Question

Assume that you are the president of Highlight Construction Company. At the end of the first year (December 31, 2014) of operations, the following financial data for the company are available:
Cash
Receivables from customers (all considered collectible) 25.600
Inventory of merchandise (based on physical count and priced at cost) 10.800
Equipment owned, at cost less used portion 81.000
Accounts payable owed to suppliers 42.000
Salary payable for 2014 (on December 31, 2014, this was owed to an employee who was away because of an emergency; will return around January 10, 2015, at which time the payment will be made) 2.520
Total sales revenue 128.400
Expenses, including the cost of the merchandise sold (excluding income taxes)80.200
Income tax expense at 30% × pretax income; all paid during 2014 ?
Common stock (December 31, 2014) 87.000
Dividends declared and paid during 2014 10.000
Using the financial statement exhibits in the chapter as models and showing computations:
a. Prepare a summarized income statement for the year 2014
b. Prepare a statement of stockholder's equity for the year 2014
c. Prepare a balance sheet on December 31, 2014

Answer 1

Answer:

Highland construction company

Income statement

For the year ended December 31, 2014

Sales revenue=128,400

Total expense=80,200

Pretax income=48,200

Tax                  =14,460

Net income     =33,740

Highland construction company

Statement of stockholder's equity

For the year ended December 31,2014

Balance December 31,2013=0

Stock issuance                    =87,000

Add:Net income

Less:Dividends

Balance December 31,2014=87,000

Highland construction company

Balance sheet

December 31,2014

Account payable=46,140

Salaries payable=2,520

Total liabilities

Common stock=87,000

Retained earnings=23,740

As complete information is not given so only relevant portion is done.