Chapter 3, Problem 8E

1.

Summary Introduction

Income Statement

Income Statement of the business is computed by adding up all the revenues on one part and all the expenses on the other part and the difference between the two shall be the net income of the business.

To determine:

Income Statement of Wilson Trucking Business.

2.

Summary Introduction

Statement of Retained earnings

The Owner’s equity section in the balance sheet of the company which is termed as Stockholder’s Equity (as the owners of the companies are stockholders of the company) consist of the two section i.e. contributed capital and retained earnings. The contributed capital of the company is computed by adding any additional stock issuance and deducted for any treasury stock purchase and repayment of stock.

However, for second part i.e. Retained earnings, the Statement of Retained earnings shall be prepared by adding the net income of the year in the beginning balance of Retained earnings of the respective company and deducting the dividend declared or paid during the period from the above total to arrive at the ending balance of Retained earnings.

To determine:

The Statement of Retained earnings.

3.

Summary Introduction

Balance Sheet

Balance Sheet is a statement of assets and liabilities owned and owed by the business at a particular point of time.

To determine:

The Balance Sheet of Wilson Trucking Business shall be prepared.