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Income Statement and Statement of Retained Earnings

Using the financial statement templates attached, prepare in good form the Income
Statement, Statement of Retained Earnings, and Balance Sheet for the year.
Be sure the 3-line headings of each financial statement are presented properly.
The company uses the periodic inventory method. Mr. Harris has decided it is too
expensive to count and price the inventory, and has asked you to estimate the
inventory using an estimated gross profit percentage of 40.0%
Hint: Compute the gross profit amount first, then "back into" the ending inventory figure.

Fred Harris, Inc
Trial Balance for the Year Ended April 30, 2010
Accounts payable 800
Accounts receivable 1,000
Accumulated depr - building 2,500
Advertising expense 3,000
Allowance for doubtful accounts 200
Equipment 3,000
Building 10,900
Cash 100
Common stock 3,300
Accumulated depr - equip 400
Dividends 500
Inventory at May 1, 2009 2,000
Note payable (1,000 due in one year) 3,800
Officers salaries 1,000
Prepaid insurance expense 100
Purchases (merchandise) 14,000
Rent expense 1,100
Retained earnings at May 1, 2009 1,500
Sales 25,000
Commission expense 2,000
Unearned revenue 200
Wages payable 1,000
38,700 38,700

Solution Summary

Income Statement, Statement of Retained Earnings and Balance Sheets are examined.