Question

You are provided with the following information for Metlock, Inc., effective as of its April 30, 2017, year-end. Accounts payable $ 884 Accounts receivable 950 Accumulated depreciation—equipment 670 Cash 1,410 Common stock 1,320 Cost of goods sold 1,110 Depreciation expense 285 Dividends 375 Equipment 2,560 Income tax expense 215 Income taxes payable 185 Insurance expense 260 Interest expense 450 Inventory 1,107 Land 3,240 Mortgage payable 3,640 Notes payable 201 Prepaid insurance 110 Retained earnings (beginning) 1,600 Salaries and wages expense 650 Salaries and wages payable 272 Sales revenue 5,240 Stock investments (short-term) 1,290 Prepare an income statement, balance sheet , retained earnings

Answer 1

BALANCE SHEET

ASSETS

Cash 1410

Accounts Receivable 950

Prepaid insurance 110

Stock investments 1290

Inventory 1107

Equipment 2560

Accumulated Depreciation Equipment -670

Land 3240

TOTAL ASSETS 9997

LIABILITIES

Accounts Payable 884

Income tax payable 185

Mortgage payable 3640

Notes payable 201

Salaries and wages payable 272

TOTAL LIABILITIES 5182

NET EQUITY

Retained earnings (beginning) 1600

Common stock 1320

Dividends -375

Net Income 2270

TOTAL NET EQUITY 4815

TOTAL LIABILITIES+TOTAL NET EQUITY 9997

INCOME STATEMENT

Sales revenue 5240

Cost of goods sold -1110

Gross Profit 4130

Salaries and wages expense -650

Insurance expense -260

EBITDA 3220

Depreciation expense -285

EBIT 2935

Interest expense -450

EBT 2485

Income Tax expense -215

NET INCOME 2270

Step-by-step explanation:

According to the accounting equation the total of the assets should be equal to the sum between the liabilities and net equity. One of the components of the net equity is the net income that can be visualized in the final line of the income statement.