APPLY THE CONCEPTS: Construct the income statement When constructing the income statement, it is important to understand that the income statement reports the revenues and expenses for period of time, based on the matching concept. This concept is applied by matching the expenses with the revenue generated during a period by those expenses. The excess of the revenue over the expenses is called net income or net profit. Coldwater Co. has compiled the following account balances from its general ledger on August 31, 20Y8 (the last day of its fiscal year) Account balances Account Amount Cash $62,460 Accounts receivable 136,125 Supplies 13,995 Prepaid insurance 25,030 Equipment 421,110 Accounts payable 63,865 Notes payable 73,940 Common stock 216,020 Retained earnings 278,420 Dividends 46,560 Fees earned 230,000 Service revenue 125,000 Advertising expense 15,000 Wages expense 200,000 Interest expense 15,410 Utilities expense 7,000 44,555 Rent expense Use the information given to create Coldwater Co.'s annual financial statements. Construct Coldwater's income statement for 20Y8 Coldwater Co. Income Statement For the Year Ending August 31, 20Y8 Revenues: X X X X X Total revenues Expenses: $ X X X X X X X X X Total expenses X X APPLY THE CONCEPTS: Construct the Statement of Stockholders' Equity. f net income and any dividends. It also serves as an important link The statement of stockholders' equity shows the change in statement of stockholders' equity as result between the income statement and the balance sheet in that it translates the effects of net income into an updated number for statement of stockholders' equity. Construct Coldwater's statement of stockholders' equity for 20Y8 Coldwater Co. Statement of Stockholders' Equity For the Year Ending August 31, 20Y8 Retained Earnings Common Stock Total X X X X X X X X X APPLY THE CONCEPTS: Construct the balance sheet the form of liabilities and The balance sheet, also known as the statement of financial position, shows the company's assets and the claims against those assets stockholders' equity. Unlike financial statements that display financial performance over given interval of time, the balance sheet is a snapshot of a financial position at a given point in time. Construct Coldwater's balance sheet in account form for 20Y8. Coldwater Co. Balance Sheet August 31, 20Y8 Assets X $ X X X X X X X Y Total assets Liabilities X X X X Total liabilities Stockholders' Equity X X Y X X Total stockholders' equity X Total liabilities and stockholders' equity d dd