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Unformatted text preview: Companies can prepare financial statements directly from an adjusted trial balance. Illustrations 4-27 and 4-28 present the interrelationships of data in the adjusted trial balance of Sierra Corporation. As Illustration 4-27 shows, companies prepare the income statement from the revenue and expense accounts. Similarly, they derive the retained earnings statement from the retained earnings account, dividends account, and the net income (or net loss) shown in the income statement. As Illustration 4-28 shows, companies then prepare the balance sheet from the asset, liability, and stockholders' equity accounts. They obtain the amount reported for retained earnings on the balance sheet from the ending balance in the retained earnings statement. Preparation of the income statement and retained earnings statement from the adjusted trial balance Illustration 4-28 Preparation of the balance sheet from the adjusted trial balance...
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- Spring '11
- Trial Balance