabilities

Accounts payable     1,500  

Interest payable        100  

Notes payable           11,000  

Unearned revenue    800  

Wages payable          400

Total Current liabilities                 13,800

Long term liabilities

Common stock      10,000

Retained earnings 18,500             28,500

Total liabilities and capital           42,300