The assets and liabilities of Auto Mechanics Ltd. as of December 31, 2017, and revenues and expenses

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The assets and liabilities of Auto Mechanics Ltd. as of December 31, 2017, and revenues and expenses for the year ended on that date follow.

The assets and liabilities of Auto Mechanics Ltd. as of

Beginning retained earnings were $40,000, and dividends totaled $50,000 for the year.
Requirements
1. Prepare the income statement of Auto Mechanics Ltd. for the year ended December 31,
2017.
2. Prepare the Auto Mechanics Ltd. statement of retained earnings for the year.
3. Prepare Auto Mechanics's balance sheet at December 31, 2017.
4. Use the information prepared in Requirements 1 through 3 to answer the following:
a. Was Auto Mechanics Ltd. profitable during 2017? By how much?
b. Did retained earnings increase or decrease? By how much?
c. Which is greater: total liabilities or total equity? Who has a claim against more of Auto Mechanics Ltd.'s assets: the creditors or the shareholders?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-0134564142

6th Canadian edition

Authors: Walter Jr. Harrison, Charles T. Horngren, C. William Thomas, Greg Berberich, Catherine Seguin

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