The following information was drawn from the accounting records of Swanson Company as of December 31, 2013, before the temporary accounts had been closed. The Cash balance was $6,000, and Notes Payable amounted to $3,000. The company had revenues of $7,000 and expenses of $4,200. The company’s Land account had a $4,000 balance. Dividends amounted to $1,000. There was $2,000 of common stock issued.
a. Identify which accounts would be classified as permanent and which accounts would be classified as temporary.
b. Assuming that Swanson’s beginning balance (as of January 1, 2013) in the Retained Earnings account was $5,200 determine its balance after the temporary accounts were closed at the end of 2013.
c. What amount of net income would Swanson Company report on its 2013 income statement?
d. Explain why the amount of net income differs from the amount of the ending Retained
e. What are the balances in the revenue, expense, and dividend accounts on January 1, 2014?