P1-1A The assets and liabilities of Hercules, Inc.

, as of December 31, 2010, and revenues

and expenses for the year ended on that date follow.

Land $98,000 Property tax expense $4,000

Note payable 185,000 Accounts receivable 12,000
Accounts payable 19,000 Advertising expense 13,000
Rent expense 23,000 Building 150,000
Cash 10,000 Salary expense 63,000
Common stock 40,000 Salary payable 1,000
Furniture 20,000 Service revenue 220,000
Interest expense 9,000 Supplies 3,000

Beginning retained earnings were $10,000 and dividends totaled $70,000 for the year.

Required:
1. Prepare the income statement of Hercules, Inc., for the year ended December 31, 2010.
2. Prepare Hercules’ statement of retained earnings for the year.
3. Prepare Hercules’ balance sheet at December 31, 2010.
4. Analyze Hercules’s Inc., by answering these questions:
a. Was Hercules profitable during 2010? By how much?
b. Did retained earning increase or decrease? By how much? Why?
c. Who owns more of Hercules’ assets, creditors or the Hercules
stockholders?