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    Balance Sheets and Trial Balance Sheet Preparation

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    Preparing a Balance Sheet

    The balance sheet items of the Prosser Company as of December 31, 2002, follow in random order. You are to prepare a balance sheet for the company, using a similar sequence for assets as illustrated in Exhibit 2-9. You must compute the amount for Retained Earnings.

    Financial Statement Preparation

    Tutors For Rent Inc performs adjusting entries every month but closes its accounts only at year end. The company's year-end adjusted trial balance dated December 31, 2002 was:

    Tutors for Rent Inc
    Adjusted Trial Balance
    December 31, 2002

    Cash $91,100
    Accounts Receivable $4,500
    Supplies $300
    Equipment $12,000
    Accumulated depreciation : Equipment $5,000
    Accounts payable $1500
    Income taxes payable $3,500
    Capital Stock $25,000
    Retained earnings $45,000
    Dividends $2,000
    Tutoring Revenue Earned $96,000
    Salary Expense $52,000
    Supply Expense $1200
    Advertising Expense $300
    Depreciation expense: equipment $1000
    Income Taxes Expense $11,600 Total 176K 176K

    A. Prepare an income statement and statement of retained earnings for the year ended December 31, 2002. Also prepare the company's balance sheet dated December 31, 2002.

    B. Does the company appear to be liquid? Please explain answer.

    C. Has the company been profitable in the past? Explain

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    Solution Summary

    This question involves the fundamentals of accounting