Assume that you are the president of High Power Corporation

Assume that you are the president of High Power Corporation. At the end of the first year of operations (December 31), the following financial data for the company are available:

Prepare a statement of retained earnings for the year ended December 31.

Was the company profitable?

Which financial statement indicates this?

Assume that you are the president of High Power Corporation. At the end of the first year of operations (December 31), the following financial data for the company are available:

Solution

1) INCOME STATEMENT Sales revenue 99600 Expenses: Operating expenses 59800 Other expenses 7990 Total expenses 67790 Net income 31810 2) STATEMENT OF RETAINED EARNINGS Beginning balance 0 Add: Net income for the year 31810 31810 Less: Dividends 2090 Ending balance 29720 3) BALANCE SHEET ASSETS: Current Assets: Cash 14700 Accounts receivable 11650 Supplies 6400 32750 Equipment 93000 Total assets 125750 LIABILITIES AND STOCKHOLDERS\' EQUITY: Current liabilities: Accounts payable 33500 Notes payable 2040 35540 Stockholders\' Equity: Common stock 60490 Retained earnings 29720 90210 Total liabilities and stockholders\' equity 125750 1-a) Stockholders. 1-b) Balance sheet. 3-a) Yes. 3-b) Income statement