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Q3PSA.

Expert-verified
Found in: Page 39

### Financial & Managerial Accounting

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

# 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

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## 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 Revenue 33,000 Rental Revenue 22,000 Total Revenue 55,000 Expenses Salaries Expense 20,000 Rent Expense 12,000 Selling and administrative expenses 8,000 Total Expenses 40,000
 Net Income 15,000

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