Retained Earnings

Retained Earnings - When preparing financial statements by...

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When preparing financial statements by hand the Income Statement would usually be prepared first because the net income or loss becomes part of the Retained Earnings Statement. The Retained Earnings Statement is usually prepared second because the ending retained earnings balance becomes part of the Balance Sheet. *Note: Corporations are subject to income taxes but sole proprietorships and partnerships are not. Otherwise the income statements of each are identical. Income Statement (single-step format): HANSON RETAIL FOOD STORE, INC. Income Statement Year Ended December 31, 2006 Net Sales $262,000 Rent revenue 6,900 Interest revenue 1,400 -------- Total Revenue 270,300 Expenses: Cost of Goods Sold $159,000 Salaries and wages 45,000 Advertising 12,400 Freight out 4,000 Depreciation 5,000 Taxes and licenses 3,000 Rent 6,300 Interest expense 350 Loss on sale of assets 250 * Income taxes 2,000 -------- Total expense 237,300 -------- Net Income (loss) $ 33,000 ======== Note: Owner’s equity statements of corporations are called Statement of
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Retained Earnings - When preparing financial statements by...

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