Chapter 4, Problem 4.17E

(a)

To determine

Financial statements: Financial statements refer to those statements, which are prepared by the company at the end of the accounting period in the particular formats which are prescribed in accounting to show its financial position.

Income Statement: Income statement is prepared by all the companies by enumerating all the expenses and revenues in the statement to calculate the resulting difference of net profit or net loss.

Owners’ Equity Statement: Owner’s equity statement is the statement that reflects the change in owner’s equity for a period. It is a part of financial statements and balances of retained earnings are included in this.

To prepare: The income Statement and owner’s equity statement for Company B.

(b)

To determine

Classified Balance Sheet: A classified balance sheet represents the financial information under different heads of classification in order to make it easy for the users of financial statements to understand the financial position of the company.

To prepare: The classified balance sheet for Company B.