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:

  Accounts Payable $ 32,600
  Accounts Receivable 10,300
  Cash 13,800
  Common Stock 59,590
  Dividends 2,000
  Equipment 84,000
  Notes Payable 1,410
  Operating Expenses 58,900
  Other Expenses 7,900
  Sales Revenue 88,800
  Supplies 5,500

1. Prepare an income statement for the year ended December 31 HIGH POWER CORPORATION Income Statement

Solution

1 HIGH POWER CORPORATION Income Statement For the Year Ended December 31 Sales revenue 88800 Less: Operating expenses 58900 Operating income 29900 Less: Other expenses 7900 Net income $ 22000 2 HIGH POWER CORPORATION Statement of Retained Earnings For the Year Ended December 31 Retained Earnings, January 1 0 Add: Net income 22000 Less: Dividends -2000 Retained Earnings, December 31 $ 20000 3 HIGH POWER CORPORATION Balance Sheet As at December 31 Assets Cash 13800 Accounts receivable 10300 Supplies 5500 Equipment 84000 Total assets $ 113600 Liabilities and Stockholders\' Equity Liabilities Accounts payable 32600 Notes payable 1410 Total liabilities 34010 Stockholders\' Equity Common stock 59590 Retained earnings 20000 Total stockholders\' equity 79590 Total liabilities and stockholders\' equity $ 113600