The assets and liabilities of Toronto Service Inc. as of December 31, 2008, and revenue and expenses for the 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 the year.
Required:
a. Prepare the Income Statement for the year ended December 31, 2008
b. Prepare the Statement of Retained Earnings for the year
c. Prepare the Balance Sheet at December 31, 2008
d. Based on the financial statements prepared, answer the following questions:
1. Was Toronto Service Inc. profitable during 2008? If so by how much?
2. Did Retained Earnings increase or decrease? What is the amount of the change?
3. Which is the greater total, liabilities or total equity? Who owns more of the company's assets, the creditors or the shareholders?