Question

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

Answer 1

Answer:

Explanation:

1. The preparation of the year-end December 31 income statement for High Power Corporation is presented below:

                                       High Power Corporation

                                          Income statement  

                               For the year ended December 31

Revenue  

Sales Revenue $99,600

Total revenues $99,600 (A)

Less: Expenses

Operating Expenses $59,800

Other Expenses $7,990

Total expenses $67,790   (B)

Net income $31,810 (A- B)

2. The preparation of the retained earnings statement for the year ended December 31 is presented below:

                                    High Power Corporation

                                          Income statement  

                               For the year ended December 31

Beginning balance of retained earning $0

Add: Net income $31,810

Less: Cash Dividend paid -$2,090

Ending balance of retained earning     $29,720