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Worksheet	Income Statement All of the accounting activities: journalizing, posting, trial balance and worksheet have one goal in mind, to report the financial progress and conditions of the business. Most businesses report their financial progress with three forms: income statement, statement of retained earnings, and a balance sheet. We will be preparing three different financial statements: income statement, statement of retained earnings, and a balance sheet. If you click on the worksheet link and scroll down below the worksheet, you will see these partially completed forms. Your job in this lesson will be to complete these three financial statements. In the last chapter we prepared a worksheet with adjustments for Bromley's Formal Wear. That will make our job a lot easier to prepare financial statements. Remember that the worksheet contains income statement and balance sheet columns. These columns will be the basis for preparing our financial statements. Click on the link above for the worksheet to see the completed worksheet with adjustments that we prepared in the last lesson. INCOME STATEMENT An income statement reports the revenue, cost of merchandise sold, the expenses of operating the business, and the net income. Remember how the income statement works. We start out with our sales, and then deduct any refunds from that amount to get net sales. The next section is the cost of merchandise sold section. In a merchandising business, this section is very important, since dealing with the inventory, purchases and cost of goods sold is critical to having an accurante income statement. Service business do not have this section and the income statement is simply sales minus total expenses to arrive at the net income. To calculate cost of goods sold, we start out with the beginning inventory. Then we add any other purchases of merchandise to it to get total cost of merchandise available for sale. From that number, we subtract the ending inventory to get cost of goods sold. To determine gross profit, profit before operating expenses, we subtract cost of goods sold from sales. The next sextion of the income statement lists all of our expenses, totals them and then subtracts the total expenses from the gross profit to determine net profit. The formulas listed below will help you delevelop your income statement for Bromley's Formal Wear. Look at the coordinates on the Income Statement, then enter the formula in that place to transfer the workshet numbers over to the income statement. Account Name Cell Formula Sales F58 =H29 Sales Ret F59 =G30 Net Sales F60 =H29-G30 Begin Inventory D63 =F13 Purchases D64 =G32 Purchase ReturnsD65 =H33 Net Purchases D66 =D64-D65 COGS Avail D67 =F13+G32 Less End Inv E68 =E13 COGS F69 =D67-E68 Gross Profit F70 =F60-F69 Salary Expense D73 =G34 Rent Expense D74 =G35 Repairs Expense D76 =G36 Advertising Exp D77 =G37 Supplies Exp D77 =E38 Depreciation D78 =E39 Insurance Exp D79 =E40 Misc. Expense D80 =G41 Payroll Taxes D81 =G42 Legal & Acct D82 =G43 Utilities Exp D83 =G44 Alterations Exp D84 =G45 Interest Exp D85 =G46 Delivery Exp D86 =G47 Total Expenses F87 =Sum(D73:D86) Net Income F88 =F70-F87 Formulas may differ slightly. They may come from a number of columns from the worksheet and still be correct. Print this report for your instructor. If you did not get things to balance, check janetbelch.com, Free Ve software link, accounting keys to find the answer key for this problem. Now prepare an income statment for your own VE company and printout a copy for your instructor.
Statement of Retained Earnings In addition to an income statement and balance sheet, most corporations issue a statement of retained earnings. Click on the worksheet link above and key the formulas in the correct cells to produce this report. Account Name Cell Formula RE Begin of year D94 =D27 Net Income D95 =G50 Subtotal D96=D94+D95 Less Dividens D97 0 RE at end of year D98 =D27+G50-D97 Formulas may differ slightly. They may come from a number of columns from the worksheet and still be correct. If you did not get things to balance, check janetbelch.com, Free Ve software link, accounting keys to find the answer key for this problem. Print out this report for your instructor. Now prepare a statement of retained earnings for your own VE company and print out a copy for your instructor.	Balance Sheet The owners of a business must make many management decisions. It is important for the owner so see the financial condition of the business at a given date. A report that shows this condition is a balance sheet. It summarizes asset, liabilities and stockholders' equity. The information to prepare the balance sheet comes from the balance sheet columns of the worksheet. Listed below is the information needed to prepare a balance sheet. Account Name Coordin Formula CASH C105 =I4 A/R C106 =I5 FURNITURE C107 =I6 ACC DEP D108 =J7 OFF SUPLIES C109 =I8 OTHER ASSETS C110 =I9 OFFICE EQUIP C111 =I10 ACC DEP D112 =J11 PREPAID INS C113 =I12 MDSE INV C114 =I13 TOTAL ASSETS C1115 =SUM(C105:C114)-SUM(D105:D114) NOTE PAY D118 =J14 A/P D119 =J15 WORK COMP D120 =J16 FED INC TX D121 =J17 FICA D122 =J18 MEDICARE D123 =J19 FUTA D124 =J20 SUTA D125 =J21 SALES TAX D126 =J22 SDI D127 =J23 STATE INC TX D128 =J24 ST EMP TRAIN D129 =J25 TOTAL LIABIL D130 =SUM(D118:D129) STOCK D133 =J26 RETAIN EARN D134 =G50 TOTAL STOCK EQ D135 =SUM(D133:D134) TOTAL LIAB+STOC D136 = D130+D135 Formulas may differ slightly. They may come from a number of columns from the worksheet and still be correct. When finished make sure that the balance sheet is in balance. Total assets less accumulated depreciation should equal total liabilities plus stockholders' equity. If you did not get things to balance, check janetbelch.com, Free Ve software link, accounting keys to find the answer key for this problem. Print out this report for your instructor. Now complete a balance sheet for your own VE company and print out a copy for your instructor.
1. Most businesses report their financial condition with _____ forms. 1 2 3	2. An income statement reports? Assets and liabilities of the company Revenue, cost of goods sold and expenses Stockholders' Equity
3. To calculate cost of goods sold, you would? Take beginning inventory add purchases and subtract ending inventory Take ending inventory add purchases and subtract beginning inventory Take sales subtract beginning inventory and add ending inventory.	4. Sales minus cost of goods sold equals? Net profit Gross profit Cost of merchandise available for sale