Answer:
These can be prepared as shown below:
Step-by-step explanation:
1. Prepare a statement of stockholder equity for the year ends December 31, 2018, assuming no common stock was issued during 2018.
To do this, the income statement is first prepared by ignoring tax as follows:
Fightin' Blue Hens Corporation
Income Statement
for the year ended December 31, 2018.
Details $
Service Revenue 300,000
Salaries Expense (200,000)
Rent Expense (10,000)
Depreciation Expense (20,000)
Interest Expense (3,000)
Earnings for the year 67,000
Therefore, we have:
Fightin' Blue Hens Corporation
Statement of Stockholder Equity
for the year ends December 31, 2018
Details $
Common stock 100,000
Retained Earnings 40,000
Earnings for the year 67,000
Stockholder Equity 207,000
2. Prepare a classified balance sheet as of December 31, 2018.
A balance sheet is a balance sheet that have different classifications suchas fixed assets, current assets and liabilities, long-term liabilities, and stockholder equity. This can be prepared as follows:
Fightin' Blue Hens Corporation
Classified Balance Sheet
for the year ends December 31, 2018
Details $ $
Fixed Assets
Equipment 200,000
Accumulated Depreciation (115,000)
Net Fixed Assets 85,000
Current Assets
Cash 10,000
Accounts Receivable 130,000
Prepaid Rent 4,000
Supplies 20,000
Total current assets 164,000
Current Liabilities
Accounts Payable (10,000)
Salaries Payable (9,000)
Interest Payable (3,000)
Working capital 142,000
Long-term Liabilities
Notes Payable (due in two years) (20,000)
Net Total Assets 207,000
Financed by:
Common stock 100,000
Retained Earnings 40,000
Earnings for the year 67,000
Stockholder Equity 207,000
Note: When a balance sheet is accurately prepared, the net total assets and the stockholder equity must be equal as above with both equaling $207,000.