Question

Longhorn Corporation provides low-cost food delivery services to senior citizens. At the end of the year, the company reports the following amounts:

Cash $1,200 Service revenue $67,700 Equipment 29,000 Cost of goods sold (food expense) 53,400 Accounts payable 4,400 Buildings 40,000 Delivery expense 2,600 Supplies 3,400 Salaries expense 5,500 Salaries payable 800


In addition, the company had common stock of $40,000 at the beginning of the year and issued an additional $4,000 during the year. The company also had retained earnings of $18,200 at the beginning of the year.

Required: Prepare the income statement, statement of stockholders' equity, and balance sheet for Longhorn Corporation.

Answer 1

The Longhorn Corporation's financial statements include an income statement showing a net income of $6,200, a statement of stockholders' equity totaling $68,400, and a balance sheet where the total assets equal the total liabilities and stockholders' equity at $73,600.

Step-by-step explanation:

To prepare the financial statements for Longhorn Corporation, we will start with the income statement, move to the statement of stockholders' equity, and finish with the balance sheet.

Income Statement:

Service Revenue: $67,700
Cost of Goods Sold (Food Expense): $53,400
Gross Profit: $67,700 - $53,400 = $14,300
Delivery Expense: $2,600
Salaries Expense: $5,500
Net Income: $14,300 - $2,600 - $5,500 = $6,200

Statement of Stockholders' Equity:

Common Stock at beginning of year: $40,000
Add: Issued Common Stock: $4,000
Retained Earnings at beginning of year: $18,200
Add: Net Income: $6,200
Less: Dividends (if any, not provided in this problem): $0
Total Stockholders' Equity: $68,400

Balance Sheet Assets:
Cash: $1,200
Equipment: $29,000
Buildings: $40,000
Supplies: $3,400
Total Assets: $73,600

Liabilities and Stockholders' Equity:

Accounts Payable: $4,400
Salaries Payable: $800
Total Liabilities: $5,200
Total Stockholders' Equity: $68,400
Total Liabilities and Stockholders' Equity: $73,600

Answer 2

The income statement, statement of stockholders' equity, and balance sheet for Longhorn Corporation is given below.

The income statement

Sales Revenue $ 67,700

COGS ($ 53,400)

Delivery expenses ($ 2,600)

Salary expenses ($ 5,500)

Net profit $ 6,200

Balance Sheet

Asset

Cash $ 1,200

Equipment $ 29,000

Building $ 40,000

Supplies $ 3,400

Total Assets $ 73,600

Equity

Common Stock $ 44,000

Retain earning $ 24,400

(18,200 + 6,200)

Liability

Account Payable $ 4,400

Salaries payable $ 8,00

Total Liabilities $ 73,600

Statement of Stockholders

Opening common Stock $ 40,000

Addition $ 4,000

Closing common Stock $ 44,000

Retain earning Opening $ 18,200

Net profit $ 6,200

Retain profit Closing $ 24,400

Total Equity $ 68,400