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