Chapter 1, Problem 39BP

Preparing the income statement and balance sheet; identifying certain financial information (Learning Objective 6) 25-30 min.

Presented here are the amounts of Assets, Liabilities, Stockholders’ Equity, Revenues, and Expenses of The Fitness Guru, Inc., at August 31, 2018. The items are listed in alphabetical order.

Accounts Payable...................	$15,000		Interest Expense....................	$ 5,000
Accounts Receivable..............	14,000		Land.......................................	37,000
Advertising Expense...............	15,000		Note Payable..........................	70,000
Building..................................	135,000		Property Tax Expense............	4,500
Cash.......................................	16,000		Rent Expense.........................	22,000
Common Stock......................	70,000		Salaries Expense....................	92,000
Dividends...............................	29,000		Salaries Payable.....................	5,000
Equipment..............................	40,000		Service Revenue....................	165,000
Insurance Expense.................	2,200		Supplies.................................	1,400

The retained earnings balance of the business was $87,1 DO at August 31, 2017.

Requirements

1. 1. Identify each amount shown as an asset, liability, or stockholders' equity.
2. 2. Prepare the company’s income statement and statement of retained earnings for the year ended August 31, 2018.
3. 3. Prepare the company’s balance sheet at August 31, 2018.
4. 4. Answer these questions about the company:
   1. a. What was the profit or loss for the year?
   2. b. What was the increase or decrease of retained earnings for the year?
   3. c. What is the amount of economic resources on August 31, 2018?
   4. d. What is the amount owed on August 31, 2018?