Solution to Practice Problem 3Req. 1PROPANE COMPANYIncome StatementFor the Year Ended December 31, 2009Total sales revenue (given) $126,000Total expenses (given) 80,200Pretax income 45,800Income tax expense ($45,800 x 30%) 13,740Net income $ 32,060Req. 2PROPANE COMPANYStatement of Retained EarningsFor the Year Ended December 31, 2009Beginning retained earnings (given) $ 0+Net income (from req. 1) 32,060–Dividends (given) 12,000Ending retained earnings $ 20,060Req. 3PROPANE COMPANYBalance SheetAt December 31, 2009Assets:Cash (given) $22,500Receivables from customers (given) 10,800Inventory of merchandise (given) 81,000Equipment (given) 40,700Total assets $155,000Liabilities:Accounts payable (given) $46,140Salary payable (given) 1,800Total liabilities $ 47,940Stockholders' equity:Contributed capital (given) $87,000Retained earnings (from req. 2) 20,060Total stockholders' equity 107,060Total liabilities and stockholders' equity
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