Answer and Explanation:
The preparations are presented below:
a. For income statement
<u> Chiara Company</u>
<u> Income statement</u>
<u> For the year ended Dec 31</u>
Revenues
Fees earned $544,000
Interest earned $30,000
Total revenues $574,000
Less: expenses
Depreciation expense - Automobiles $26,000
Depreciation expense- Equipment $20,000
Salaries expense $187,000
Wages expense $43,000
Interest expense $32,200
Office supplies expense $34,200
Advertising expense $63,000
Repairs expense - Automobiles $25,200
Total expenses ($430,600)
Net income $143,400
b. For a statement of retained earnings
<u> Chiara Company</u>
<u> Statement of retained earnings</u>
<u> For the year ended Dec 31</u>
Beginning balance of retained earnings $257,220
Add: Net income $143,400
Less: Dividend -$45,000
Ending retained earnings balance $355,620
c. For balance sheet
<u> Chiara Company</u>
<u> Balance sheet </u>
<u> For the year ended Dec 31</u>
<u>Liabilities & equity Amount Assets Amount </u>
Liabilities & equity Cash $132,400
Accounts payable $98,000 Accounts receivable $50,500
Interest payable $20,000 Interest receivable $20,800
Salaries payable $22,000 90 days notes receivable $171,000
Unearned fees $28,000 Office supplies $16,500
Long-term notes payable $144,000 Automobiles 169,000
Common stock $26,580 Less:
Retained earnings $355,620 Accumulated depreciation
Automobiles $ 80,000 $89,000
Total liabilities & equity $694,200 Equipment 140,000
Less:
Accumulated depreciation
Equipment 23,000 $117,000
Land $79,000
Total assets $694,200
