E3-37B. (Learning Objective 4: Preparing the financial statements) The adjusted trial balance of Sweet Hut, Inc., is as follows.

Requirement 1. Prepare Sweet Hut, Inc.’s Income Statement and statement of changes in equity for the year ended December 31, 20X8, and its Balance Sheet on that date. Draw arrows linking the three statements.

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A1 1 2 (Amounts in thousands) 3 Account 4 Cash 5 Accounts receivable 6 Inventories 7 Prepaid expenses Sweet Hut, Inc. Adjusted Trial Balance 8 Property, plant, and equipment 9 Accumulated depreciation December 31, 20X8 Adjusted Trial Balance Credit Debit $ 3,600 1,600 1,300 1,700 6,800 $ 2,800 10 Other assets 9,600 11 Accounts payable 7,900 12 Income tax payable 1,000 13 Other liabilities 2,800 14 Share capital 4,900 15 Retained earnings (beginning, December 31, 20X7) 4,800 16 Dividends 1,200 17 Sales revenue 40,900 18 Cost of goods sold 26,400 19 Selling, administrative, and general expenses 10,500 20 Income tax expense 2,400 21 22 Total 23 $ 65,100 $ 65,100