Chapter 1, Problem 34AP

Preparing the income statement and balance sheet; identifying certain financial information (Learning Objective 6) 25-30 min.

Presented here are the amounts of Assets, Liabilities, Stockholders’ Equity, Revenues, and Expenses of Extreme Sports, Inc., at October 31, 2018 The items are listed in alphabetical Order.

Accounts Payable................	$ 18,000	Interest Expense.....................	$ 5,500
Accounts Receivable ..........	14,000	Land........................................	35,000
Advertising Expense............	19,000	Note Payable..........................	65,000
Building...............................	125,000	Property Tax Expense...........	4,300
Cash....................................	18,000	Rent Expense.........................	22,000
Common Stock......................	20,000	Salaries Expense....................	61,000
Dividends...............................	36,000	Salaries Payable.....................	6,000
Equipment..............................	50,000	Service Revenue.....................	190,000
Insurance Expense...............	2,800	Supplies...................................	1,300

The retained earnings balance of the business was $94,900 at October 31, 2017.

Requirements

1. 1. Identify each amount shown as an asset, liability, or stockholders equity.
2. 2. Prepare the company's income statement and statement of retained earnings for the year ended October 31, 2018.
3. 3. Prepare the company's balance sheet at October 31, 2018.
4. 4. Answer these questions about the company.
   1. a. What was the profit or loss for the year?
   2. b. What was the increase or decrease of retained earnings for the year?
   3. c. What is the amount of economic resources on October 31, 2018?
   4. d. What is the amount owed on October 31, 2018?