Net income for the period is $2,700. Retained earnings end at $1,700 after deducting $1,000 dividends. The balance sheet shows total assets of $78,400 and total equity of $700.
To prepare financial statements, we typically create an Income Statement, a Statement of Retained Earnings (or Equity), and a Balance Sheet. I'll guide you through these statements based on the information you provided.
Income Statement:
Sales Revenue: $12,600
Less: Purchase Return ($100)
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Net Sales: $12,500
Expenses:
Salary Expense: ($4,500)
Rent: ($5,000)
Insurance Expense: ($150)
Depreciation: ($150)
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Total Expenses: ($9,800)
Net Income: $2,700
Statement of Retained Earnings:
Retained Earnings, beginning: $0
Add: Net Income: $2,700
Less: Dividends: ($1,000)
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Retained Earnings, ending: $1,700
Balance Sheet:
Assets:
Cash: $30,200
Furniture: $2,000
Office Supply: $1,100
Stock: $35,000
Account Receivable: $1,600
Van: $7,000
Prepaid Insurance: $1,650
Accum. Depreciation: ($150)
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Total Assets: $78,400
Liabilities:
Account Payable: $1,000
Salary Payable: $500
Loan: $6,000
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Total Liabilities: $7,500
Equity:
Retained Earnings: $1,700
Drawings: ($1,000)
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Total Equity: $700
Total Liabilities and Equity: $78,400
Note: The above financial statements are based on the information provided. Ensure that all transactions are accurately recorded and that the financial statements comply with accounting principles and standards.