Question

Following are the accounts and balances from the adjusted trial balance of Stark Company. Notes payable $ 11,000 Accumulated depreciation-Buildings $ 15,000 Prepaid insurance 2,500 Accounts receivable 4,000 Interest expense 500 Utilities expense 1,300 Accounts payable 1,500 Interest payable 100 Wages payable 400 Unearned revenue 800 Cash 10,000 Supplies expense 200 Wages expense 7,500 Buildings 40,000 Insurance expense 1,800 Stark, Withdrawals 3,000 Stark, Capital 24,800 Depreciation expense-Buildings 2,000 Services revenue 20,000 Supplies 800 Prepare the (1) income statement and (2) statement of owner's equity for the year ended December 31, and (3) balance sheet at December 31. The Stark, Capital account balance was $24,800 on December 31 of the prior year.

Answer 1

STARK COMPANY

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31

PARTICULARS AMOUNT$

Service Revenue 20,000

Less-Expenses

Supplies expense 200

Interest expense 500

Insurance expense 1800

Utilities expense 1300

Depreciation expense 2000

Wages expense 7500

Total expenses 13,300

Net profit $6,700

STARK COMPANY

STATEMENT OF RETAINED EARNINGS

FOR THE YEAR ENDED DECEMBER 31 Amount$

Retained earnings December 31 prior year end 14,800

Add- Net income 6,700

Less- Dividends 3,000

Retained earnings, December 31 Current year end $18,500