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chapter_1_solution - Chapter 1 Homework Problems P1-1...

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Chapter 1 Homework Problems P1-1 Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet Assume that you are the president of Propane Company. At the end of the first year (December 31, 2006) of operations, the following financial data for the company are available: Cash $ 27,500 Receivables from customers (all considered collectible) 13,200 Inventory of merchandise (based on physical count and priced at cost) 99,000 Equipment owned, at cost less used portion 49,500 Accounts payable owed to suppliers 52,107 Salary payable for 2006 (on December 31, 2006, this was owed to an employee who was away because of an emergency; will return around January 10, 2007, at which time the payment will be made) 2,200 Total sales revenue 154,000 Expenses, including the cost of the merchandise sold (excluding income taxes) 98,010 Income taxes expense at 30% × pretax income; all paid during 2006 ? Contributed capital, 7,000 shares outstanding 103,990 Dividends declared or paid during 2006. 8,290 Required: 1. Prepare a summarized income statement for the year 2006. 2. Prepare a Statement of Retained Earnings for the year 2006. 3. Prepare a balance sheet at December 31, 2006. 1. Propane Company Income Statement For Year Ended December 31, 2006 Total sales revenue $ 154,000 Total expenses 98,010 Pretax income 55,990 Income tax expense 16,797 Net income $ 39,193
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