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Financial & Managerial Accounting
Found in: Page 39
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

As of December 31, 2017, Armani Company’s financial records show the following items and amounts.

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000

Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000

Retained earnings, Dec. 31, 2016 . . . . . . . . . . . . . . . . 4,000

Retained earnings, Dec. 31, 2017 . . . . . . . . . . . . . . . . 6,000

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000

Consulting revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000

Rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000

Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000

Selling and administrative expenses . . . . . . . . . . . . . . 8,000

Required Prepare the 2017 year-end income statement for Armani Company

Retained earnings are the accumulated profit and net income which is $15,000

See the step by step solution

Step by Step Solution

Definition of retained earnings

Retained earnings are defined as the accumulated profit of the business over a period of time which is left after the dividends.

Preparation of Income statement

Armani Company
Income Statement
As of December 31, 2017
Amount ($)Amount ($)
Revenue
Consulting Revenue33,000
Rental Revenue22,000
Total Revenue55,000
Expenses
Salaries Expense20,000
Rent Expense12,000
Selling and administrative expenses8,000
Total Expenses40,000
Net Income15,000

Most popular questions for Business-studies Textbooks

Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.

July 1 Reyna Rivera invested $80,000 cash in the company in exchange for its common stock.

2 The company rented office space and paid $700 cash for the July rent.

3 The company purchased roofing equipment for $5,000 by paying $1,000 cash and agreeing to pay the $4,000 balance in 30 days.

6 The company purchased office supplies for $600 cash.

8 The company completed work for a customer and immediately collected $7,600 cash for the work.

10 The company purchased $2,300 of office equipment on credit.

15 The company completed work for a customer on credit in the amount of $8,200.

17 The company purchased $3,100 of office supplies on credit.

23 The company paid $2,300 cash for the office equipment purchased on July 10.

25 The company billed a customer $5,000 for work completed; the balance is due in 30 days.

28 The company received $8,200 cash for the work completed on July 15.

30 The company paid an assistant’s salary of $1,560 cash for this month.

31 The company paid $295 cash for this month’s utility bill.

31 The company paid $1,800 cash in dividends to the owner (sole shareholder).

Required Analysis Component 4. Assume that the $5,000 purchase of roofing equipment on July 3 was financed from an owner investment of another $5,000 cash in the business in exchange for more common stock (instead of the purchase conditions described in the transaction above). Compute the dollar effect of this change on the month-end amounts for (a) total assets, (b) total liabilities, and (c) total equity.

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