Following is a list of financial statement items and amounts for Vantage Service as of 12/31/Year 1, the end of its first year in operation. Accounts Receivable $ 40,000 Accounts Payable 30,000 Cash 10,000 Common Stock 20,000 Notes Payable 20,000 Equipment 50,000 Sales Revenue 100,000 Fuel Expense 15,000 Rent Expense 20,000 Advertising Expense 5,000 Salaries and Wages Expense 20,000 Retained Earnings ? Dividends 10,000 Required: Prepare the Income Statement for the year ended December 31, Year 1. Prepare the statement of retained earnings for the year ended December 31, Year 1. Prepare the balance sheet for the year ended December 31, Year 1.

Income Statement for the year ended December 31, Year 1.

Sales Revenue                                               100,000

Less Expenses :

Fuel Expense                                 (15,000)

Rent Expense                                (20,000)

Advertising Expense                       (5,000)

Salaries and Wages Expense      (20,000)  (60,000)

Net Income/ (loss)                                           40,000

Statement of retained earnings for the year ended December 31, Year 1

Retained Earnings Opening Balance                 0

Add Profit for the year                                     40,000

Less Dividends for the year                            (10,000)

Retained Earnings Closing  Balance               30,000

Balance sheet for the year ended December 31, Year 1.

Non - Current Assets

Equipment                                                        50,000

Total Non - Current Assets                              50,000

Current Assets

Accounts Receivable                                       40,000

Cash                                                                   10,000

Total Current Assets                                        50,000

Total Assets                                                     100,000

Equity and Liabilities

Equity

Common Stock                                               20,000

Retained Earnings                                           30,000

Total Equity                                                      50,000

Non - Current Liabilities

Notes Payable                                                 20,000

Total Non - Current Liabilities                         20,000

Current Liabilities

Accounts Payable                                            30,000

Total Current Liabilities                                   30,000

Total Equity and Liabilities                             100,000

Explanation:

Income Statement.

Income / loss = Sales less Expenses

Retained Earnings

Retained Earnings Closing Balance = Opening Retained Earnings Balance plus Profit / Income for the year less dividends declared.

Balance Sheet.

Assets = Equity + Liabilities

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