Chapter 1, Problem 33AP

A Preparing the income statement, statement of retained earnings, and balance sheet (Learning Objective 6) 20-25 min.

Resto Motors, Inc., restores antique automobiles. The retained earnings balance of the corporation was $22,400 at December 31, 2017. During 2018, the corporation paid $85,000 in dividends to its stockholders. At December 31,2018. the business s accounting records show these balances:

Accounts Receivable.................	$ 30,000	Cash.............................................	$36,000
Notes Payable...........................	15,000	Accounts Payable..........................	19,000
Retained Earnings....................	?	Advertising Expense....................	1,100
Salaries Expense.......................	33,400	Service Revenue............................	50,000
Equipment...............................	57,000	Common Stock............................	2,500
Insurance Expense....................	3,300	Rent Expense................................	2,200
Utilities Expense........................	2,950	Supplies.......................................	40,000

Requirements

1. 1. Identify each amount shown as an asset, liability, or stockholders' equity
2. 2. Prepare the following financial statements for Resto Motors, inc.:
   1. a. Income statement for the year ended December 31, 2018
   2. b. Statement of retained earnings for the year ended December 31, 2018
   3. c. Balance sheet at December 31, 2018