Instructions:

(1) Prepare an Income Statement for the year ended December 31, 2021.

(2) Prepare a Statement of Retained Earnings for the year ended December 31, 2021.

(3) Prepare a Balance Sheet dated December 31, 2021.

(4) Does the company appear to be liquid? Explain. Justify your conclusion with calculation of working capital and current ratio.

(5) Has the company been profitable in the past? Is the company profitable this year? Justify your conclusion with calculation of net income percentage and return on equity.

(6) Some people think that a companys retained earnings represent cash reserved for the payment of dividends. Are they correct? Explain.

(7) Discuss the relationship among the income statement, the statement of retained earnings, and the balance sheet.

The following is Glamour Corporation year-end adjusted trial balance dated December 31, 2021