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Stark company has the following adjusted accounts with normal balances at its December 31 year-end.
Notes payable $ 31,000 Accumulated depreciation—Buildings $ 35,000
Prepaid insurance 4,500 Accounts receivable 8,000
Interest expense 900 Utilities expense 3,300
Accounts payable 11,500 Interest payable 900
Wages payable 2,400 Unearned revenue 1,800
Cash 50,000 Supplies expense 600
Wages expense 9,500 Buildings 240,000
Insurance expense 3,800 Dividends 13,000
Common stock 30,000 Depreciation expense—Buildings 12,000
Services revenue 120,000 Supplies 1,800
Retained earnings 114,800
Use the adjusted accounts for Stark Company to prepare the (1) income statement and (2) statement of retained earnings for the year ended December 31 and (3) balance sheet at December 31. The Retained Earnings account balance was $114,800 on December 31 of the prior year.
Prepare the income statement for the year ended December 31.
STARK COMPANY
Income Statement
For Year Ended December 31
Services revenue $120,000
Expenses
Depreciation expense—Buildings $12,000
Interest expense 900
Insurance expense 3,800
Supplies expense 600
Utilities expense 3,300
Wages expense 9,500
Total expenses 30,100
Net income $89,900
Prepare the statement of retained earnings for the year ended December 31. The Retained Earnings account balance was $114,800 on December 31 of the prior year.
STARK COMPANY
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, December 31 prior year end $114,800
114,800
Retained earnings, December 31 current year end $114,800
Prepare the balance sheet at December 31.
STARK COMPANY
Balance Sheet
December 31
Assets
Accounts receivable $8,000
Cash 50,000
Prepaid insurance 4,500
Supplies 1,800
0
Total assets $64,300
Liabilities
Wages payable 2,400
Interest payable 900
Total liabilities 3,300
Equity
Common stock 30,000
Total equity 30,000
Total liabilities and equity $33,300
