Question Completion:
The adjusted trial balance for Chiara Company as of December 31 follows.
                                 Debit   Credit
Cash                             $182,200
Accounts receivable                  51,500
Interest receivable                    21,000
Notes receivable (due in 90 days) Â Â Â Â Â 169,000
Office supplies                      15,500
Automobiles                       175,000
Accumulated depreciation-Automobiles         $70,000
Equipment                        142,000
Accumulated depreciation-Equipment           19,000
Land                             85,000
Accounts payable                            98,000
Interest payable                             50,000
Salaries payable                             16,000
Unearned fees                              30,000
Long-term notes payable                     152,000
Common stock                              51,580
Retained earnings                          284,220
Dividends                         48,000
Fees earned                              524,000
Interest earned                             34,000
Depreciation expense-Automobiles   27,500
Depreciation expense-Equipment     18,500
Salaries expense                  190,000
Wages expense                   44,000
Interest expense                  36,200
Office supplies expense            35,800
Advertising expense               60,000
Repairs expense-Automobiles       27,600
Totals                        $1,328,800 $1,328,800
CHIARA COMPANY
a) Income Statement For Year Ended December 31
Fees earned                             $524,000
Interest earned                             34,000
Total revenue                            $558,000
Depreciation expense-Automobiles   27,500
Depreciation expense-Equipment     18,500
Salaries expense                  190,000
Wages expense                   44,000
Interest expense                  36,200
Office supplies expense            35,800
Advertising expense               60,000
Repairs expense-Automobiles       27,600
Total expenses                          $ 439,600
Net income                               $118,400
CHIARA COMPANY
2. Statement of Retained Earnings For Year Ended December 31
Retained earnings, Dec.31 prior year     $284,220
Add: Net income                       118,400
                                   402,620
Less: Dividends                        48,000
Retained earnings, Dec. 31 current year  $354,620
CHIARA COMPANY
3. Balance Sheet December 31
Assets
Current assets:
Cash                             $182,200
Accounts receivable                  51,500
Interest receivable                    21,000
Notes receivable (due in 90 days) Â Â Â Â Â 169,000
Office supplies                      15,500  $439,200
Long-term assets:
Automobiles             175,000
Accumulated depreciation  70,000   105,000
Equipment              142,000
Accumulated depreciation  19,000   123,000
Land                             85,000   $313,000
Total assets                               $752,200
Liabilities + Equity
Current liabilities:
Accounts payable                $98,000
Interest payable                  50,000
Salaries payable                  16,000
Unearned fees                   30,000    $194,000
Long-term notes payable                     152,000
Total liabilities                            $346,000
Equity:
Common stock                  $51,580
Retained earnings               354,620   $406,200
Total equity Total liabilities and equity        $752,200
Explanation:
The financial statements above are prepared from the adjusted trial balance. Â The revenue items (temporary accounts) are closed to the income statement, while the assets, liabilities, and equity accounts (permanent items) are closed to the balance sheet. Â The Statement of retained earnings links the income statement and the balance sheet through the adjustments to the net income and retained earnings.
