Problem 2 Required information The following information applies to the question
ID: 2550178 • Letter: P
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Problem 2
Required information The following information applies to the questions displayed below) The adjusted trial balance for Chiara Company as of Decermber 31, 2017, follows. Debit Credit Accounts receivable Interest receivable Sotes receivable (due in 90 days) office suppl $105,200 54,000 19,800 172,000 16,000 171,000 ics Accumlated depreciation Autonobiles Equipment Accumlated depreciation Equipment $ 85,000 144,000 16,000 83,000 Accounts payable Interest payable Salaries payable Unearned fees Long-term notes payable Common stock Retained earnings 106,000 20,000 23,000 32,000 142,000 28,580 257,220 52,000 524,000 26,000 Fee earned Interest carned Depreciation Depreciation expense Equipment Salarics expense Wages expense Interest expense Office supplies expense Advertising expense 26,000 21,000 191,000 45,000 34,000 33, 800 62,000 $1,259,800 1,259, 800 Required: 1(a) Prepare the income statement for the year ended December 31, 2017. 1(b) Prepare the statement of retained earnings for the year ended December 31, 2017. 1(c) Prepare Chiara Company's balance sheet as of December 31, 2017.Explanation / Answer
Income Statement for the year ended 31 december 2017 Revenue Fees earned 524,000 Interest earned 26,000 total revenues 550,000 Depreciation expense—Automobiles 26,000 Depreciation expense—Equipment 21,000 Salaries expense 191,000 Wages expense 45,000 Interest expense 34,000 Office supplies expense 33,800 Advertising expense 62,000 Repairs expense—Automobiles 30,000 Total expenses 442,800 Net Income 107,200 Statement of Retained Eranings Beginning Balance, Jan 1 2017 257,220 Add: net income 107,200 364,420 Less: dividends -52,000 Ending Balance Dec 31 2017 312,420 Balance sheet December 31 2017 Assets Current assets Cash 105,200 Accounts receivable 54,000 Interest receivable 19,800 Notes receivable (due in 90 days) 172,000 Office supplies 16,000 Toatl current assets 367,000 Property Plant and equipment Automobiles 171,000 Accumulated depreciation—Automobiles 85,000 86,000 Equipment 144,000 Accumulated depreciation—Equipment 16,000 128,000 Land 83,000 Net Property Plant and equipment 297,000 Total Assets 664,000 Liabilities & stockholder Equity Current liabilities Accounts payable 106,000 Interest payable 20,000 Salaries payable 23,000 Unearned fees 32,000 Total Current liabilities 181,000 Long term Notes payable 142,000 Total liabilities 323,000 Stockholder Equity Common stock 28,580 Retained earnings 312,420 Total Stockholder Equity 341,000 Total Liabilities & stockholder Equity 664,000 ans 2 Profit margin ratio Net income/ Net sales Profit margin ratio 107,200 524000 20.5 %
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