Problem:
Interrelationships among Financial Statements
Best Electronics started the accounting period with $10,000 of assets, $2,200 of liabilities, and $4,550 of retained earnings. During the period, the Retained Earnings account increased by $3,565. The bookkeeper reported that Best paid cash expenses of $5,010 and paid a $625 cash dividend to stockholders, but she could not find a record of the amount of cash that Best received for performing services. Best also paid $1,000 cash to reduce the liability owed to a bank, and the business acquired $2,000 of additional cash from the issue of common stock.
Required:
Question: Prepare an income statement, statement of changes in stockholders' equity, year-end balance sheet, and statement of cash flows for the accounting period. (Hint: Determine the beginning balance in the common stock account before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)