Prepare financial statements (Learning Objective 3) 20–25 min.

The adjusted trial balance for Ocean Realty, Inc., at March 31, 2014, follows:

Requirements 1. Prepare Ocean Realty’s income statement and statement of retained earnings for the year ended March 31, 2014, and year-end balance sheet. List expenses in decreasing order on the income statement.
2.

a. Which financial statement reports Ocean Realty’s results of operations? Were operations successful during 2014? Cite specifics from the financial statements to support your evaluation.

b. Which statement reports the company’s financial position?AppendixLO1

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Ocean Realty, Inc. Adjusted Trial Balance March 31, 2014 ACCOUNT Cash Accounts Receivable Prepaid Rent Supplies DEBIT CREDIT $ 10,200 11,600 1,000 1,300 Equipment Accumulated Depreciation, Equipment Accounts Payable Unearned Service Revenue 46,000 $ 12,000 3,300 1,800 Interest Payable 540 Salaries Payable Notes Payable Common Stock Retained Earnings 1,500 9,000 26,000 10,900 Dividends 19,000 Service Revenue 88,000 Interest Revenue 960 Salaries Expense 43,000 Rent Expense 14,000 Depreciation Expense, Equipment 4,200 Utilities Expense 2,800 Interest Expense 600 Supplies Expense 300 Total $154,000 $154,000