Prepare the income statement, statement of retained earnings, and balance sheet (Learning Objective 6) 20–25 min.

The Classy Chassis, Inc., restores antique automobiles. The retained earnings balance of the corporation was $32,400 at December 31, 2013. During 2014, the corporation paid $25,000 in dividends to its stockholders. At December 31, 2014, the business’s accounting records show these balances:

Requirement 1. Prepare the following financial statements for The Classy Chassis, Inc.:

a. Income statement for the year ended December 31, 2014

b. Statement of retained earnings for the year ended December 31, 2014

c. Balance sheet at December 31, 2014.

AppendixLO1

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Accounts Receivable.......... $12,500 Cash........... $ 14,800 Note Payable.......... 10,000 Accounts Payable............. 2,400 Retained Earnings. ? Advertising Expense........ 3,500 Salaries Expense. 38,000 Service Revenue 106,000 Equipment....... 82,400 Common Stock ..... 30,000 Insurance Expense. 4,600