Chapter 4: Q20E (page 224)

E4-20 Preparing financial statements from the completed worksheet Use your answer from Exercise E4-19 to prepare Data Solution’s financial statements. Requirements 1. Complete the income statement for the month ended November 30, 2018. 2. Complete the statement of retained earnings for the month ended November 30, 2018. Assume beginning Retained Earnings was $0. 3. Complete the classified balance sheet as of November 30, 2018. Use the report form.

Expert verified

(1) Net income is $4,550.

(2) Ending balance of retained earnings equals $1,650.

(3) Total assets and total liabilities & Stockholders’ equity equals $40,300.

Step by step solution

Income statement is shown as follows:

DATA SOLUTION
Income Statement
Year Ended November 30, 2018
Revenues
Service Revenue		$9,600
Expenses
Depreciation Expense-Equipment	$350
Salaries Expense	2,750
Rent Expense	700
Utilities Expense	700
Supplies Expense	550
Total Expenses		5,050
Net Loss		$4,550

Statement of retained earnings is shown as follows:

DATA SOLUTION
Statement of Retained Earnings
Year Ended November 30, 2018
Retained Earnings, Beginning Balance	$0
Net income for the year	4,550_
	4,550
Dividends	(2,900)
Retained Earnings, November 30, 2018	$1,650

Balance Sheet is shown as follows:

DATA SOLUTION
Balance Sheet
November 30, 2018
Assets
Current Assets:
Cash		$4,400
Office Supplies		2,550
Prepaid Rent		1,100
Accounts Receivable		3,900
Total Current Assets			$11,950
Property, Plant, and Equipment:
Equipment	30,200
Less: Accumulated Depreciation- Building	(1,850)	28,350
Total Property, Plant, and Equipment:			28,350
Total Assets			$40,300
Liabilities
Current Liabilities:
Accounts Payable		$5,100
Salaries Payable		650
Total Current Liabilities:			5,750
Total Liabilities			$5,750
Stockholders’ Equity
Common Stock		32,900
Retained Earnings		1,650
Total Stockholders’ Equity			34,550
Total Liabilities and Stockholders’ Equity			$40,300