Question & Answer: Using the balances from the trial balance below, prepare;…..

Using the balances from the trial balance below, prepare;

a) The multi-step income statement

b)The statement of retained earnings

c) The balance sheet

Account name          Dr                              Cr

Land                                            45,000

Building                                         6000

Machinery                                              4000

Mortgage                                                                                                                                     37,000

Dividends                                                   6000

Common stock                                                                                                                            15,000

Inventories                                                   6,100

Cash                                                              4000

CoGS                                                             56,400

Interest revenue                                                                                                                         3,200

Trade payable                                                                                                                              3,705

Tax expense                                                 7,730

Sales                                                                                                                                               80,875

Trade receivable                                          2,300

Admin expense                                             900

Selling expense                                             400

Interest expense                                          950

Total                                                               139,780                                                                  139,780

The opening balance for the Statement of Retained Earnings is zero (0).

Saffron Trading

Company

INCOME STATEMENT

For the year ended 30thNovember 2010

Sales Revenue

Operating expenses

Other revenues and gains

Other expenses and losses

Income before tax

Net income for the year

Saffron Trading Company

RETAINED EARNINGS STATEMENT

For the year ended 30thNovember 2010

Saffron Trading Company

BALANCE SHEET As of 30th

November 2010

ASSETS

Current assets

Fixed assets

EQUITY & LIABILITIES

Current liabilities

Long term liabilities

Equity