1. Introduction: The adjusted trail balance of C company is given, prepare Income statement, Statement of retained earnings and the balance sheet . And also calculate the profit margin ratio.Profit margin ratio is one of the profitability ratios and it shows how much profit is generated through the sales of the company. It is also known as profit to sales ratio. It reflected the capacity of the company to generate the profit from its all over turnover. To determine: Prepare the income statement, retained earnings statement and balance sheet. Income Statement of C Company as on December 31, 2016 Particulars Amount ($) Amount ($) Income Fees Earned 484000 Interest Earned 24000 Less: Expenses Depreciation Expense-Automobiles 26000 Depreciation Expense-Equipment 18000 Salaries Expense 188000 Wages Expense 40000 Interest Expense 32000 Office Supplies Expense 34000 Advertisement expense 58000 Repair expense 24800 -420800 Net Income 87200 Statement of Retained Earnings as on December 31,2016 Particulars Amount ($) Retained earnings (opening balance) 235800 Add: Net income of the year 2016 87200 Less: Dividend declared -46000 Retained earnings (Closing balance) 277000 Balance sheet of C Company as on 31 s t December, 2016 Particulars Amount ($) Amount ($) Particulars Amount ($) Amount ($) LIABILITIES AND STOCKHOLDERS EQUITY ASSETS Fixed Assets: Stock holder's Equity 297000 Land 78,000 Long term notes payable 138,000 Automobiles 168,000 less: Accumulated depreciation -50,000 118000 Current Liabilities: Equipment 138,000 Accounts Payable 96,000 less: Accumulated depreciation -18,000 120,000 Interest Payable 20,000 Salaries payable 19,000 Current Assets: Unearned fees 30,000 165000 Cash 30,000 Accounts Receivable 52,000 Interest Receivable 18,000 Notes Receivable 168,000 Office Supplies 16,000 284,000 Total Liabilities 600000 Total Assets 600,000 2. Introduction: Profit margin ratio shows the company’s earning capacity. It tells how company held its finances overall. It is calculated by dividing company’s profit by its overall revenue. To determine: The Profit margin of company as on 31 s t December 2016. Profit Margin ratio of company is 17.17%. Profit margin ratio = Net income Net sales ×100 = 87200 508000 × 100 = 17.17 % Therefore, Profit margin ratio of C company is 17.17%.

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