Question

Following is an alphabetical list of the assets, liabilities, revenues, and expenses of Keykin Inc. Prepare a) an income statement for the year ended September 30, 2017.

**Note, not all balances are debits.

Accounts payable                       $2,800                           Note payable                  $5,000

Accounts receivable                     5,400                            Rent expense                     8,200

Advertising expense                    4,600                         Salary expense                  14,100

Cash                                                 6,100                         Salary payable                        900

Cost of goods sold                      21,700                           Sales revenue                  80,800

Inventory                                        5,900                      Interest expense                        800              

Utilities expense                              700

b) Using Net Income or Net Loss as per the Income Statement, prepare the Keykin Inc. Statement of Retained Earnings for the year ended September 30, 2017. During the year, $2,000 in dividends were paid out to shareholders. Opening retained earnings as of October 1^st, 2016 totaled $23,000.

Answer 1

Income statement

Sales revenue		80,800
Cost of goods sold		-21,700
Gross profit		59,100
Operating Expenses :
Salary expense	14,100
Advertising expense	4,600
Rent expense	8,200
utilities expense	700
Total operating expense		-27,600
Operating income		31,500
Other expenses :
interest expense		-800
Net income		$30,700

Statement of Retained earnings

For the year ended Sep. 30, 2017

Retained earnings, beginning	23,000
Add : Net income	30,700
Less : Dividend	-2,000
Retained earnings, ending	$51,700