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# Making an income statement, balance sheet given transactions

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I am getting confused by the different accounting spreadsheets. Can you assist with a word problem and establishing the spreadsheets I am having problems with?

Overview - Smith Enterprises started the 2002 accting period with \$30,000 of assets (all cash), \$18000 of liabilities, \$4000 of common stock. During the year, Smith's earned cash revenues of \$48,000, paid cash expenses of \$32,000 and paid a cash dividend to stockholders of \$2000. Smith's also acquired \$10,000 of additional cash from the sale of common stock and paid \$6000 cash to reduce the liability owed to a bank.

Question -

Can you help me prepare a income statement, statement of changes in stockholder's equity, period end balance sheet, and statement of cash flows for the 2002 accounting period.

Where I continue to get incorrect balances if the question has a note that reads to determine the amount of begining retained earnings before considering the effects of the current period; might be helpful to record all events under an accting equation before preparing the statements?

#### Solution Preview

Overview - Smith Enterprises started the 2002 accting period with \$30,000 of assets (all cash), \$18000 of liabilities
\$4000 of common stock. During the year, Smith's earned cash revenues of \$48,000, paid cash expenses of \$32,000 and paid
a cash dividend to stockholders of \$2000. Smith's also acquired \$10,000 of additional cash from the sale of common stock
and paid \$6000 cash to reduce the liability owed to a bank.

The expanded form of accounting equation is
Assets = Liabilities + Common stock + Retained earnings
First we calculate the retained earnings at the beginning of the period
30,000 = 18,000+4,000 + Retained Earnings
Retained earnings at the start of 2002 = 8,000

We now make the financial statements.
1. Income statement - we need to look at revenues and expenses. It is stated that
revenues were 48,000 and expenses were 32,000.
The ...

#### Solution Summary

The solution explains how to make the income statement, balance sheet, statement of stockholders equity and statement of cash flows for Smith Enterprises

\$2.19