Question

Riverside, Inc. presents the following trial balance at the end of its first year of business. Debit Credit $14 $225 16 18 15 208 Accounts Cash Sales revenues Operating expenses Inventory Accounts payable Common stock Property, Plant and Equipment Accumulated Depreciation Notes payable Cost of Goods sold Depreciation Expense Taxes Accrued Taxes 500 50 250 175 25 4 4 Required: Use the account balances in the above trial balance to present (1) an income statement and (2) the balance sheet for Riverside Inc. (Note: you must add retained earnings to shareholders' equity on the balance sheet to make the balance sheet balance.)

Answer 1

INCOME STATEMENT
Sales revenues		$                225
Cost of goods sold		$                175
Gross profit		$                  50
Less: Operating expenses:
Operating expenses	$                     16
Depreciation expense	$                     25
Total operating expenses		$                  41
Net operating income		$                    9
Interest expense		$                   -
Income before taxes		$                    9
Income tax expense		$                    4
Net income		$                    5
BALANCE SHEET
Assets
Current assets:
Cash	$                     14
Inventory	$                     18
Total current assets		$                  32
Non-current assets:
Property, plant & equipment	$                   500
Accumulated depreciation	$                     50	$                450
Total assets		$                482
Total liabilities and Owners' Equity
Current liabilities:
Acccounts payable	$                     15
Accrued taxes	$                        4
Total current liabilities		$                  19
Non-current liabilities-Notes payable		$                250
Total liabilities		$                269
Common stock	$                   208
Retained earnings	$                        5	$                213
Total liabilities and owners' equity		$                482