Meera started a business on January 1,2017 called Aroma, Inc. Aroma is a retail company that sells flowers and decorative plants. the following information was available on Aroma Inc. : During 2017, Aroma made sales totaling OMR 50,000 and paid OMR 42,000 in cash to its creditors. It purchased equipment costing OMR 25,000, paid OMR 1,500 for dividends and the cost of flowers and plants (goods) sold was OMR 21,000. Also, the corporation incurred the following expenses during 2017: Requirements: a - Using the above information, prepare the income statement for Aroma Inc, for the year ended December31, 2017. b- According to the information provided, what will be the effect of paying $42,000 to creditors on the accounting equation elements of Aroma Inc.? c- Using the above information, what is the amount of retained earnings on the balance sheet prepared as of December 31, 2017?
Meera started a business on January 1,2017 called Aroma, Inc. Aroma is a retail company that sells flowers and decorative plants. the following information was available on Aroma Inc. : During 2017, Aroma made sales totaling OMR 50,000 and paid OMR 42,000 in cash to its creditors. It purchased equipment costing OMR 25,000, paid OMR 1,500 for dividends and the cost of flowers and plants (goods) sold was OMR 21,000. Also, the corporation incurred the following expenses during 2017: Requirements: a - Using the above information, prepare the income statement for Aroma Inc, for the year ended December31, 2017. b- According to the information provided, what will be the effect of paying $42,000 to creditors on the accounting equation elements of Aroma Inc.? c- Using the above information, what is the amount of retained earnings on the balance sheet prepared as of December 31, 2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Meera started a business on January 1,2017 called Aroma, Inc. Aroma is a retail company that
sells flowers and decorative plants. the following information was available on Aroma Inc. :
During 2017, Aroma made sales totaling OMR 50,000 and paid OMR 42,000 in cash to its
creditors. It purchased equipment costing OMR 25,000, paid OMR 1,500 for dividends and the
cost of flowers and plants (goods) sold was OMR 21,000. Also, the corporation incurred the
following expenses during 2017:
Requirements:
a - Using the above information, prepare the income statement for Aroma Inc, for the year
ended December31, 2017.
b- According to the information provided, what will be the effect of paying $42,000 to
creditors on the accounting equation elements of Aroma Inc.?
c- Using the above information, what is the amount of retained earnings on the balance
sheet prepared as of December 31, 2017?
Transcribed Image Text:Salaries
$8,000
Interest
500
Insurance
400
Electricity
600
Rent
340
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