Tomas Corporation began operations at the start of 20C. During the year, it made sales totaling $875,000 and collected $850,000 in cash from its customers. It purchased inventory costing $460,000, paid $20,000 for dividends and the cost of goods sold was $430,000. In addition, the corporation incurred the following expenses:
- Salary Expense $120,000
- Interest Expense 10,000
- Insurance Expense 8,000
- Supplies Expense 12,000
- Income Tax Expense 60,000
Required:
1. Prepare an income statement showing revenues, expenses, pretax income, income tax expense, and net income for the year ended December 31, 20C.
2. Based on the above information, what is the amount of accounts receivable on the balance sheet prepared at the end of 20C? (Hint: Use a T-account)
3. Based on the above information, what is the amount of retained earnings on the balance sheet prepared at the end of 20C? (Hint: Use a T-account)