Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet

Assume that you are the president of Gaslight Company. At the end of the first year (December 31, 2011) of operations, the following financial data for the company are available:

Cash $ 24,500

Receivables from customers (all considered collectible) 10,800

Inventory of merchandise (based on physical count and priced at cost) 81,000

Equipment owned, at cost less used portion 40,700

Accounts payable owed to suppliers 46,140

Salary payable for 2011 (on December 31, 2011, this was owed to an

employee who was away because of an emergency; will return

around January 10, 2012, at which time the payment will be made) 1,800

Total sales revenue 126,000

Expenses, including the cost of the merchandise sold (excluding income taxes) 80,200

Income taxes expense at 30% × pretax income; all paid during 2011?

Contributed capital, 7,000 shares outstanding 87,000

Dividends declared and paid during 2011 10,000

Required:

Using the financial statement exhibits in the chapter as models and showing computations:

1. Prepare a summarized income statement for the year 2011.

2. Prepare a statement of retained earnings for the year 2011.

3. Prepare a balance sheet at December 31, 2011.