Chapter 1 - Introduction to Financial Statements - Exercises - Page 31: E1-5

INCOME STATEMENT For the year ended December 31, 2022 Revenues Service revenues \$58,000 Expenses Salaries and wages expense. \$30,000 Rent expense \$10,400 Utilities expense \$2,400 Advertising expense \$1,800 Total expenses \$44,600 Net income \$13,400 RETAINED EARNINGS For the year ended December 31, 2022 Revenues Retained earnings, January 1 \$67,000 Add: net income \$13,400 \$80,400 Less: Dividends \$6,000 Retained earnings, December 31 \$74,400

Retained earnings, January 1, 2022      $67,000 Advertising expense 1,800 Dividends 6,000 Rent expense 10,400 Service revenue 58,000 Utilities expense 2,400 Salaries and wages expense 30,000 Instructions Prepare an income statement and a retained earnings statement for the year ending December 31, 2022.