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1-1A Answer
1-1A Answer
1
Hercules, Inc.
Income Statement
Year Ended December 31, 2010
Revenue
Service revenue………………… $220,000
Expenses
Salary expense…………………. $63,000
Rent expense……………………. 23,000
Advertising expense…………… 13,000
Interest expense………………... 9,000
Property tax expense………….. 4,000
Total expenses………………….. 112,000
Net income…………………………. $108,000
Req. 2
Hercules, Inc.
Statement of Retained Earnings
Year Ended December 31, 2010
Retained earnings, beginning of year…… $10,000
Add: Net income for the year…………… 108,000
Less: Dividends……………………………. -70,000
Retained earnings, end of year…………… $48,000
Req. 3
Hercules, Inc.
Balance Sheet
As of December 31, 2010
ASSETS LIABILITIES
Cash $10,000 Accounts payable $19,000
Accounts receivable 12,000 Salary payable 1,000
Supplies 3,000 Note payable 185,000
Furniture 20,000 Total liabilities 205,000
Building 150,000 STOCKHOLDERS’
Land 98,000 EQUITY
Common stock 40,000
Retained earnings 48,000
Total stockholders’ equity 88,000
Total liabilities and
Total assets $293,000 stockholders’ equity $293,000
Req. 4
The creditors own more of Hercules’ assets than do the company’s stockholders.