Prepare an income statement and balance sheet in good form.?

Question

Sale Revenue $160,000

Accounts Receivable 12,000

Equipment 33,000

Accounts Payable 9,000

Salaries Expense 33,000

Inventory 15,000

Note Payable 14,000

Income Taxes Payable 3,000

Cash 24,000

Selling Expenses 25,000

Common Stock 38,000

Interest Income 2,000

Cost of Sales 74,000

Prepain Expenses 4,000

Income Tax Expense 6,000

Can you show me how to do this work. Thank you.

Answer 1

First list the BS accounts. Then list the IS accounts. Both lists need to be in proper account order.  Rev - Ex = Profit.  Assets = Liabities + SE. The rest is up to you, it's your homework. Transfer your profit amount to the Retained Earnings account on the BS and you should balance. If you know how to do a Worksheet that would be the easiest format (look in your book under Trial Balance).

Answer 2

Income statement

Sale Revenue $160,000

Cost of Sales 74,000

Gross profit $86,000

less:

Operating expenses

Selling Expenses 25,000

Salaries Expense 33,000

Operating profit $28,000

Non-operating

Interest income 2,000

Profit before taxes $30,000

Income Tax Expense 6,000

Profit after taxes $24,000

Balance Sheet

Non-current assets-

Equipment 33,000

Current Assets-

Inventory 15,000

Accounts Receivable 12,000

Prepaid Expenses 4,000

Cash 24,000

Total assets $88,000

Liabilities & Owner's Equity

Current liabilities-

Accounts Payable 9,000

Note Payable 14,000

Income Taxes Payable 3,000

Total liabs $26,000

Owners' equity

Common Stock 38,000

Retained earnings $24,000

Total liabs & owners' equity $88,000