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
Problem 1: 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.
Problem 2: Does the company appear to be liquid? Please explain answer.
Problem 3: Has the company been profitable in the past? Explain.