P13-10A (LO5.9) AP Northwood Architects Ltd. is a private company reporting under ASPE. It is authorized to issue an unlimited number of common and $3 cumulative preferred shares. The following is an alphabetical list of its adjusted accounts at March 31, 2024, its fiscal year end. All accounts have normal balances. Accounts payable Accounts receivable Accumulated depreciation-equipment Cash Cash dividends-common Cash dividends-preferred Common shares Consulting revenue Depreciation expense Dividends payable Equipment There are 1,500 preferred and 75,000 common shares issued. Instructions $21.350 Income tax expense $16.535 38,700 Insurance expense 6,550 23.650 Interest expense 3,000 54,600 Notes payable 40,000 Preferred shares 4.500 Prepaid expenses 75.000 Rent expense 404,500 Retained earnings 11,825 Salaries expense 15,000 Salaries payable 224,000 Supplies expense 50,000 56,250 6,150 35.800 64,800 245.400 2,310 25,800 a. Prepare the statement of retained earnings, and the shareholders' equity section of the balance sheet. b. Calculate return on equity. Note: No shares were issued during the year. Taking It Further Why is it important that retained earnings be tracked and presented separately from share capital in the balance sheet?
P13-10A (LO5.9) AP Northwood Architects Ltd. is a private company reporting under ASPE. It is authorized to issue an unlimited number of common and $3 cumulative preferred shares. The following is an alphabetical list of its adjusted accounts at March 31, 2024, its fiscal year end. All accounts have normal balances. Accounts payable Accounts receivable Accumulated depreciation-equipment Cash Cash dividends-common Cash dividends-preferred Common shares Consulting revenue Depreciation expense Dividends payable Equipment There are 1,500 preferred and 75,000 common shares issued. Instructions $21.350 Income tax expense $16.535 38,700 Insurance expense 6,550 23.650 Interest expense 3,000 54,600 Notes payable 40,000 Preferred shares 4.500 Prepaid expenses 75.000 Rent expense 404,500 Retained earnings 11,825 Salaries expense 15,000 Salaries payable 224,000 Supplies expense 50,000 56,250 6,150 35.800 64,800 245.400 2,310 25,800 a. Prepare the statement of retained earnings, and the shareholders' equity section of the balance sheet. b. Calculate return on equity. Note: No shares were issued during the year. Taking It Further Why is it important that retained earnings be tracked and presented separately from share capital in the balance sheet?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:P13.10A (LO5.9) AP Northwood Architects Ltd. is a private company reporting under ASPE. It is authorized to issue an unlimited number of common and $3 cumulative
preferred shares. The following is an alphabetical list of its adjusted accounts at March 31, 2024, its fiscal year end. All accounts have normal balances.
Accounts payable
Accounts receivable
Accumulated depreciation equipment 23,650 Interest expense
54,600 Notes payable
40,000 Preferred shares
4.500 Prepaid expenses
75.000 Rent expense
404,500 Retained earnings
Cash
Cash dividends-common
Cash dividends-preferred
Common shares
$21,350 Income tax expense $ 16,535
38,700 Insurance expense
6,550
3,000
50,000
56,250
6,150
35,800
64,800
245,400
Consulting revenue
Depreciation expense
Dividends payable
Equipment
11,825 Salaries expense
15,000 Salaries payable
224,000 Supplies expense
2,310
25,800
There are 1,500 preferred and 75,000 common shares issued.
Instructions
a. Prepare the statement of retained earnings, and the shareholders' equity section of the balance sheet.
b. Calculate return on equity. Note: No shares were issued during the year.
Taking It Further Why is it important that retained earnings be tracked and presented separately from share capital in the balance sheet?
Calculate return on assets and equity, and comment.
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