what is my retained earning and net income →Step 3Next, let's prepare the income statement. The income statement shows the company's revenues and expenses, and the difference is the net income. Here's theincome statement for Sage Inc. for Year 1:Sales Revenue: $310,000Cost of Goods Sold: $156,000Gross Profit: $154,000 ($310,000 - $156,000)Operating Expenses:Salaries Expense: $52,000Other Operating Expenses: $68,000Total Operating Expenses: $120,000 ($52,000+ $68,000)Net Income: $34,000 ($154,000 - $120,000)Step 4Then, let's prepare the statement of changes in stockholders' equity. The statement of changes in stockholders' equity shows the changes in the company'sequity during the year. Here's the statement of changes in stockholders' equity for Sage Inc. for Year 1:Beginning Common Stock: $0Issued Common Stock: $90,000Net Income: $34,000Ending Common Stock: $124,000 ($0 + $90,000+ $34,000)Step 5Next, let's prepare the balance sheet. The balance sheet shows the company's assets, liabilities, and equity at the end of the year. Here's the balance sheet forSage Inc. for Year 1:

To calculate the retained earnings and net income for Sage Inc. for Year 1, we need to analyze the…

Answered: → Step 3 Next, let's prepare the income…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 87PSB

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