Question

The adjusted trial balance for Speedy Courier as of December 31, 2017, follows.

Debit Credit

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \( 58,000

Accounts receivable . 120,000

Interest receivable 7,000

Notes receivable (due in 90 days) . 210,000

Office supplies 22,000

Trucks 134,000

Accumulated depreciation—Trucks . \) 58,000

Equipment . 270,000

Accumulated depreciation—Equipment 200,000

Land . 100,000

Accounts payable . 134,000

Interest payable 20,000

Salaries payable . 28,000

Unearned delivery fees 120,000

Long-term notes payable . 200,000

Common stock . 15,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000

Dividends 50,000

Delivery fees earned 611,800

Interest earned . 34,000

Depreciation expense—Trucks 29,000

Depreciation expense—Equipment . 48,000

Salaries expense 74,000

Wages expense 300,000

Interest expense . 15,000

Office supplies expense . 31,000

Advertising expense . 27,200

Repairs expense—Trucks . 35,600

Totals \(1,530,800 \)1,530,800

Required

1. Use the information in the adjusted trial balance to prepare (a) the income statement for the year endedDecember 31, 2017, (b) the statement of retained earnings for the year ended December 31, 2017, and

(c) the balance sheet as of December 31, 2017.

2. Compute the profit margin for year 2017 (use total revenues as the denominator).

Short answer

Total assets are $663,000. Income statement shown in step 2. Statement of retained earnings is shown in step 3. Balance sheet shown in step 4.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of the Income statement

An income statement is a financial statement prepared at the end of period to show profit earnings.

 Step 2: Income Statement

Income Statement
Year ending December 31, 2017
Delivery Fees Earned	$611,800
Other Income:
Interest Earned	$34,000
Total Income		$645,800
Less:
Depreciation Expense- Truck	$29,000
Depreciation Expense- Equipment	$48,000
Salaries Expense	$74,000
Wage Expense	$300,000
Interest Expense	$15,000
Office Supplies Expense	$31,000
Advertising Expense	$27,200
Repairs Expense- Truck	$35,600	$559,800
Net Income		$86,000

Statement of retained earnings

Statement of Retained Earnings
For Year Ending December 31, 2017
Beginning Balance	$110,000
Net Income	$86,000
Dividends	-$50,000
Retained Earnings	$146,000

Balance Sheet

Balance Sheet
For the year ending December 31, 2017
Assets
Current Assets:
Cash	$58,000
Accounts Receivable	$120,000
Interest Receivable	$7,000
Notes Receivable	$210,000
Office Supplies	$22,000
Non-Current Assets
Truck	$134,000
Accumulated Depreciation	-$58,000
Equipment	$270,000
Accumulated Depreciation	-$200,000
Land	$100,000
Total Assets		$663,000
Liabilities
Current Liabilities
Accounts Payable	$134,000
Salaries Payable	$28,000
Interest Payable	$20,000
Unearned Delivery Fees	$120,000
Long-term liabilities
Long-term Notes Payable	$200,000
Stockholder’s Equity
Common Stock	$15,000
Retained Earnings	$146,000
Total liabilities & Stockholder’s Equity		$663,000