University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

304

Pages:

3
Author:

stud_ice13

1. Income Statement The income statement shows a company's revenues and expenses for a given period, resulting in net income or loss. It uses information from the revenue and expense accounts in the adjusted trial balance. Example Format: bash Magic Company Income Statement For the Year Ended December 31, 2021 Revenues: Consulting Revenue Service Revenue Total Revenues $XX,XXX $XX,XXX $XX,XXX Expenses: Salaries Expense $XX,XXX Rent Expense $XX,XXX Utilities Expense $XX,XXX Supplies Expense $X,XXX Depreciation Expense $X,XXX Total Expenses $XX,XXX Net Income: $XX,XXX 2. Statement of Retained Earnings This statement starts with the beginning balance of retained earnings, adds net income (or subtracts net loss), and subtracts dividends to arrive at the ending balance of retained earnings. Example Format: yaml Magic Company Statement of Retained Earnings For the Year Ended December 31, 2021 Beginning Retained Earnings: $45,000 Add: Net Income $XX,XXX Less: Dividends $(X,XXX) Ending Retained Earnings: $XX,XXX 3. Balance Sheet (Unclassified) The balance sheet lists the company’s assets, liabilities, and equity at a specific point in time. The adjusted balances from the trial balance are used. Example Format: ruby Magic Company Balance Sheet December 31, 2021 Assets: Cash $XX,XXX Accounts Receivable $X,XXX Supplies $X,XXX Equipment $XX,XXX Less: Accumulated Depreciation $(X,XXX) Total Assets $XX,XXX Liabilities: Accounts Payable Salaries Payable Interest Payable Total Liabilities $X,XXX $X,XXX $X,XXX $XX,XXX Equity: Common Stock Retained Earnings Total Equity $XX,XXX $XX,XXX $XX,XXX Total Liabilities and Equity: $XX,XXX Steps to Use Adjusted Trial Balance for Preparation: 1. Transfer Revenue and Expense Accounts to the Income Statement: Include all adjusted balances from revenue and expense accounts to calculate net income. 2. Calculate Ending Retained Earnings: Use the beginning retained earnings, add net income from the income statement, and subtract dividends. 3. List Assets, Liabilities, and Equity: Transfer all the adjusted balances of assets, liabilities, and equity to the balance sheet, ensuring that the ending retained earnings balance matches the one from the statement of retained earnings.