P1–1. Req. 1 HIGHLIGHT CONSTRUCTION COMPANY Income Statement For the Year Ended December 31, Current Year Total sales revenue (given) Total expenses (given) Pretax income Income tax expense ($48,200 x 30%) Net income $128,400 80,200 48,200 14,460 $ 33,740 Req. 2 HIGHLIGHT CONSTRUCTION COMPANY Statement of Stockholders’ Equity For the Year Ended December 31, Current Year Balance January 1, Current year Stock issuance (given) +Net income (from req. 1) –Dividends (given) Balance December 31, Current year $ Common Stock Retained Earnings 0 $ 0 87,000 33,740 $ 87,000 10,000 $ 87,000 $ 23,740 Req. 3 HIGHLIGHT CONSTRUCTION COMPANY Balance Sheet At December 31, Current Year Assets Cash (given) Receivables from customers (given) Inventory of merchandise (given) Equipment (given) Total assets Liabilities Accounts payable (given) Salary payable (given) Total liabilities Stockholders' Equity Common stock (given) Retained earnings (from req. 2) Total stockholders' equity Total liabilities and stockholders' equity $25,600 10,800 81,000 42,000 $159,400 $46,140 2,520 $ 48,660 $87,000 23,740 110,740 $159,400