Question

Assume that you are the president of High Power Corporation. At the end of the first...

Assume that you are the president of High Power Corporation. At the end of the first year of operations (December 31), the following financial data for the company are available:

  
  Accounts Payable $ 33,500
  Accounts Receivable 11,650
  Cash 14,700
  Common Stock 60,490
  Dividends 2,090
  Equipment 93,000
  Notes Payable 2,040
  Operating Expenses 59,800
  Other Expenses 7,990
  Sales Revenue 99,600
  Supplies 6,400
1.Prepare an income statement for the year ended December 31.   
2.

Prepare a statement of retained earnings for the year ended December 31.

3. Prepare a balance sheet at December 31.   
1-a. Is the company financed mainly by creditors or stockholders?
Creditors
Stockholders
1-b. Which financial statement indicates this?
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows
3-a.

Was the company profitable?

Yes
No


3-b.

Which financial statement indicates this?

Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows

Homework Answers

Answer #1
1) INCOME STATEMENT
Sales revenue 99600
Expenses:
Operating expenses 59800
Other expenses 7990
Total expenses 67790
Net income 31810
2) STATEMENT OF RETAINED EARNINGS
Beginning balance 0
Add: Net income for the year 31810
31810
Less: Dividends 2090
Ending balance 29720
3) BALANCE SHEET
ASSETS:
Current Assets:
Cash 14700
Accounts receivable 11650
Supplies 6400 32750
Equipment 93000
Total assets 125750
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable 33500
Notes payable 2040 35540
Stockholders' Equity:
Common stock 60490
Retained earnings 29720 90210
Total liabilities and stockholders' equity 125750
1-a) Stockholders.
1-b) Balance sheet.
3-a) Yes.
3-b) Income statement
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