Q1) Assets and liabilities of Toronto Service Inc. as of December 31, 2008, and revenue and expenses for year ended December 31, 2008 are listed below:
|
Accounts Payable
|
$21,000
|
Property tax expense
|
$5,000
|
|
Accounts Receivable
|
25,000
|
Rent expense
|
3,000
|
|
Advertising expense
|
10,000
|
Salary expense
|
85,000
|
|
Building
|
140,000
|
Salary payable
|
12,000
|
|
Cash
|
10,000
|
Service Revenue
|
200,000
|
|
Furniture
|
20,000
|
Share Capital
|
75,000
|
|
Interest expense
|
4,000
|
Supplies
|
3,000
|
|
Land
|
98,000
|
Note Payable
|
95,000
|
Beginning Retained Earnings were $50,000 and dividends totalled $50,000 for year.
Required:
i) Make Income Statement for year ended December 31, 2008
ii) Make Statement of Retained Earnings for the year
ii) Make the Balance Sheet at December 31, 2008
iii) Based on financial statements prepared, reply the given problems:
a. Was Toronto Service Inc. profitable during 2008? If so by how much?
b. Did Retained Earnings increase or decrease? Determine the amount of change?
c. Which is greater total, liabilities or total equity? Who owns more of company's assets, creditors or shareholders?