This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.
Income statement:
The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
To Prepare: The balance sheet and income statement of Corporation C.
Explanation of Solution
Prepare the balance sheet for Corporation C.
Corporation C | ||
Balance sheet | ||
Assets | Amount($) | Amount($) |
Cash | 15,000 | |
12,000 | ||
Inventory (4) | 30,000 | |
prepaid expenses and other current assets (9) | 3,000 | |
current assets (8) | 60,000 | |
property, plant and equipment(net) (10) | 140,000 | |
Total assets (2) | 200,000 | |
Liabilities and shareholders' equity | ||
accounts payable (7) | 25,000 | |
short term notes | 5,000 | |
current liabilities (6) | 30,000 | |
bonds payable (12) | 20,000 | |
shareholders' equity (11) | 150,000 | |
Total liabilities and shareholders’ equity (2) | 200,000 |
Table (1)
Prepare the income statement for Corporation C:
Corporation C | ||
Income statement | ||
Particulars | Amount($) | Amount($) |
Sales (1) | 300,000 | |
less: cost of goods sold (3) | (180,000) | |
gross profit (3) | 120,000 | |
operating expenses (15) | (96,000) | |
interest expense (13) | (2,000) | |
tax expense (14) | (7,000) | |
Net income | 15,000 |
Table (2)
Working notes:
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Chapter 4 Solutions
Intermediate Accounting
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