Question

Tar Heel Corporation provides the following information at the end of 2021. Salaries payable to workers at the end of the year Advertising expense for the year Building that has been purchased Supplies at the end of the year Retained earnings Utility expense for the year Note payable to the bank Service revenue recognized during the year Salary expense for the year Accounts payable to suppliers Dividends paid to shareholders during the year Common stock that has been issued, including $6,000 that was issued this year Cash remaining Interest expense for the year Accounts receivable from customers Retained earnings at the beginning of the year $ 3,000 10, 100 77,000 4,300 38,200 5,700 23,500 67,900 26,400 7,400 (?) 27,000 4,900 1,950 12,900 25, 150 Required: 1. Prepare the income statement for the year ended December 31, 2021. 2. Prepare the statement of stockholders' equity for the year ended December 31, 2021. 3. Prepare the balance sheet for the year ended December 31, 2021.

Answer 1

Requirement 1:

TAR HEEL CORPORATION
Income Statement
For the year ended December 31,2021
Revenues:
Service revenue		$67,900
Expenses:
Advertising expense	$10,100
Utilities expense	$5,700
Salaries expense	$26,400
Interest expense	$1,950
Total expenses		$44,150
Net income		$23,750

Requirement 2:

TAR HEEL CORPORATION
Statement of Stockholders' Equity
For the year ended December 31,2021
	Common Stock	Retained Earnings	Total Stockholders' Equity
Beginning balance	$21,000	$25,150	$46,150
Issuance of stock	$6,000		$6,000
Add: Net income		$23,750	$23,750
Less: Dividends		($10,700)	($10,700)
Ending balance	$27,000	$38,200	$65,200

Dividends = Beginning balance of 'Retained earnings'+Net income - Ending balance of 'Retained earnings'

= 25,150+23,750-38,200

=$10,700

Requirement 3:

TAR HEEL CORPORATION
Balance Sheet
December 31,2021
Assets		Liabilities
Cash	$4,900	Accounts payable	$7,400
Accounts receivable	$12,900	Salaries payable	$3,000
Supplies	$4,300	Notes payable	$23,500
Building	$77,000	Total liabilities	$33,900
		Stockholders' Equity
		Common stock	$27,000
		Retained earnings	$38,200
		Total stockholders' Equity	$65,200
Total assets	$99,100	Total liabilities and stockholders' Equity	$99,100