Question

The following accounts are taken from Equilibrium Riding, Inc., a company that specializes in occupational therapy and horseback riding lessons, as of December 31.
Account Name Debits Credits
Cash 69,600
Accounts Receivable 5,200
Prepaid Insurance 5,000
Equipment 78,750
Land 26,550
Accounts Payable 32,600
Unearned Revenue 2,100
Notes payable (long-term) 66,000
Common stock 5,000
Retained Earnings 51,815
Dividends 0
Service Revenue 33,500
Wages Expense 4,800
Repairs and Maintenance-
Expense 830
Office Expenses 285
Totals 191,015 191,015

(a) Using the unadjusted trial balance provided, create an Income Statement for Equilibrium Riding, Inc., for the year ended December 31.
(b) Using the unadjusted trial balance provided, create a Statement of Retained Earnings for Equilibrium Riding, Inc., for the year ended December 31.
(c) Using the unadjusted trial balance provided, create a classified Balance Sheet for Equilibrium Riding, Inc., for the year ended December 31.

Answer 1

Answer:

Please find the answer below

Explanation:

1.  Equilibrium, Inc

Income statement for the year ended December 31

                                                                               ($)

Service revenue                                                33, 500

Other income                                                          0

Gross Income                                                   33, 500

Expenses:

Wages expense                                                 4, 800

Repairs and maintenance                                     830

Office expenses                                                    285

Total Expenses                                                  (5, 915)

Net Income                                                         27, 585

2. Equilibrium, Inc

Statement of retained earnings

for the year ended December 31

                                                                             ($)

Retained earnings, 1 Jan                                  51, 815

Dividends                                                               (0)

Net profit                                                          27, 915

Retained earnings , Dec 31                           79, 400

3. Equilibrium, Inc

Balance sheet

for the year ended December 31

                                                                           ($)

Non-Current assets

Equipment                                                        78, 750

Land                                                                  26, 550

Total Non-current assets                                105, 300

Current Assets

Cash                                                                   69, 600

Accounts Receivable                                          5, 200

Prepaid insurance                                               5, 000

Total non-current assets                                  79, 800

TOTAL ASSETS                                               185, 100

Equity

Common stock                                                   5, 000

Retained earnings                                             79, 400

Total equity                                                        84, 400

Liabilities

Notes payable (long-term)                                66, 000

Unearned revenue                                              2, 100

Accounts payable                                              32, 600

Total liabilities                                                   100, 700

TOTAL EQUITY AND LIABILITIES                   185, 100

Answer 2

Answer:

Part a) Net Income for the year $27,585

Part b) Balance of Retained Earnings for the year $79,400

Part c) Total Assets as the December 31 $185,100  

Explanation:

Part a)

                                          Equilibrium Riding Inc.

                    Income Statement for the year ended as of 31 December

Service Revenue                                    $33,500  

Less Expenses  

Wages Expense                                    $4,800  

Repairs and Maintenance Expense    $830  

Office Expenses                                    $285  

Net Revenue                                             $27,585  

 

Part b)              

                                         Equilibrium Riding Inc.

Statement of changes in Equity for the year ended as of 31 December

Retained Earnings at the beginning of the period         $51,815  

Add: Net income for the year                                        $27,585  

Less Dividends                                                                $0

Retained earnings at the end of the period                 $79,400  

 

Part c)  

                                             Equilibrium Riding Inc.

                                    Balance Sheet as at 31 December

 

Assets

Non-Current Assets

Equipment                                                            $78,750  

Land                                                                    $26,550    

Current Assets

Accounts Receivable                                            $5,200  

Cash                                                                    $69,600  

Prepaid Insurance                                                    $5,000    

Total Assets                                                              $185,100  

Equity and Liabilities

Owners Equity

Common Stock                                                     $5,000  

Retained Earnings                                                     $79,400  

 

Non Current Liabilities

Notes Payable (long-term)                                     $66,000  

 

Current Liabilities  

Accounts Payable                                                    $32,600  

Unearned Revenue                                            $2,100  

Total Equity and Liabilities                                     $185,100