Assets and liabilities of ABC Service Inc. as of December 31, 2008, and revenue and expenses for year ended December 31, 2008 are given below:
Accounts Payable $21,000 Property tax expense $5,000
Accounts Receivable 25,000 Rent expense 3,000
Advertising expense 10,000 Salary expense 85,000
Building 140,000 Salary payable 12,000
Cash 10,000 Service Revenue 200,000
Furniture 20,000 Share Capital 75,000
Interest expense 4,000 Supplies 3,000
Land 98,000 Note Payable 95,000
Beginning Retained Earnings were $50,000 and dividends totalled $50,000 for the year.
Questions
Create the Income Statement for the year ended December 31, 2008
Create the Statement of Retained Earnings for the year
Create the Balance Sheet at December 31, 2008
Based on financial statements created, answer the questions given below:
a. Was ABC Service Inc. profitable during 2008? If yes explain by how much?
b. Did Retained Earnings increase or decrease? What is the amount of the change?
c. Which is the greater total, liabilities or total equity? Who have more of the company’s assets, creditors or the shareholders?