Question

Following is a list of financial statement items and amounts for Vantage Service as of 12/31/Year 1, the end of its first year in operation.

Consider the following account balances of Evan McGruder, Inc., as of December 31, Year 3:

Accounts Payable	$	112,960		Retained Earnings		56,100
Equipment		423,000		Notes Payable, due Year 5		344,600
Common Stock		207,000		Accounts Receivable		203,900
Income Tax Payable		4,040		Cash		97,800

Required:
Prepare a classified balance sheet at December 31, Year 3.

Required:

1. Prepare the Income Statement for the year ended December 31, Year 1.
2. Prepare the statement of retained earnings for the year ended December 31, Year 1.
3. Prepare the balance sheet for the year ended December 31, Year 1.

Answer 1

Evan McGruder, Inc.
Balance sheet
as of December 31
Assets
Current assets:
Cash	$ 97,800
Accounts receivable	$ 203,900
Total current assets		$ 301,700
Property, plant and equipment:
Equipment		$ 423,000
Total assets		$ 724,700
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$ 112,960
Income tax payable	$ 4,040
Total current liabilities		$ 117,000
Long-term liabilities:
Notes payable, due year 5		$ 344,600
Total liabilities		$ 461,600
Stockholders' equity
Common stock	$ 207,000
Retained earnings	$ 56,100
Total stockholders' equity		$ 263,100
Total liabilities and stockholders' equity		$ 724,700