Chapter 1, Problem 1.43AP

(a)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Statement of retained earnings: This statement reports the beginning retained earnings and all the changes which led to ending retained earnings. Net income from income statement is added to and dividends is deducted from beginning retained earnings to arrive at the end result, ending retained earnings.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

To prepare: Income statement of PP Photography for the year ended December 31, 2018

(b)

To determine

To prepare: Statement of retained earnings of PP Photography for the year ended December 31, 2018.

(c)

To determine

To prepare: Balance sheet of PP Photography as of December 31, 2018.