Presented below is the trial balance of Thompson Ltd. at December 31, 2022.

A physical count of inventory on December 31 resulted in an inventory amount of £64,000; thus, cost of goods sold for 2022 is £645,000.

Instructions

Prepare an income statement and a retained earnings statement. Assume that the only changes in retained earnings during the current year were from net income and dividends. Thirty-thousand ordinary shares were outstanding the entire year.

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Thompson Ltd. Trial Balance December 31, 2022 Debit Credit Purchase Discounts £ 10,000 Cash £ 189,700 Accounts Receivable 105,000 Rent Revenue 18,000 Retained Earnings 160,000 Salaries and Wages Payable 18,000 Sales Revenue 1,100,000 Notes Receivable 110,000 Accounts Payable 49,000 Accumulated Depreciation-Equipment 28,000 Sales Discounts 14,500 Sales Returns and Allowances 17,500 Notes Payable Selling Expenses Administrative Expenses 70,000 232,000 99,000 Share Capital-Ordinary 300,000 Income Tax Expense 53,900 Cash Dividends 45,000 Allowance for Doubtful Accounts 5,000 Supplies 14,000 Freight-In 20,000 Land 70,000 Equipment Bonds Payable 140,000 100,000 Gain on Sale of Land 30,000 Accumulated Depreciation-Buildings 19,600 Inventory 89,000 Buildings 98,000 Purchases 610,000 Totals £1,907,600 £1,907,600